VAT MOSS and turnover

From 1st January 2015 there are new place of supply rules for value added tax (VAT) on the supply of digital services by businesses to consumers in the EU. VAT on digital services will be paid in the consumer’s country, not the supplier’s country. It will be charged at the rate that applies in the consumer’s country.

There are essentially 3 rules that dictate whether the new rules apply to you:

1. Do you supply “digital services”?
2. Do you supply to consumers (i.e. not other businesses)
3. Are your consumers located outside of the UK, but within the EU?

If you answered “yes” to all 3 questions, then the new rules may apply to you and unfortunately, there are no exceptions. So even though your turnover may be very low, you will still need to adhere to the new rules.

The only concession HMRC have announced is that VAT only needs to be charged on the EU sales; it does not need to be operated on the UK sales provided your turnover is below the UK VAT registration threshold (currently £81,000).

If you’re struggling to get to grips with the new rules, your local TaxAssist Accountant would be happy to discuss this further with you. Or alternatively, they could manage your VAT affairs for you. 

Date published 2 Jan 2015

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.