EU established suppliers of telecoms, broadcasting and electronic services should be aware that they need to change the way VAT is accounted for on B2C supplies from 1 January 2015. As highlighted in our recent story, businesses will either have to register for VAT in each country where their customer is located, or register for the MOSS scheme and complete a single quarterly VAT return. Regardless of which method is used, both will require local VAT to be collected according to the rules in place for that EU Member State.
Businesses that opt to use the MOSS will need to consider the rules and requirements of the scheme. The European Commission recently published guidance on the MOSS for EU and non-EU established businesses; we have highlighted some of the main features below:
- There is a scheme for EU established businesses (‘Union Scheme’) and one for non-EU established businesses (non-Union scheme).
- Checks will be made by the Member State of registration to ensure a business meets the conditions for using the scheme.
- Registrations will take effect from the first day of the calendar quarter following that in which the business informs the Member State of identification that it wishes to register but there are different rules that will apply if a business starts making supplies under the scheme before this date.
- Return periods are based on a calendar quarter filing and payment due 20 days after the period end.
- There are specific rules which apply for VAT groups and businesses with VAT registrations or fixed establishments in other EU countries which make relevant supplies under the scheme.
- Businesses can be excluded from the scheme (possibly resulting in having to register in each Member State) for various reasons such as persistently failing to comply with the requirements for filing returns, not making payments of VAT or not making records available electronically.
- There is a ‘Quarantine Period’ for businesses in certain instances, including voluntarily leaving the scheme, ceasing to make relevant supplies, and failing to comply with the rules.
- VAT incurred in the Member State of consumption cannot be offset against VAT declared on the MOSS. Businesses must use the applicable method of refund; the VAT Refund Mechanism (EU businesses) or 13th Directive (non-EU businesses).
- There are rules on what records are required to be maintained. These must be kept for 10 years and be made available electronically to the Member State of identification or consumption without delay.
Having a single point of registration should make it easier for businesses to deal with the change in the place of supply rules. However, there are many issues to overcome including the increased complexity of collecting VAT in each EU Member State and the systems changes needed to produce the right data for reporting purposes. With the MOSS registration period less than a year away, now is the time to start thinking about what the impact is for your business and what action needs to be taken.
Who to contact
If you’d like to find out more please contact us at:
+44 (0) 1273 573950