On 1 January 2015 the place of supply of certain broadcasting, telecommunications, and electronic (“BTE”) services is changing. With effect from that date the place of supply for BTE services supplied to non-registered customers will be the country where the customer is deemed to belong. For example, the sale of an app to a non-registered customer based in Spain will take place in Spain. This means a UK supplier who makes this type of supply will have a liability to register for VAT in Spain and charge Spanish VAT.
The VAT Mini One Stop Shop (MOSS)
In order to avoid multiple VAT registrations in different countries businesses can register to use the Mini One Stop Shop (MOSS). A UK business making BTE sales to non-registered customers in other EU countries can register for MOSS and make one MOSS return (in addition to the normal VAT return) to cover all the relevant EU sales each calendar quarter. The UK business must charge VAT at the rates appropriate to each country on the relevant sales and these are summarised on the MOSS return. One quarterly payment is made to HMRC covering all the VAT charged on MOSS sales.
In order to use MOSS a business must register for VAT. For businesses with UK sales below the registration threshold, this meant that they would have to register and account for VAT on UK sales. The alternative would be to register in their customers’ countries.
In Business Brief 46 (2014) HMRC set out a VAT registration procedure for businesses whose UK turnover is below the VAT threshold but who also make BTE sales to non-registered customers in other EU countries. Such businesses can register for VAT, and so register for MOSS, but they do not account for VAT on UK sales as long as these remain below the VAT registration threshold. Input VAT relating to MOSS sales can be claimed on the VAT returns (but there is no UK output tax to declare). No input VAT can be claimed relating to UK sales. Input VAT cannot be claimed on MOSS returns.
For more details of the conditions for special registration see HMRC’s Business Brief 46.
More background on the change in place of supply and MOSS was given in the previous article on 6 October.