What is the Mini One Stop Shop (MOSS)?

VAT Aug 12, 2013

Last year, the EU decided to change how VAT is collected for e-services, telecommunication or broadcasting services to B2C clients within the EU. Examples of telecommunications services include fixed and mobile telephone services; paging, fax and telex services; access to the internet. Examples of broadcasting services include radio and television programmes transmitted over a radio or television network, and live broadcasts over the internet. Examples of e-services include video on demand, downloaded applications (or “apps”), music downloads, gaming, e-books, anti-virus software and online auctions. Starting in 2015, every business involved in such activities will have to collect VAT at the rate where the client resides. Today, unless the business in each country exceeds the VAT threshold, VAT is collected at the rate where the business is located (distance selling rules).

Starting in 2015, a business involved in any electronic activity with other EU countries will have to charge local VAT (from the 1st pound). There is a bit of good news thanks to the Mini One Stop Shop (MOSS) scheme that will allow businesses to collect and report into just one EU country. Still it means that businesses will have to identify their client location and charge the proper VAT. It also means that accounting systems will have to be amended to properly report the VAT at different rates for each country. Considering that some products (like ebooks) might have reduced rates, you can imagine the added cost of having to track up to 56 different rates!

There will be two different schemes, one for non-EU businesses (called non-Union scheme) and one for EU businesses. Both will be optional (the alternative being to register for VAT in each country where one does business and report there). Also, they will only apply to output VAT. Input VAT will continue to be reported and recovered as today. Furthermore, the EU business will have to report all other supplies (e.g. sales of goods and other services) by the means of the regular VAT returns as they do today.

Member states have been pushing for those changes in the name of tax harmonisation (i.e. removal of tax competition). And indeed, the benefit of setting shop in a low VAT jurisdiction will disappear in 2015 – but it also means unfortunately an additional burden for small businesses.


Franck Sidon

With over 15 years of experience as a Managing Director at TaxAssist Accountants, I have helped thousands of businesses and individuals achieve their financial goals and optimize their tax efficiency.