VAT MOSS stands for Mini One Stop Shop affecting digital services business providing services to consumers (B2C).
VAT MOSS means that when a business provides digital services to consumers, that business is responsible for charging VAT on the sale at the VAT rate that the buyer lives in.
Learn More: VAT MOSS Explained
Why Was VAT MOSS Introduced
Normally in the UK businesses are not required to register for VAT until their turnover reaches the VAT registration threshold, currently £85,000 for 2019/2020.
Then once they are registered the rate of VAT charged, if at all, is related to the place of supply.
VAT MOSS turns the place of supply rule on its head, meaning the VAT rate applicable is the country in which the consumer lives.
In recent years, with digital services taking off, there was a trend arising where businesses began to locate themselves in lower VAT rated countries.
That meant if they were VAT registered, the VAT added to their digital services gave them the competitive edge over other businesses located in different European countries.
What Businesses are Affected by VAT MOSS
VAT MOSS affects larger businesses provided digital services like radio & TV streaming and telecommunication services such as mobile phones or internet access.
Crucially for small and micro businesses VAT MOSS also covers what HMRC calls Electronically Supplied Services which is things like:
- downloadable training courses
- Music, games & films
- online magazines
- website supply or web hosting services
- distance maintenance of programmes and equipment
- supplies of software and software updates
- advertising space on a website
What Does Electronically Supplied Services Mean?
In working out whether your business needs to register for VAT MOSS you need to work out whether your digital service are electronically supplied.
An electronically supplied service is one which is delivered automatically over the internet with minimal or no human intervention.
- where the sale of the digital content is entirely automatic, for example, a consumer clicks the ‘Buy Now’ button on a website and either:
- the content downloads onto the consumer’s device
- the consumer receives an automated email containing the content
- where the sale of the digital content is essentially automatic, and the small amount of manual process involved doesn’t change the nature of the supply from an e-service
All e-services that are electronically supplied in the ways outlined above are digital services and are covered by the VAT rule change.
HMRC has provided a sample list of electronic supplies with guidance as to whether they would be covered by VAT MOSS or not.
Here is a copy:
|Covered by the rules|
|PDF document manually emailed by seller||Yes||No||No|
|PDF document automatically emailed by seller’s system||Yes||Yes||Yes|
|PDF document automatically downloaded from site||Yes||Yes||Yes|
|Stock photographs available for automatic download||Yes||Yes||Yes|
|Online course consisting of pre-recorded videos and downloadable PDFs||Yes||Yes||Yes|
|Online course consisting of pre-recorded videos and downloadable PDFs plus support from a live tutor||Yes||No||No|
|Individually commissioned content sent in digital form, for example, photographs, reports, medical results||Yes||No||No|
|Link to online content or download sent by manual email||Yes||Yes||Yes|