Brexit: Digital Supplies & MOSS

The end of the Brexit transition period on 1 January 2021 will bring new changes that will impact any business that currently trades with the EU.

Digital Supplies & MOSS

Brexit will have a major impact on digital businesses both in the UK and outside, particularly when it comes to accounting for and reporting VAT. This will impact both UK businesses supplying digital services to EU consumers and non-UK businesses supplying digital services to UK consumers.

The Mini-One-Stop-Shop (MOSS) service was introduced back in 2015 when the EU amended the rules on how cross border digital supplies to consumers were to be taxed in the member state of consumption. The MOSS service allows businesses to submit one return including its supplies to all consumers in the different EU member states.

1. Digital businesses registered with UK VAT MOSS

As the UK will be a non-EU member state from 1 January 2021 digital businesses will not be able to use the UK’s VAT MOSS service to declare the VAT due on its sales to consumers located in the EU. The final return period for the UK’s VAT MOSS system will be the period ending 31 December 2020.

From 1 January 2021, to continue to use VAT MOSS digital businesses will need to register for the VAT MOSS scheme in an EU member state, by the 10th day of the month following your first sale to an EU customer. For example, if a business makes its first sale on 12 January 2021, then it must register by 10 February 2021. Effectively businesses need to change their MOSS identification country.

If a business does not want to use VAT MOSS from 1 January 2021, it must register for VAT in each EU member state where it sells digital services to consumers. We therefore recommend any business with a UK VAT MOSS registration to consider and apply for a MOSS registration number in an EU member state, for example Ireland. This will then allow the business to report quarterly sales to the remaining EU member states under the non-Union MOSS scheme.

2. Digital businesses selling into the UK

Any digital business that sells digital services into the UK will also be unable to use their MOSS registration to report sales to UK consumers from 1 January 2021. In this case, these businesses will be required to apply for a regular UK VAT number to report any digital sales to UK customers. Please note, there is no threshold for this. All UK sales will be required to be immediately reported to HMRC from 1 January 2021. This will therefore apply to all EU based digital businesses making supplies to UK consumers

Business Current Position From 1 January 2021
UK Based Registered for Union MOSS Scheme in UK
  • Will need register for MOSS in an EU member state under Non-Union scheme.
  • We would recommend Ireland.
  • Registration would need to be made by 10 February 2021 if sales made to EU consumers in January 2021.
EU Based (Not UK) Registered for Union MOSS
scheme in EU member state
  • If makes digital supplies to UK consumers, will need to register for UK VAT with effect from 1 January 2021.
Non-EU Business Registered for Non-Union MOSS
Scheme in UK
  • Will need to register for MOSS in a different EU member state under Non-Union scheme.
  • We would recommend Ireland.
  • Registration would need to be made by 10 February 2021 if sales made to EU consumers in January 2021.
  • If makes digital supplies to UK consumers, will need to register for UK VAT with effect from 1 January 2021.