If you are selling digital downloads or online services, and you sell to EU countries, you are likely to have to register for VAT moss even if you do not meet the UK VAT threshold, so what is VAT moss?
So what is VAT MOSS?
VAT MOSS stands for Value Added Tax Mini One Stop Shop. VAT (value added tax) is a normal requirement for businesses when they sell domestically. Normally, business must meet a threshold of sales to be required to register and charge VAT. Therefore, if you sell under £85,000 in the UK you need not register for VAT and will not have to charge VAT.
It will surprise the vast majority of businesses who sell and deliver online to hear that they need to register for VAT MOSS Mini One Stop Shop regardless of turnover.
- Digital Guides
- Audiobooks
- Digital Courses
- Games which are delivered by Download
- Logos electronically
- Schematics
- Videos delivered by download
- Online delivered projects
- and the list keeps growing
Introduced in 2015, this scheme aims to simplify VAT when selling in the EU, the alternative would be registering for VAT in each individual country. It means that you only have to pay VAT to HMRC and not the individual EU countries.
This is aimed specifically at those who sell business to consumer. Therefore if someone in Germany buys your product you need to send a return to HMRC stating how much VAT you should have charged. You would then pay HMRC the money so they can send it to the German tax authorities.
Thresholds for VAT MOSS
You must register for VAT moss if you meet the following criteria:
- The digital supplies threshold is £8,818
- Business to consumer
- Not a Hobby/interest business – see here
- Deliver digitally
How to register for VAT MOSS?
To register for VAT MOSS you need to be VAT registered in the UK. After you have registered for VAT you need to register for VAT moss.
If you are below the threshold for UK VAT then you will need to submit Nil VAT returns quarterly. You will also not be required to register for Making Tax Digital if you are below the threshold.
How do I pay VAT moss?
You will have to submit four VAT MOSS returns a year and these are set dates:
- 20 April for the quarter ending 31 March
- 20 July for the quarter ending 30 June
- 20 October for the quarter ending 30 September
- 20 January for the quarter ending 31 December
You need to supply a list of sales including information on VAT rate and country consumer purchased from. HMRC have provided a template for submissions and this can be found here.
The information is simple but you need to ensure that you capture the relevant information when selling digital items. Specialist providers like SendOwl, EasyDigital Downloads, Shopify and Sellfly should have downloadable reports for you to use.
Once you have completed your VAT moss return you will need to pay on the same day as the deadline for the returns themselves. It is always best practice to pay HMRC once you submit the return.
Can I reclaim VAT with VAT moss?
If you do not pay VAT on your UK sales then you cannot reclaim VAT on purchases made for these items. However, if you purchase items and sell to EU countries you can claim VAT. Instead of doing a nil VAT return you will have to enter purchase VAT incurred so you can reclaim. This is not done on the VAT moss return itself.
Take a look at this post: Top 8 Making Tax Digital for VAT Software Solutions
Need more Help?
If you have any questions about VAT moss, please reach out to us. We are experts at e-commerce and digital businesses.
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