Understanding VAT MOSS – Tax on Digital Services

Changes to the UK VAT MOSS Scheme following Brexit

The VAT Mini One Stop Shop, or VAT MOSS, is a scheme that was introduced in 2015 to simplify the payment of VAT for businesses selling digital services to consumers in the European Union (EU), where those sales were €10,000 or more.

The Mini One Stop Shop is a central portal where businesses register, rather than registering for VAT in the individual countries where they make their sales. The business then submits a single VAT return and pays their VAT directly to MOSS, and the portal distributes the various VAT payments to the correct EU countries.

The VAT MOSS scheme changed on 1st January 2021 following our exit from the EU, however, and you now have two options for dealing with VAT on the sale of digital services to consumers in the EU.

So what do you need to know about VAT MOSS and the new rules?

Changes to VAT MOSS in 2021

VAT MOSS compromised two schemes:

• Union VAT MOSS
• Non-Union VAT MOSS

Following the UK’s exit from the European Union, the UK VAT MOSS scheme has closed down. An obligation to report the sales of digital products to EU customers still exists, however, and this is done under the ‘place of supply’ rules.

For the purposes of VAT, sales on digital services to consumers in the EU from businesses in the UK, the place of supply is the location of the customer.

How are the changes affecting businesses in the UK?

The place of supply rules mentioned above mean you should now either:

• Register for the Non-Union Scheme in an EU member state - you have until the 10th of the month following your first sale to register for Non-Union VAT MOSS
• Register for VAT in each EU member state where you make a sale – the sales threshold for digital services doesn’t apply in this case

You can still access your original VAT MOSS details to correct any errors on your tax returns until 11 pm on 20th January 2022, and view your previously submitted returns. You also have until 31st December 2024 to provide updated registration details.

Obtaining professional guidance on VAT MOSS

VAT MOSS is a complex scheme, as is registering for VAT on digital services in each EU member state where a sale is made. In fact, the premise behind the Mini One Stop Shop was to reduce the administrative burden on businesses making these types of sales, so you may be wondering how to proceed.

Obtaining professional accountancy advice and guidance on VAT MOSS is crucial to ensure you take the most appropriate route, minimise your administration, and ensure you pay the correct amount of VAT on the sale of affected digital services.

Handpicked Accountants can put you in touch with fully qualified accountants in your area, who will provide reliable specialist advice. We have longstanding professional relationships with accountants across the country – please get in touch to find out more about how we can help.