Businesses should already be aware that supplies of telecommunication, broadcasting and e-services such as downloaded 'apps', music, gaming, e-books and similar services to private consumers located in other EU member states will become subject to VAT in the country of the customer from 1 January 2015.

To remove the need for relevant businesses to register in every EU member state where their customers reside, a voluntary simplification procedure known as the 'Mini One Stop Shop' (MOSS) will operate in each EU member state. The MOSS will allow relevant businesses to account for VAT via a single VAT return, in their own member state. This simplification is intended to remove the need for multiple EU VAT registrations that would inevitably result from the 1 January 2015 changes.

After much discussion and debate, the EU has finally issued guidance on how the MOSS will operate in each EU Member State. As we know, businesses are being advised to register for MOSS from October 2014, but the guidance is also useful in that it provides details on how the MOSS will operate for areas such as:

  • businesses that are 'established' and businesses that do not have an establishment (eg. premises from which they operate) within the EU
  • what happens where businesses are already registered in a number of EU member states. For example, as a result of 'distance sales' (typically mail order) of goods to private customers
  • information to be recorded on each MOSS Return
  • payment of VAT due for each EU member state, penalties, and other compliance issues
  • invoicing requirements.

If your business will be caught by the new rules, you will need to be aware of how the VAT regime will operate with effect from 1 January 2015, and make sure your systems are able to cope with the changes. You will also need to manage your pricing (to take account of different VAT rates across the EU) and invoicing (which will need to conform to rules set out in each EU country).

We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2014. code NTD167 exp: 30/6/2014