VAT for digital business

The new VAT service started on 1 January 2015 for businesses supplying digital services in the EU. The 'Mini One Stop Shop' (MOSS) means that such businesses will not have to account and pay VAT separately in each country where they do business.

'Digital services' can include: broadcasting, telecoms and e-services such as apps, e-books, streaming, dating, journals, online newspapers/magazines and smartphone games.

Place of supply change

Currently, suppliers of digital services to non-business customers within the EU are subject to VAT in the member state where the supplier belongs. From 1 January 2015 the place of supply for VAT purposes changed to ensure that UK consumers of these services will pay UK VAT no matter where the supplier belongs.

In order that UK businesses supplying digital services do not have to register for VAT in every EU member state where they have customers, the optional VAT MOSS online service has been set up by HMRC. Other EU member states will be building their own systems.

HMRC said in a statement: 'The VAT MOSS is a tool that saves digital services suppliers from having to register for VAT in every member state in which they sell such services. Businesses with their main operation or headquarters in the UK will register with HMRC to use the service. They can register for the online service and then authorise an agent to act on their behalf'.

Between 27,000 and 42,000 UK businesses are expected to register with the service, most of them small and medium-sized enterprises. Registration for the service began in October 2014 and was made available to use from 1 January 2015.

For more information on how the change could affect your business and if MOSS is right for you, please contact us.

A Government guide can be found online here.