The Mini-One-Stop-Shop regime (MOSS) is an online service that allows EU businesses selling digital services to consumers (B-C) in other EU member states to report and pay VAT via a single return and payment in their home Member State. Businesses not established in the EU can also use the system by registering in an EU member state (non-Union MOSS). Alternatively, a business can register in each EU Member State where sales are made. You can find further information about registering for VAT in EU member states on the EU Commission website https://ec.europa.eu/taxation_customs/business/vat/eu-country-specific-information-vat_en
It is difficult to predict the outcome of present talks but it is likely that after Brexit, as the UK will no longer be part of the EU, different rules will apply and the UK will no longer be part of the Union MOSS scheme. UK businesses will then need to register for non-Union MOSS in one of the remaining member states.
Following a period of consultation and agreement at EU level, changes are being introduced with effect from 1 January 2019, which are intended to ease the administrative burden on businesses. Pending implementation of the post-Brexit treatment, these changes may benefit your client so that she no longer has to complete MOSS returns.
The legislation in the form of two statutory instruments was laid before Parliament on 19 November 2018. This will make two changes to the rules for businesses making sales of digital services to consumers across the EU.
Firstly, for EU established businesses, it will introduce a €10,000 threshold (sterling equivalent of £8,818) for total B-C sales of digital services to the EU in a year. This change means that businesses below this threshold will, unless they elect formally to do otherwise, treat the supply as a domestic supply made in the UK and charge UK VAT, accounting for VAT on their UK return rather than completing MOSS.
If your client’s sales to unregistered customers in other member states are below this threshold, she needs to consider if these sales when added to her UK turnover take her over the UK VAT registration threshold of £85000. If so, she will begin to account for her UK and EU B-C supplies on her UK VAT return. Conversely, if her total UK turnover, when these B-C supplies to the EU are taken into account, is still below the UK threshold, she could deregister from VAT.
If she is no longer required to submit MOSS returns because her B-C supplies are below the new threshold she can deregister from MOSS. The following link takes you to guidance on how to cancel a MOSS registration: https://www.gov.uk/guidance/register-and-use-the-vat-mini-one-stop-shop#if-you-want-to-leave-the-scheme
It is important to note that while this threshold has been introduced for EU business, there is still no threshold for businesses established outside the EU and they will be required to account for VAT on their digital supplies regardless of the value of the sales.
The second change will give non-EU businesses registered for VAT in the EU for other purposes the option to use a MOSS scheme to account for VAT on their sales of digital services to consumers in EU member states. These businesses are currently excluded from the MOSS regime.
The second change will not affect your client, as I understand she is not VAT registered in any other member state. However, as the Directive that led to this change will be implemented in all member states it follows that other UK suppliers who are already registered in the member states for other reasons will be able to use non-Union MOSS after Brexit.
The following link takes you to updated information on Gov.UK:
https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers
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