VAT Mini One Stop Shop changes from 1 January 2019

We’d like to remind readers about two changes to the VAT Mini One Stop Shop (MOSS) rules from 1 January 2019. The first of these may be of benefit to businesses with small values of electronic sales to consumers in other EU countries. 

The changes are being made throughout the EU. The purpose is to ease the administrative burden on businesses making sales of digital services, and to allow a group of businesses currently excluded from the MOSS scheme to access it. 

UK businesses

The first change introduces a de minimis threshold of £8,818 excluding VAT (equivalent to €10,000) to the place of supply rules for total annual supplies to the EU of digital services. This change means businesses will only be subject to the VAT rules of their home country if their relevant sales across the EU in a year (and the preceding year) fall below this threshold. If the total taxable turnover of the business is below the UK VAT registration threshold, it will be able to de-register from VAT. Businesses can continue to apply the current rules if they so choose. 

For businesses established in the UK, the rules only apply where a UK business: 

  • charges consumers for digital services (digital services given free of charge are not affected by the rules)
  • supplies services from the UK to private consumers in another EU member state
  • has EU consumers that are not VAT-registered businesses, and
  • does not sell digital services through a third-party platform or marketplace (not your own website) - read digital platforms and accounting for VAT for more information. 

For cross-border supplies of digital services on a business-to-consumer basis, the place of supply will be the UK on or after 1 January 2019 if: 

  • the business is not established in any other EU member state, and
  • the total value of the cross-border digital sales is less than £8,818 in the current year and previous calendar year. 

The place of supply of any digital services made before 1 January 2019 falls under the present rule of being where the consumer is located. This rule continues to apply where the value of affected supplies exceeds the new de minimis threshold. 

From 1 January 2019, UK businesses under the digital services threshold can elect to treat the place of supply as where the consumer is located. If this applies, you must continue to apply this treatment from the day you make the election until the end of that calendar year, and the next two calendar years. 

You need to tell HMRC about any election within 30 days of the date of the election. You should include: 

  • your business name
  • your business address
  • the date your election was made 

Send your elections by email to: vat2015.contact@hmrc.gsi.gov.uk, or in writing to:

HM Revenue and Customs - VAT Written Enquiries Team Alexander House 21 Victoria Avenue Southend-On-Sea SS99 1BD United Kingdom 

Non-EU businesses

The second change concerns non-EU businesses that are registered for VAT for other purposes. They will be able to use the MOSS scheme to account for VAT on sales of digital services to consumers in EU member states, having previously been excluded from using MOSS. 

If you are based outside the EU and supply digital services to consumers in the EU, the place of supply will be where the consumer is located. Such businesses will need to: 

Note that the £8,818 digital services threshold does not apply to non-EU businesses, which will have to account for VAT on supplies regardless of the total value of sales.

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