What is VAT MOSS?

Definition of VAT MOSS

VAT MOSS is is an abbreviation of VAT Mini One Stop Shop. It’s an option offered by tax authorities for businesses affected by rules relating to the supply of certain digital services to consumers in the European Union (EU).

Who does VAT MOSS apply to?

Since 2015, any business that supplies certain digital services to consumers in the EU has had to charge those consumers VAT at the local rate in the country where the consumer used the service.

The affected supplies are services that are supplied digitally with minimal or no human intervention at the point of sale, such as apps and PDF documents. HMRC provides a full definition on its website.

Only supplies of digital services to individual consumers in the EU are affected by this rule. Supplies to businesses are not affected.

VAT MOSS before 1st January 2021

Before 1st January 2021, businesses in the UK were able to manage VAT on qualifying sales to consumers in the EU by using HMRC’s VAT MOSS portal. This portal allowed UK businesses to draw up a single VAT MOSS return that detailed all the VAT charged to consumers in the EU for sales of digital services each quarter. Businesses were then able to pay the VAT that they owed directly to HMRC.

VAT MOSS after 1st January 2021

HMRC’s VAT MOSS portal is closing and cannot be used for any qualifying sales that are dated on or after 1st January 2021. Businesses that had registered for VAT MOSS in the UK before this date need to de-register for VAT MOSS. They then need to register for the equivalent of VAT in any EU country and then register for that country’s VAT MOSS service. This will allow these businesses to file VAT MOSS returns in that country.

More information about how FreeAgent handles VAT MOSS is available in our Knowledge Base article.