9 December 2014    |    Taxation

VAT on internet sales inside the EU

Overview of VAT on internet sales

If your business has supplied digital services to consumers in the EU, you can register for HM Revenue and Customs’ (HMRC’s) VAT MOSS scheme if your business is:

  • based in the UK (union VAT MOSS scheme)
  • a non-EU businesses (non-union VAT MOSS scheme)

You can submit a single calendar quarterly return and VAT payment to HMRC, who will send the appropriate information and payment to each relevant member state’s tax authority.

Generally, a digital service will include broadcasting, telecommunications and e-services.

How to register

You can register for the VAT MOSS scheme using HMRC’s online services. This is a ‘beta’ service – find out what this means for you.

VAT groups

Only one member of the VAT group (normally the representative member) can register for VAT MOSS using its existing VAT registration number.

If a member of the VAT group has (or will have) a fixed establishment in another member state, the supplies from that fixed establishment can’t be declared on the group’s VAT MOSS return.

How to account for VAT on digital supplies

VAT on internet salesOnce you’ve registered, from 1 January 2015 you must use the scheme to account for VAT on all your supply of digital services to EU consumers. But you can’t use it to report supplies to consumers in the same member state as your business.

You’ll be able to partially complete, save and submit your VAT MOSS return online. If you have multiple entries you’ll be able to upload your data using an Open Document Format spreadsheet that will be published online.

If you don’t make any digital supplies to any EU consumers in a quarter, you must submit a ‘nil return’.

Correcting your return

If you need to make an adjustment to your VAT MOSS return you must make a correction to the original return, using the online service. You can do this up to 3 years and 20 days after the end of the quarter.

VAT on E-Service Scheme (VoES)

If you currently use the VoES scheme, you’ll need to register for the non-union VAT MOSS scheme. The UK will continue to run VoES for a limited period of time after the 1 January 2015 so you can submit a final return for the tax period ending 31 December 2014 and make amendments to declarations that you’ve already sent under the VoES scheme.

Deadlines

You must submit your return before:

  • 20 April – for returns covering 1 January to 31 March
  • 20 July – for returns covering 1 April to 30 June
  • 20 October – for returns covering 1 July to 30 September
  • 20 January – for returns covering 1 October to 31 December

You won’t be able to submit your VAT MOSS return before the end of the return reporting period.

Pay your VAT MOSS bill

You should pay your VAT MOSS bill either at the same time as submitting your return or before the due date of the return. You should quote the payment reference number provided by the online service when you make your payment.

HMRC will send you an electronic reminder 10 days after the payment was due if you’ve not paid the full amount.

Further guidance on paying your VAT MOSS bill will be published early 2015.

Records you need to keep

You must keep evidence to prove where the place of supply is. You can read more detailed guidance about how many pieces of evidence you’ll need to keep.

You must keep VAT MOSS records for a period of 10 years from 31 December of the year during which the transaction was carried out.

Compliance checks

HMRC may conduct checks on your business to make sure you’re following the VAT MOSS rules and keeping appropriate records.

If you consistently don’t comply with the rules for the scheme, HMRC may exclude you from using the scheme. You’ll be sent a message through the online service, and you won’t be able to use the scheme anywhere in the EU for up to 2 years.

VAT MOSS de-registration

The VAT MOSS scheme is optional. If you decide to voluntarily de-register from the scheme you’ll need to tell HMRC at least 15 days before the end of the calendar quarter in which you intend to stop using the scheme. For example, if you want to de-register from 1 July, you must tell HMRC before the 15 June. You can do this using the online service.

Once you’ve de-registered from the scheme you won’t be allowed to rejoin that same scheme in any member state for 2 calendar quarters (normally starting after the first day of the next calendar quarter).

More information

Read more detailed information about accounting for VAT on digital supplies using VAT MOSS.

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