Digital supplies are within non EU VAT MOSS sphere

Much has been said about the impact on the movement of goods post 31 December 2020.

Who hasn’t heard about the lorry carparks on the motorways in Kent? We have a number of really useful insights on this topic.

However, less is being said about the impact on businesses who are selling digital services, because it is often assumed there is no impact, which is not the case. 

What are digital services? 

If you supply any of the following you may be making supplies of digital services:

• Telecommunication, television and radio broadcasts, 
• Images, e-books, pdfs, music, films, games supplied electronically.
• Website supply or web hosting
• Software or software updates
• Advertising on websites

Currently, if you supply any of these services to consumers in the EU and you sell less than £8,818 in a calendar year, then there is no requirement for any additional VAT reporting or registration.

Exceed that limit and you need to register for UK MOSS - a single VAT return filed with HMRC in the UK and allowing the business to account for VAT at the rate where the consumer is based. 

From 1 January 2021, that threshold has gone and any person based in the UK who makes a supply of digital supplies to an EU consumer will be liable to either:

• Register for VAT in the member state where the consumer customer belongs, or
• Register for the VAT Non-Union MOSS Scheme. 

If you are selling to multiple member states, registering in each country will be a significant burden.

So, instead, the Non-Union MOSS works the same way as the MOSS, but you will need to pick a continuing EU member state in which to register  and pay over the required VAT. 

Not only that, but the Non-Union MOSS must be applied for from the 10th of the month following the month of your first sale to an EU consumer.

Therefore, if you sell an e-book online to an individual in the EU on 31 January 2021, you will be liable to register for the Non-Union MOSS by 10 February.

For more specific information, check out our International Advisory Hub