EU VAT Update (MOSS)

The rules determining the “place of supply” for telecommunications, broadcasting and electronically supplied services (TBES) significantly changed on 1 January 2015.

Further to our previous articles on the subject, the rules determining the “place of supply” for telecommunications, broadcasting and electronically supplied services (TBES) significantly changed on 1 January 2015. These changes affect those businesses providing services to individual consumers (B2C sales) as opposed to those making sales to other businesses (B2B sales).

What Do The Changes Mean?

The changes mean that businesses making sales to individual consumers across Europe should now charge Value Added Tax (VAT) at the local rate where the customer is based and ensure that the VAT collected is paid across to the relevant local tax authority. There is no de minimis threshold for avoiding this obligation.

Mini One Stop Shop

Businesses must therefore either register for VAT in each country where supplies are made (up to 27 EU states), or register under an EU wide scheme known as the Mini One Stop Shop (MOSS). There are technically two MOSS schemes: the “Union” MOSS registration for businesses with an EU VAT registration and a “non-Union” registration for those businesses not registered for VAT.

Under the MOSS, businesses register in a single EU state and report all VAT charged on sales to customers located across Europe on a single filing. Businesses without an existing VAT registration can choose in which state they wish to register under the “non-Union” MOSS scheme.

Reclaiming

It should be noted that VAT incurred by businesses on purchases (“input VAT”) or bringing goods into the EU (“import VAT”) cannot be reclaimed under a MOSS registration and must be reclaimed via existing means.

What Next?

Registration for the MOSS can simplify VAT affairs for a business, but given the scheme is in its infancy, it is advisable to seek professional guidance around applying for this simplified reporting mechanism.

For further information, please contact Sean O’Sullivan (below).

Sean O'Sullivan
Tax Manager
+44 (0)20 7430 5966
sosullivan@fitzandlaw.com

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