In the event of an increasingly likely no deal Brexit, changes have been put in place to the existing MOSS (Mini One Stop Shop) arrangements. Details of MOSS here.
These intended changes will affect UK businesses which provide electronically supplied services such as cross-border telecommunication, television and radio broadcasting, or digital services to non-business (eg; individuals) recipients in the EU.
Such services include:
- website hosting
- supply of software
- access to databases
- downloading apps or music
- online gaming
- distance teaching
The existing threshold of £8818 pa introduced by Schedule 4A, para 15(1) of the VAT Act 1994 will be removed via SI2019/404.
This means that if there is a no deal Brexit UK businesses supplying such services will either be required to:
- register for Non-Union MOSS, or
- register for VAT in each EU Member State in which they made a sale (where the customer belongs),
MOSS Non-Union Scheme
A business may use the Non-Union scheme when it supplies cross-border electronically supplied services to consumers in all EU countries (including the EU country selected as the Member State of identification).
The EU countries where a business supplies services to are known as Member States of consumption.
Selecting a member state of identification
A business must designate a Member State of identification. This can be any EU country a business chooses. A business may change the member state of identification at a later date if it wants. Again, this can be any EU country a business chooses.
Registration
A business registers online via the Member State of identification’s portal.
VAT rules
A business will be allocated a VAT number by the EU country chosen to be the Member State of identification and charge VAT at the rate of the EU countries where its customers reside. The same invoicing rules as your Member State of identification must be used (although an invoice is not required in most countries when supplying services under the MOSS scheme).
VAT returns
A business must submit detailed online quarterly VAT returns within 20 days of the end of each return period. The information is then securely transferred from your Member State of identification to the relevant Member State of consumption.
VAT rates
VAT rates can be checked for the supply of telecommunications, broadcasting and electronically supplied services using the Tax Information Communication database.
For further information and to register for MOSS please see here.