The basics of VAT MOSS
What is VAT MOSS?
VAT MOSS is a VAT mini one stop shop and is used to report and pay VAT which becomes due when one sells digital services to consumers within the European Union.
Cases in which VAT MOSS Scheme works
The VAT MOSS scheme works in the following two scenarios. The first is for businesses based within the European Union including the UK and the second is for businesses based outside the European Union. Let’s look at both these types in detail.
VAT MOSS scheme for businesses based in EU including UK
Union VAT MOSS comes into play when the business is based in UK or it is a non EU business which has a fixed establishment in UK. The question that arises is what is considered a fixed establishment. There is no set definition of a fixed establishment but the test of a fixed establishment is that it should be any establishment other than a business establishment which is used to carry out the activities of the organization and which has a permanent presence both in terms of human and technical resources necessary for receiving or making the supplies of the services in question. Union VAT MOSS also comes into play when the business is registered for UK VAT or when the business supplies digital services to EU consumers. The next important question is whether the US MOSS scheme will be applicable when the turnover of the business is below the UK VAT threshold. The answer is yes. Even in this case the person concerned will need to register for UK VAT and use the Union VAT MOSS scheme. The process in this case is that the first step should be to register for VAT and then when you are asked to search for a business activity as part of VAT registration then enter ‘digital services’ and select ‘supplies of digital services’ (below UK VAT threshold) under the VAT MOSS arrangements. You will only need to furnish nil VAT returns when you are using your UK VAT registration only so that you are able to use the VAT MOSS scheme.
Non union VAT MOSS
Now let’s talk about Non-Union VAT MOSS. In this case the business should be supplying digital services to EU consumers but the business must not be based in the EU and should not have a fixed or business establishment in the EU.
How UK VAT MOSS works?
How UK VAT MOSS works is that you have to send only a single VAT MOSS return in each calendar quarter after which you will not be needed to declare a VAT due separately for each EU member state.
Can an agent register for you?
The answer is no. You have to register for the scheme yourself and once registered then you can authorize an agent to submit your VAT MOSS returns. The agent will need to sign himself or herself up for VAT MOSS for agents online service.
I would like to conclude with information about deadlines and deregistration. The deadline for registration is the 10th day of the month after your first sale of digital service. Lastly, the scheme is optional and you can deregister. For de-registering you have to inform HMRC about the same at least 15 days before the end of the quarter in which you want to leave and then you cannot rejoin the scheme for 2 calendar quarters in any member state.