MOSS VAT System FAQs

MOSS VAT System FAQs

Do the 2015 VAT changes affect my business?

The changes affect your business only if it is engaged in telecommunications, broadcasting or electronically supplied services (collectively “TBEs”) and it is offering these services in a Business to Consumer (“B2C”) scenario.

What has changed?

The changes concern the place of supply of TBEs offered on a B2C basis.  These changes can be summarised as follows:

Place of Supply
Before 1st Jan 2015 On/After 1st Jan 2015
EU to EU- TBEs Country of Supplier  Country of Customer*
(therefore VAT of the country of registration is applicable)  (therefore VAT of the MS of consumption is applicable)
EU to Non-EU- TBEs Country of Customer Country of Customer
(therefore no VAT would be applicable as service is consumed outside EU Borders) (therefore no VAT would be applicable as service is consumed outside EU Borders)
Non- EU to EU-Telecommunications Country of Supplier  Country of Customer*
(therefore VAT of the MS of consumption is applicable)
Non- EU to EU-Broadcasting Country of Supplier  Country of Customer*
(therefore VAT of the MS of consumption is applicable)
Non- EU to EU-Electronically Supplied Services Country of Customer Country of Customer
(therefore VAT of the Member State of Consumption is applicable consquently requiring Non- EU operator to Register on the MS of Customer) (therefore VAT of the Member State of Consumption is applicable consquently requiring Non- EU operator to Register on the MS of Customer)

*Denontes change in rules

Do the changes mean that I have to register for VAT in those member states where my customers are resident?

Registering for VAT in all the jurisdictions where you offer your services is one of the options.  However this may be a considerable administrative burden and the EU has come up with a simplification process known as the Mini One Stop Shop or MOSS. Through this optional system you can maintain one registration in the country where you are established, which will become the Member State of Identification (“MSI”). Sales and VAT due in all member states (except the MSI) will be reported and paid through the electronic system of MOSS to the MSI.  Domestic sales in the MSI will be reported though the normal domestic system.

So through this system I can net off any input tax credits I may have in the other Member States from any VAT due to those States?

No.  The MOSS system is designed to collect all the VAT due to the various Member States.  Input Tax incurred in Member States other than the MSI, may not be reclaimed through the MOSS but through those channels available before these changes. If you have regular considerable amounts of cross border input tax claims, you may decide not to opt in the MOSS system, and maintain the different registrations in those member states where your customers are established.

So, I can register for VAT and maintain a second VAT registration in that country where I have substantial claims for Input Tax, and report the rest through the MOSS – Right?

No, the MOSS system is and all in or an all-out system.  If you opt in the MOSS system you have to report all your relevant supplies and respective VAT through the MOSS system.  You cannot be selective for which Member States you use the MOSS.

I am not established in the EU, so I don’t need to worry about these rules – Right?

No.  The VAT changes can affect you even if you are not established within the EU. As explained in the answer to Q2, if you provide Telecommunication or Broadcasting services from outside the EU to EU resident consumers, then the place of supply of your services is now being considered to be where your customer is resident, which would therefore attract VAT of the country of residence of the customer. This has been brought in line with the provision of electronically supplied services by non-EU established business to EU resident consumers.  The place of supply of these services was already deemed to be the place where the customer was established before 1st January 2015.

I am not established in any Member State.  Does this mean I cannot use the MOSS?

The MOSS system is also available to non-EU established suppliers of TBEs.  In fact the MOSS system has two schemes the Union and Non-Union Scheme.  The Non-Union Scheme is the scheme which is available to those businesses which are established in a third country, but are making B2C supplies of TBEs within the European Union borders. In these cases the taxable person may choose to register for the non-Union Scheme in any Member State, making that state the MSI.  This Member State will provide the taxable person with an individual identification number in the following format – EUxxxyyyyyz).

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