Businesses supplying digital services – broadcasting, telecoms and e-services such as smartphone games and other apps – across the European Union will be able to use a one-stop VAT service from January.
Using the VAT Mini One Stop Shop, or VAT MOSS, online service will mean that they do not have to pay the tax separately in each country where they do business.
Businesses affected include those selling apps and smartphone games, e-books, streaming services for sports, film, TV and music, radio broadcasting, dating services and journals, newspapers and magazines subscribed to electronically.
From 1 January next year, the place of supply – and therefore the place of taxation – for business-to-consumer suppliers of digital services will change to the place where the customer who receives the service lives or is located.
So that UK businesses supplying digital services do not have to register for VAT in every EU member state where they have customers, HM Revenue & Customs (HMRC) has set up VAT MOSS as an optional service. Other EU member states will be building their own systems.
Sally Beggs, deputy director indirect tax at HMRC, said on 9 June: “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-to-medium-sized enterprises (SMEs).
These changes, under the EU VAT directive, must be implemented by member states before the end of 2014. Businesses will be able to register for VAT MOSS from October 2014 and it will be available to use from 1 January 2015.