The VAT Mini One Stop Shop (“MOSS”)
Digital services within the EU
Businesses that supply digital services within the EU are subject to VAT in every member state where they make sales. ‘Digital services’ include most services supplied on websites and online, such as streaming and downloads. Historically, this would require the business to register in multiple countries even if the supplies they made were negligible.
HMRC’s Mini One Stop Shop scheme (MOSS) was originally introduced to reduce this compliance burden. It allows UK businesses, and businesses outside the EU, to submit a single return to cover their supplies made in every member state.
Although MOSS removed the requirement for business to have multiple registrations, it still did not alleviate the requirement for some companies who make minimal supplies in the EU from charging the appropriate rates of EU VAT, registering for MOSS and completing a return.
Changes to MOSS
From 1 January 2019 however, new rules allow businesses with digital sales to other EU members states below £8,818 (€10,000), to avoid MOSS registration.
Going forward, it is possible for businesses that make supplies of digital services to other member states to treat them as being made in the UK instead. This will allow a great number of businesses who make minimal supplies of digital services to other member states to de-register from MOSS.
If a business is unsure of whether it will remain below the £8,818 threshold, it is possible to make an election to ignore the new threshold and continuing submitting returns through MOSS.
Deregistering for VAT
If a business is below the new digital services threshold and the total value of their digital supplies, when combined with digital sales, is below the UK VAT threshold, then the business is not required to remain registered for UK VAT. If a business falls into these circumstances it is possible for them to de-register for VAT entirely.
If your business is making supplies of digital services within the EU and you would like to discuss these rules further, please get in touch with our team.