VAT MOSS – What is it and how does it affect you?

If you are an unregistered business selling online downloads to private customers in Europe recent VAT changes will affect you and mean that you will now have to register for VAT!

New EU regulation, due to be introduced on January 1st 2015, would have forced UK firms selling digital “e-services”, such as ebooks and e-courses, in Europe to register for VAT in every country, as VAT on digital products will be chargeable in the place of purchase rather than the place of supply.

However the Government has agreed to change this controversial VAT rule that thousands of UK business owners claimed was putting their companies at risk. You will now have to register for a VAT “Mini One Stop Shop” (VAT MOSS) by registering for VAT in the UK, which would funnel the tax payments automatically but make the seller liable for VAT domestically, even if you fall below the usual VAT threshold.

A spokesperson for HMRC said: “Businesses below the current VAT registration threshold that can separate their sales to UK customers from sales to EU customers can voluntarily register the cross border element of their business, and then use that registration number to register for MOSS. This means that their domestic sales will remain VAT free.”

petition was launched online, demanding that Business Secretary Vince Cable intervenes and “upholds the existing VAT Exemption Threshold for businesses supplying digital products”. It currently boasts more than 9,000 signatures.

The new rule has been introduced to stop multinational corporations that trade online, such as Amazon or Google, from diverting all their European sales through low VAT countries. A spokesperson for HMRC said of the new rules: “New EU rules were brought in to remove unfair competition between online traders registered in EU states with very low VAT rates and traders based in member states like the UK with higher standard VAT rates.”

The good news is that this service will significantly reduce the administrative burden which would have existed if a requirement to register in multiple countries had arisen, however a practical problem that will arise is that when you make online sales you probably won’t know where your customer is located.  If a business intends to continue making B2C sales to customers in Europe you will need to know what country they are based in so that you can account for the correct amount of VAT.

If you are unsure how these upcoming changes will affect you and your business, then contact us on 0161 249 5040 or email us

You can view the full details from HMRC here