Despite the further delay to Brexit, B2C suppliers of electronically supplied digital services still need to be aware of rules relating to the VAT MOSS (Mini One Stop Shop) scheme. As it currently stands, if we leave the EU on 31stJanuary without a deal, HMRC’s advice is that UK businesses will no longer be able to use the UK’s VAT MOSS service to declare the sale of digital services.
To give you some background on this, there are special rules surrounding B2C suppliers of electronically supplied digital services. The general rule is that the place of supply is where the supplier belongs. However, for B2C digital services, the place of supply is where the customer belongs. As a consumer cannot reverse charge a transaction, the supplier would normally register in the member state where they have supplied their digital services.
Whilst you can still choose to register in any member state where you have supplied digital services, the VAT MOSS scheme was introduced to simplify the process. Typically, this would result in one registration within the member state where the business is established to declare digital supplies made to consumers in all EU member states.
It’s important to note the threshold of £8,818, introduced in January 2019, where businesses could treat the place of supply as being the UK. Where EU digital supplies do not exceed this threshold this will no longer apply, meaning that VAT MOSS registration will be required as soon as the first sale is made in any EU member state.
Here is a typical VAT MOSS scenario you could be facing, if you are a B2C digital supplier:
You are a chef who has built up a successful website subscription service, which is supplied to individual customers. In return for the subscription payments, customers can sign-in to the website, download PDF recipe cards, watch pre-recorded content and receive other digital services. Your business has been successful in the UK for some time, but subscription sales within the EU have been steadily increasing. As a result, you have just breached the £8,818 VAT MOSS threshold. You registered for VAT MOSS last month, but you need to know what will happen if the UK leaves the EU without a deal on 31st January?
After Brexit, UK suppliers of B2C digital services will have two options:
- Register for VAT MOSS in any EU member state (only one registration will be required)
- VAT register in each member state where you supply digital services to consumers
Currently, VAT MOSS registration will be required by the 10th day of the month following your first EU sale after Brexit.
The final UK VAT MOSS return period runs up to the 31st March 2020. The return must be submitted by the 20th April 2020 and amendments can be made up until the 14th May 2020. We would advise you to begin the process of deciding on a suitable member state to register for VAT MOSS and to also appoint an appropriate tax representative in that member state.
If you would like more advice on the implications of Brexit and VAT MOSS, then please get in touch by emailing: firstname.lastname@example.org