Breaking Down What MOSS Is
Do you supply services related to broadcasting, telecommunications and electronics to non-VAT registered customers in the EU? If you have been doing business without any problems in the past, you might want to prepare for some major headaches that are coming your way.
Since changes in the rules of theVAT place of supply will be implemented next year, you should be ready to comply.
Come1 January 2015, suppliers of digital services will be required to account for VAT in the country where their customers are located. As a company selling online and serving customers all over the EU, you would need to account for VAT in 28 countries, which can be time-consuming and confusing. Good thing the EU has introduced the Mini One-Stop Shop (MOSS).
What is Mini One-Stop Shop (MOSS)?
A MOSS VAT return enables suppliers and service providers to submit just one return each calendar quarter. Regardless if you do business in 5 or all 28 countries under the EU, you can register all non-taxable customers from different countries at one time. Think of it as debt consolidation, where you only need to worry about one account instead of 5 or more.
The only difference is that local VAT rules still apply. That is, for every EU country, the appropriate charges must be imposed and not a universal fee. Listing individual fees, however, may be the only time-consuming task you need to do prior to MOSS registration. Once that is all done, you only need to account for just one VAT return with payment.
Can foreign business owners use MOSS?
If you are a non-EU supplier, you can use MOSS to account for VAT on relevant services, just register in one EU country where relevant supplies will be accounted for. However, if your business is already VAT-registered outside the EU, you cannot use MOSS. You would have to separately register in all EU countries where your non-business customers are located.
If you are a non-EU supplier but have a fixed establishment in any of the Member States, you can register and use the ‘Union’ VAT MOSS online service. Otherwise, you would have to register under the ‘Non-Union’ VAT MOSS.
When does MOSS registration start?
Although changes to the rules on VAT place of supply will take effect on 1 January 2015, business owners can start the registration process on 20 October 2014. This should give you enough time to comply with the paperwork, especially if you supply to various countries in the EU. Consequent registrations will take effect from the beginning of each calendar quarter.
UK and foreign suppliers can register through HM Revenue and Custom’s online services. Make sure you register while the web page is still on its beta release, as it is still easier to use. Once improvements are made, the registration process could become more complicated.
It is important that you plan ahead, since complying with the MOSS requirements is just one of the many things you need to think about. Remember that you also need to identify your customer’s location, local rules and local rates, if you supply different Member States.
To avoid any problem with record-keeping, price adjustments and the like, you must allocate ample time to prepare for MOSS registration. You can cut down on time and effort by working with experts on UK VAT rules and regulations. This way, you would not have to worry too much on the VAT side, and you can focus on what really matters to your business.