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EU MOSS VAT Returns – What Happens Post BREXIT?

Indirect Tax Matters November 2020

“MOSS”, the Mini One Stop Shop, was introduced with the aim of reducing the administrative burden for businesses engaged in the supply of telecommunications, broadcasting and electronically supplied services to non-taxable customers, generally private consumers, in the EU.

Prior to MOSS a business could have had a VAT registration obligation in multiple EU jurisdictions, by opting to use MOSS a business can report sales for all EU jurisdictions via a single quarterly return made to one Member State. There are currently two types of MOSS scheme, one for businesses established within the EU and the second for those established elsewhere, both relate to supplies made to consumers within the EU and are very similar. Businesses do have to follow certain rules, such as sourcing and retaining evidence regarding where the customer is located to determine the country where tax is due.

As the UK is leaving the EU businesses currently using MOSS need to consider the impact on their existing MOSS registration and reporting obligations in respect of sales to both EU and UK customers. This article summarises the position for both UK and non UK businesses that are registered for MOSS in the UK under the EU MOSS or Non EU MOSS schemes respectively. We also include high level details on the UK VAT position for non-UK (both EU & non EU) resident businesses that provide electronically supplied services (ESS) to UK customers, following the end of the Brexit transitional period (on 31 December 2020).

UK Business with UK MOSS registration

One of the rules for the MOSS scheme is that if your business is established in the EU your MOSS registration should be in the EU Member State of establishment. Therefore all UK established businesses should be currently registered for the Union MOSS scheme in the UK. From 1 January 2021, the UK will no longer operate the MOSS scheme to account for VAT on B2C supplies of digital services.

The expectation is that businesses registered in the UK in respect of MOSS (both union and non-union) will be automatically deregistered, with effect from 1 January 2021. UK businesses will still be obliged to report sales to EU customers and must therefore be registered for MOSS in a new member state, using the Non-Union MOSS scheme, by the 10th day of the month following the first sale to an EU customer. For example, if an EU sale is made during January 2021, the business must be registered for MOSS in a new Member State by 10 February 2021. Sales made by UK business to UK customers will continue to be reported in their UK VAT returns.

Non UK established business with UK MOSS registration

The non-Union MOSS scheme applies to any person not established within the EU supplying TBE services to a non-taxable person who is established in an EU Member State or has their permanent address or usually resides in a Member State.

Businesses outside the EU can choose any Member State to be their ‘country of identification’ (registration) for the non Union MOSS scheme. New rules introduced in 2019 allow such persons not established within the EU, but who may already have a VAT registration in some Member States, still choose the country in which they wish to register in for MOSS purposes.

Similar to above, non UK businesses who are currently accounting for sales to EU consumers through a UK MOSS registration will, we expect, be deregistered for UK MOSS with effect from the end of December 2020. These businesses must therefore choose a new EU country in which to register for MOSS. Again such businesses must be registered for MOSS in a new member state by the 10th day of the month following the first sale to an EU customer (i.e. if an EU sale is made during January 2021, it must be registered for MOSS in a new Member State by 10 February 2021).

Additionally, instead of using MOSS, all businesses (EU and non EU) suppling services to customers in the UK will be required to account for UK VAT due on sales to UK customers through a standard non-resident UK VAT registration (noting the threshold for B2C digital services is nil). This application should be submitted to HMRC’s Non-Established Taxable Persons (NETPU) team at HMRC.

At this stage, there is no indication that HMRC will opt for a simplified VAT registration process. The deadline for notifying HMRC of a liability to be registered is within 30 days of:

  1. the date that the person makes taxable supplies; or (if earlier);
  2. the date on which there are reasonable ground for believing that the person will make taxable supplies in the period of 30 days then beginning.

Our understanding is that it should be sufficient to submit the NETPU VAT registration application within 30 days of the date on which the transitional period ends.

UK MOSS access

The MOSS scheme will continue to operate in the UK until 31 December 2020, and sales made during the period must be included in the final MOSS return due to be filed by 20 January 2021. The UK’s VAT MOSS system can still be accessed after this date to:

  1. amend returns until 11pm on 20 January 2022;
  2. update registration details until 31 December 2024; and
  3. view previous returns.

MOSS in Ireland

Ireland is an obvious choice to relocate your UK MOSS registration to in terms of Irish Revenue being listed as the most effective EU country in which to pay taxes and the fourth most effective worldwide, it is also at the top of the EU league table for ease of paying taxes, according to the 2020 PwC-World Bank Paying Taxes report. Another key attribute is the fact that English is natively used in Ireland and the Revenue Online Systems are very easy to use.

We have developed an excellent relationship with the MOSS team in Irish Revenue and would be very happy to assist with registrations and compliance. If you need assistance with UK VAT implications we are also in a position to assist with referrals to the appropriate Deloitte team to assist.

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