VAT MOSS Registration

Discussions
#1

I’ve had discussions on here before about VAT and the upcoming changes. I was under the impression we could register for the MOSS from 1st October, seems it is now 20th Oct and registration will be accessed via the HMRC online services, lucky us.

https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop

There is more information available now here: https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop

Enjoy.

#2

VAT. Eugh. One of my least favourite things about running a business.

Thanks for the heads up. I will try to find the motivation to read it.

#3

I’m fairly confused after reading that! I need to read it again after more coffee. But my understanding is:

B2C customers used to be taxed according to the location of the seller. Now they will be taxed according to the location of the buyer from 01-Apr-15. But only for electronic goods.

I have to have 2 items of proof of where the consumer lives (e.g. address and IP) and I have to keep this for 10 years.

If my customer buys through Avangate, then Avangate are going to handle all of this for me. Hooray!

There is no change for B2B sales of electronic goods I sell direct. If they are in the UK, I charge them 20% VAT. If they are in the EU (but not in the UK) I charge them ex VAT under reverse charge.

There is no change for in-person consulting I sell direct. I charge them UK VAT rate if they are in the EU.

I don’t have to declare digital goods sales on the EC sales list if they are declated using MOSS. But I will still have to declare non-digital sales (e.g. consulting).

So if I sell them a licence key and a CD, do I have to charge UK rate VAT on the CD and buyer rate VAT on the licence?

Where does MOSS fit in? Do I have to register for MOSS if I am making B2C sales? Should I register for MOSS if I am only making B2B sales?

It is rare that I make B2C sales direct these days. Maybe I just won’t sell to consumers direct.

Would love some clarification on the above.

#4

BTW How do I get ‘2 items of proof of location’ when someone pays me via PayPal? I don’t get the IP (do I?) and I don’t always get the address.

#5

Not surprised it has been delayed. I’ve asked a few questions of HMRC about this as well and still don’t understand it properly. I asked about how to account for VAT in currencies other than Sterling (since the invoice needs to show a Sterling amount) and the guidance for MOSS says:

your VAT MOSS return will need to show the billed currency amount converted into the MSI currency using the rate published by the European Central Bank (ECB) on the last working day of the calendar quarter

I use the rates published in advance by HMRC currently, but that isn’t going to work with the above and no one is going to want to wait until the end of the quarter to receive an invoice. I asked HMRC about this:

“It is currently unclear as to whether the HMRC published rates will change with the new rules.”

Bummer. Need to ask them again in a month or two I guess.

@Andy: Now they will be taxed according to the location of the buyer from 01-Apr-15

1st January 2015 is it not?

And just read this:

You’ll need to raise and issue VAT invoices in accordance with the published requirements of each member state where your consumer is located.

Oh grief. This is HMRC’s guidelines for UK VAT invoices. I guess I need to find similar documents for all other 27 member states and make sure I conform.

Unless you have an accounts dept. this doesn’t look like it is going to be particularly trivial to make sure all the t’s are crossed and the i’s dotted.

Allan

#6

I believe the MOSS is so that you do not have to register and comply in each member state. So there are two options, register with MOSS OR comply in each state. That’s what I was told earlier in the year, may have all changed of course.

I haven’t yet figured it all out for our business, although when we did a bunch of work on our payment systems earlier in the year we put in place the flexibility to deal with the nonsense whichever way it fell. We’re about to launch the beta of our new product so I’ve not properly delved into all of this yet. Once I do I’ll write up what I find and how we are dealing with it as it might be helpful to others here.

#7

Interesting to hear how you get on with it. I’m off to see my account later this week and will ask them about it and if they have any advice.

My reading of the point about the invoice compliance, was that if you register for MOSS then you don’t need to register for VAT in every member state, but you would still need to meet their requirements for invoices. Might be clean wrong though! I suspect they will all be very similar, but in the same way as knowing what VAT rate to apply for every member state, I really don’t want to spend the time reading through the guidance for every member state. And then keep on top of it as it changes…

Allan

#8

Yes, my mistake. I think the first compliant VAT returns need to be made on 01-Apr-15?

#9

I am hoping that my payment processor (Avangate) is going to do all the heavy lifting for me! They have confirmed in an email to me that they will be compliant with the new VAT regs.

#10

When I read this stuff, I am yet again grateful that I use a third party payment processor (FastSpring) who handles EU VAT issues for me.

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#11

I think it is potentially worse than I thought and if I’m right there is a horrible implication for anyone in the UK who currently is not registered for VAT but sells to EU countries.

Here in the UK we have a high VAT registration threshold. Many freelancers who also sell some digital product (an app or an ebook) are not VAT registered, they don’t need to be. So they don’t need to worry about VAT when they sell their ebooks - I’m in this category when I’m being me selling an ebook, as opposed to my company (a separate entity) selling Perch.

However, other EU countries have a registration threshold of 0. You have to register. So if I sell my ebook to those countries I have to charge VAT and pay it to those countries OR register for the MOSS here in the UK. I can’t register for the MOSS unless I’m VAT registered in the UK, meaning that I then have to charge VAT and my ebook/app or whatever is more expensive or I lose a chunk of profit if I just swallow it.

In my situation what I will probably do is turn edgeofmyseat.com into the publisher of my ebooks, that way I don’t have to register and we’re already setup to deal with VAT.

#12

I certainly interpreted it as VAT is no longer optional under the threshold. Not ideal - at least before you had the option of launching on the cheap and only adding VAT once you saw your product was selling, but based on what my accountant has quoted me, this will add quite a bit to my startup and running costs.

#13

Ugh. That’s really nasty.

#14

So I wrote it all up: http://rachelandrew.co.uk/archives/2014/10/13/the-horrible-implications-of-the-eu-vat-place-of-supply-change/

I have also set up a GitHub pages site to collect resources and help. Please share anything you know. If you’ve been told that providers you use have you covered, that would be great stuff to add as if people can shift delivery to a provider and save themselves a lot of hassle that is probably a good route.

Rachel (wearing my VAT prophet of doom hat)

#15

Seems like this might force a lot of people to move from lightweight payment processors (such as Stripe) to ‘full fat’ payment processors such as Avangate and FastSpring. I’m surprised the latter aren’t shouting about it more.

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#16

Apologies if everyone realised this already, but it seems it’s not just the EU - it actually appears to apply to anyone selling to EU countries, no matter where they are - ie it also applies to people in the US who sell digital goods to the EU:

http://www.forbes.com/sites/janetnovack/2014/05/15/european-vat-10-things-online-sellers-need-to-know-about-taxes-on-digital-goods-and-services/

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#18

Our business is going to be affected by this new EU law, it became immediately apparent to us that there was very little help out there in determining from a programming perspective where a customer resides so we’ve created our own solution born out of necessity which brings together a raft of essential VAT functions into one easy to use API, https://vatapi.com it will help our business comply so may just help yours too.

#19

What I wonder is how they are going to enforce VAT registration from companies outside the EU.
In other words: What keeps me from founding a LLC in Delaware and go offshore?

#20

US companies selling into the EU are still supposed to collect VAT. But I guess it is hard for the EU to enforce if they are in the US. But if the VAT authorities found out you owned the company and lived in the EU, then I think you would be in big trouble for tax evasion!

The UK VAT authorities have a lot of power. I understand they can come and kick your door in and take away your computers without even needing a warrant (the British Police would need a warrant from a judge to do this). Do not mess with the VAT man!

#21

BTW there are all sorts of schemes where you can register your company in other countries to try to reduce the tax you pay. These might save you paying 20% VAT (legally or otherwise), but I think these open you up to the very real possibility that some local representative is going to disappear with 100% of your money.