cheap accountants - VAT moss

VAT MOSS is an aspect of the VAT regime which applies to digital products sold within the EU. The requirements of VAT MOSS are different to the usual VAT requirements and this will be explained further below. It is important to consider the impact of VAT MOSS if you are a supplier of digital products as this scheme may result in different VAT rates being levied on your customers. Those impacted are quite often creative individuals who operate in the digital sphere and sell related products online.

What are digital products?

Digital products include the following:

1. Images or text, which can be as simple as a PDF file or a screensaver

2. Online magazines

3. The supply of a website or hosting services

4. The online maintenance of programmes and equipment

5. The supply of software and even software updates or patches

6. Online advertising

If you supply any of the above to an end-user consumer then you will be impacted by VAT MOSS.

How does VAT MOSS work?

This scheme was introduced on 1 January 2015 and it effectively means that VAT must be charged at the place of purchase rather than the place of supply. This means that the VAT rate is determined by the rate charged by the country in which your customer purchases your product. So you will have to charge your customer local VAT based on where they used the service.

This has numerous impacts for companies who sell digital products in a number of countries across the EU as each country has a different rate of VAT or local sales tax.

What do I do next?

You might already be asking yourself if you need to register for VAT in each of the EU countries you sell to, the short answer is no you don’t need to do this. HMRC offer the VAT MOSS (which stands for VAT Mini One Stop Shop) scheme so you don’t need to register in each different country. You will simply report your sales and VAT collected to VAT instead and then pay HMRC the VAT due.

It is worth noting that you will still be required to charge this local rate of VAT even if you are not registered for VAT within the UK. This means that a number of UK companies may be forced to comply with VAT rules when this was previously optional if your turnover was beneath the UK VAT registration threshold.

Sales to businesses and sales of physical or tangible products are not affected by the VAT MOSS rules.