Who this affects: suppliers of broadcasting, telecommunication and electronic services to consumers in the EU (outside UK). Consumers are customers who are not capable of having a VAT number because they are not in business.
The general rule for supply of services to EU customers is that consumers are charged VAT based on where the supplier belongs. So a UK business selling to consumers in the EU has to charge UK VAT. It can therefore be an advantage if a business supplying services to consumers moves its base to an EU country with a relatively low VAT rate.
That advantage will disappear from 1 January 2015 in relation to supplies of broadcasting, telecommunication and electronic services. From that date, VAT will be due in the country where the customer belongs regardless of their status.
This means that suppliers of such services to consumers will either need to register for VAT in each of the EU countries to which they make supplies or use the mini one stop shop (MOSS) facility in the country where they are already registered for VAT.
The MOSS facility is intended to allow businesses supplying broadcasting, telecommunication or electronic services to consumers in other EU countries to submit a quarterly return and a VAT payment to the tax authorities in the country where they are registered for VAT. The quarterly return will be in addition to the normal VAT return.
The VAT payment will cover the output tax based on supplies made to consumers in other countries, calculated using their respective VAT rates. Input tax will continue to be recovered via the normal VAT return.
From October 2014, VAT-registered businesses in the UK that make supplies of broadcasting, telecommunication or electronic services to consumers in other EU countries should be able to apply to HMRC for a MOSS registration, with the registration taking effect from 1 January 2015.
If this affects you please contact us to discuss this further.