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Ready for VAT MOSS (VAT Mini One Stop Shop)?

The history

Under the VAT on Electronic Services (VoES) scheme, since 2003 businesses outside the EU have had to charge VAT on business-to-consumer (B2C) supplies of broadcasting, telecommunications and e-services to private EU consumers. However, once the law was introduced, many of the big US companies decided to establish themselves in the EU (usually Luxembourg) to take advantage of the intra-EU laws of charging VoES. Ten years later the EU has changed the rules. In the UK alone, the Chancellor estimates that the new rules will generate an extra £300m revenue in 2015/16.

The new rules – fundamental change 

On 1 January 2015 the EU VAT place of supply rules for EU suppliers of electronic, broadcasting and telecom services to consumers will change. 

VAT will now be charged where the customer is not where the supplier resides. These rules don't apply to businesses, nor to the supply of goods or other services.

The new rules mean the supplier has to gather and report information on where their customers are based – in any one, or all of the 28 EU member states. This puts a huge compliance burden on businesses. Not only do they have to make sure the right processes, checkout software and accounting packages are in place, but they also need to take into consideration how the new rules will affect prices and margins.

What you need to know 

Do the new rules apply to you?
To find out whether these new rules apply to your business, HMRC has published a table of examples to help you decide.

Is your customer a business or a private consumer?
Usually a VAT registration number will determine whether your customer is a business or not. If they are not yet VAT registered and they are a business, other evidence will suffice e.g. a link to their business website or other commercial documents.

Find out and prove where your customer is located
Provide two pieces of non-contradictory evidence to prove where your customer is. Evidence can include the customer's billing address; their Internet Protocol (IP) address or the customer’s bank details. 

HMRC, showing empathy for UK micro-businesses, is making concessions to give micro-businesses time to adapt their websites. It has agreed that "UK micro-businesses that are below the current UK VAT registration threshold, and who register for the VAT Mini One Stop Shop (MOSS) may base their "customer location" VAT taxation and accounting decisions on information provided to them by their payment service provider," as the payment service providers already collect and hold two pieces of information about a customer’s location.

It's important to note that this applies only until 30 June 2015. From 30 June, HMRC will assume you have adequate systems in place to capture your own customer data.

What VAT rate applies to your service? 
You'll need to apply the correct VAT rate for your particular digital service/s.  Don’t assume because your service has a certain VAT rate here that the same rate will apply across the EU – it won’t. Some countries may apply reduced rates. The EC has published information relating to VAT rates and specific country rules.

Are your invoices compliant?
Find out if you will need to raise an invoice and what information needs to be on that invoice (again, different rules apply to different countries). Also consider whether your billing system can cope with the potential variations. 

Where to submit the information?
To account and report the VAT you have two options:
  1. VAT register in every EU country where your customers are present.
  2. Register for MOSS – the Mini One Stop Shop. Registration is voluntary. You can register for MOSS in one member state where your business has a fixed establishment e.g. if you are a UK business you will register at HMRC. The tax authority will collect the information and payment from you and distribute it to the relevant tax authority where your customer(s) is/are.

Post registration what happens?
Once registered, you will need to submit regular VAT MOSS returns.
  • VAT due under MOSS must be paid electronically by the 20th of the month following the end of the quarter
  • Make sure you have a clear audit trail, because the tax authorities in every EU country you sell to can inspect your sales records going back ten years
  • If you are under the UK VAT registration threshold, you can still register for the VAT MOSS to account for the VAT due in other EU countries, but you don’t need to account for and pay VAT on sales to your UK customers
  • Errors made in a MOSS return must be corrected by amending the original return – they cannot be included on a later return
The future 

If the teething problems are ironed out, the tax authorities will eventually look to introduce a similar system to cover VAT on the sale of goods online to consumers in other EU member states. With this uncertainty, many smaller businesses focused on selling goods may curtail any international expansion plans over the coming years until the landscape is more stable. It is good to prepare and plan the cost of compliance may be far-outweighed by the benefits of those international sales.

To find out more, please visit or email to [email protected] if you need help with your VAT MOSS registration and returns. 

Currencies Direct work with online retailers, selling worldwide on international marketplaces, and help them with international transfers. Our aim is to make it as easy as possible for you to manage your sales proceeds from multiple online marketplaces, so that you can grow faster & receive different currencies without being held back by unnecessary barriers.

For a free trial or to find out more about e-tailer Collection Accounts in the UK, EU and USA, contact the dedicated online retailer team on +44 (0) 20 7847 9269, email [email protected] or visit

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