VAT rules on sales of digital services in the EU

Changes to the ‘VAT Mini One Stop Shop’

Brexit has necessitated a number of changes with regards to VAT on products, including digital products such as media, apps and online books.  Because different countries in the EU have different VAT registration processes, the Mini One Stop Shop scheme or (MOSS) was set up to avoid huge costs in compliance.

MOSS means that companies do not need to register with individual countries’ tax authorities, but instead only register for VAT and file VAT returns and payments in a single EU country.  The business must apply the MOSS scheme to all  of its consumer sales in the EU.

Changes following Brexit

Following Brexit however, since MOSS is an EU scheme, registration will no longer be available in the UK.  UK service providers selling to EU consumers must register in one of the EU countries to continue using MOSS under the Non Union scheme. This can be done in any EU state, however there are countries where this process is quicker.

When we were part of the EU, UK companies were able to make use of the €10,000/£8,818 threshold allowing businesses under that threshold to avoid registration.  Now that we have left the EU, this exemption is no longer available and therefore any sale of digital services to consumers in the EU may require a company to register for the Non Union VAT MOSS scheme.

For more information on rules, returns and exchange rates you can visit the government’s information page here:

https://www.gov.uk/government/collections/vat-moss-vat-on-sales-of-digital-services-in-the-eu

Or get in touch with your Swindells’ Partner who will be able to advise you further.