With the growth of digital companies in the common market and the far reaching geographical capabilities these companies now hold, it is becoming more and more important that businesses in the digital and media industries are aware of the VAT Mini One Stop Shop scheme to ensure they comply with European VAT legislation.

What is the VAT Mini One Stop Shop scheme?

The VAT Mini One Stop Shop scheme (commonly referred to as VAT MOSS) was introduced by HMRC to allow businesses who provided digital services across the European Union to register for one blanket VAT scheme rather than having to individually register for VAT in each EU member state in which services are provided. Digital services which fall under this category include:

  • Website hosting
  • Supply of online software
  • Applications and music available for download
  • Online games which can be digitally downloaded and played.

Similar to the UK VAT return, the VAT MOSS return needs to be completed and filed quarterly with the amount of VAT charged to each EU member state disclosed separately.

Person examining VAT

When do I need to register?

The turnover threshold for VAT MOSS is reviewed annually on a calendar basis (January-December). The threshold for registration is €10,000 which translates to £8,818. Once you have exceeded this threshold, you will need to register for VAT MOSS and UK VAT (if you have not done so already). Even if you are below the £85,000 turnover threshold for UK VAT you are still required to register and file nil VAT returns on a quarterly basis.

You are required to register for VAT MOSS personally and this cannot be completed by your accountant. Once registered however your accountant can complete and submit your VAT MOSS return on your behalf.

Once you have passed this threshold, you will be deemed as registered from the 10th day following your first digital service sale in that calendar year. On completion of the first VAT MOSS return, you will be required to include any of these sales on the VAT MOSS return to this point in time even if they are dated before the filing quarter.

When do I not need to register? 

The digital services which are to be included within your VAT MOSS calculation are only from digital sales directly between your business and a customer in an EU member state. In situations where a third-party intermediary not based in the EU is used such as Steam, Twitch or Microsoft you will not need to worry about registering for VAT MOSS as the intermediary is responsible for accounting for the relevant VAT. This is because you are invoicing and receiving funds from the intermediary who may be based in the USA or the UK and so would not fall in the geographical region susceptible to VAT.

Crowdfunding

On receipt of pledges through crowdfunding websites such as Kickstarter, it is important to determine what the customer will receive as a result of their pledge as this is deemed to be a direct business to customer supply. In instances where customers are receiving a digital product as a result of their investment such as a digital version of a video game or early access to a new track by an artist then this will be deemed a Vatable supply and, if this customer is based in an EU member state, this will fall under the jurisdiction of VAT MOSS. It is important in instances where crowdfunding is utilised to monitor the location of the customers and also keep a record of what is being received as a return of their investment. When there is either no return (and so is seen as a donation) or the product provided is a physical product such as merchandise with no digital supply then these will not need to be included in the VAT MOSS threshold calculation.

Author: Sam Baldwin, Business Services Assistant Manager, Plus Accounting

Contact Sam

Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site

Date published: 22 October 2020