UK Mini One Stop Shop (MOSS) and Brexit: What next for digital businesses?
Brexit is having a major impact on digital businesses both in the UK making EU supplies and outside, making UK supplied, particularly when it comes to applying the correct VAT treatment.
The Brexit transition period applies until 31 December 2020. This means the EU's VAT Mini One Stop Shop (MOSS) will remain available until this date.
After 31 December 2020, there will be no UK VAT MOSS system. It is essential that digital services businesses prepare now
Digital businesses registered with UK VAT MOSS
The VAT MOSS service is used to declare VAT due on sales to EU-based customers and to remit the VAT to the relevant tax authority. VAT MOSS is a special registration scheme which was introduced in January 2015 when the EU amended its rules so that cross-border B2C digital supplies were to be taxed in the member state of consumption. The MOSS allows a taxable person to submit a single return for each calendar quarter to the Member State of Identification (in this case the UK).
As the transitional period ends on 31 December 2020, digital businesses will no longer be able to use the UK’s VAT MOSS service.
HMRC has issued guidance on what to do. This includes the following:
The final return period for the UK’s VAT MOSS system will be the period ending 31 December 2020. [Note that digital businesses registered with UK VAT MOSS should only include sales made before 1 January 2021, in their final return]. According to HMRC guidance, these businesses will be able to use the UK’s VAT MOSS system to:
- submit their final return by 20 January 2021
- amend their returns until 11pm on 20 January 2022
- update their registration details until 31 December 2024
- view their previous returns
For sales made after the transitional period, these businesses will need to register for either:
- VAT MOSS in any EU member state (effectively changing the MOSS identification country) by the 10th following the month of their first sale (i.e. February 10 if sales in January) to an EU customer (this registration cannot be made before 1 January 2021), or
- Register for VAT in each EU member state where they sell digital services to consumers, noting that the digital services sales threshold will no longer apply.
Digital businesses selling into the UK
The UK Government has provided guidance in this scenario stating: “You must register and pay VAT in the UK as soon as you supply any digital services to a UK consumer.”
It is important to note that the existing VAT MOSS threshold of €10,000 would not apply as the UK is not an EU member state. More information is available here.
4 Eyes Ltd provides VAT registration and UK VAT agency services to non-UK businesses requiring a UK VAT registration. We are part of a leading EU VAT network and our partners can assist with your VAT registration and representation throughout the EU. Please contact us if your business will be affected by these changes.
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