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BREXIT extra EU VAT MOSS registrations

  • Jun 28, 2016 | Richard Asquith

BREXIT extra EU VAT MOSS registrations

On 23 June, the UK voted to leave the European Union. This could mean additional EU VAT MOSS registration and reporting for UK-based providers to consumers of e-services. The hardest hit would be micro businesses that were granted this year an effective exemption by the UK’s HMRC to new 2015 EU VAT MOSS returns.

E-services include: e-books; streaming videos or music; web hosting; online journals; online gambling; web hosting; e-learning; broadcast radio and TV; voice and data telephony; and other digital services.

MOSS reporting changes in January 2015

Since January 2015, EU providers of the above services have had to charge and collect VAT at the rate of their EU consumer’s country of residence. Currently, UK providers can report and pay this non-UK VAT via a special Mini-One-Stop Shop online portal, MOSS. This accepts a single, quarterly EU VAT filing covering all of the other 27 member states. It is run by the UK’s HMRC, and simply requires UK providers to login in with their existing UK VAT registration.

BREXIT to result in new VAT registration requirements

When, and if, the UK leaves the EU, the UK will exit the EU VAT regime, too. This means HRMC will not longer be able to provide MOSS reporting to UK businesses. However, providers will still be expected to still charge EU VAT in each country.

The UK providers will be treated as ‘non-union’ for EU VAT purposes. This means they will have to VAT register as a non-resident in any of the remaining 27 states, and file through their MOSS web portals.

Micro-businesses hardest hit will double VAT obligations

The 2015 VAT changes inadvertently drew in thousands of UK micro-businesses (1 or 2 employees) into the EU VAT net. Many of them were too small to have a UK VAT registration – the turnover threshold is £83,000 per annum – and so were forced to UK VAT register for the first time to report VAT on their EU e-services income via MOSS. After a major campaign, HMRC agreed to effectively exempt such small businesses from this obligation.

In the case of a UK exit from the EU VAT regime, this exemption would be lost. This would in turn compel small businesses to VAT register in the UK first, and then again in the EU.

Explore more content like this in our Brexit hub

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.