VAT MOSS

The VAT e-commerce package adopted by the Council on 5 December 2017 includes a number of changes to the place of supply rules for telecommunications, broadcasting and electronically supplied services ('TBE services') as well as to the Mini One Stop Shop (MOSS) which can be used to declare and pay VAT in a single Member State on supplies of these services to non taxable persons. The objective of these changes is to reduce the burden for SMEs established in a Member State supplying such services to customers in other Member States.

These changes are included in Article 1 of Council Directive (EU) 2017/2455 modifying Directive 2006/112/EC (‘the VAT Directive’) and in Council Implementing Regulation (EU) 2459/2017 modifying Regulation (EU) 282/2011 (‘the VAT Implementing Regulation’).

1. The Place of Supply – EUR 10 000 threshold (Directive 2017/2455, Article 1, point (1))

The place of supply of TBE services supplied by a taxable person (thesupplier) established  in a Member State to a non-taxable person (the customer) in another Member State is in the Member State where the customer is established and actually residing.

As a result the supplier has to charge VAT to the customer at the rate of the customer’s Member State. To declare and pay this VAT to the tax authorities in that Member State, the supplier must either register for VAT in (each of) the Member State(s) of the customer(s) or register for the MOSS in his own Member State. This is very costly and costly for micro-businesses, which only occasionally supply TBE services to customers in other Member States.

For this reason, there is an annual EUR10 000 turnover threshold as from 1 January 2019 meaning that turnover less than EUR 10 000 up to which the place of supply of relevant supplies of cross-border TBE services remains in the Member State where the supplier is established and residing .The application of this threshold is subject to the following conditions:

  • the supplier is established and resides only one Member State;
  • the supplier supplies TBE services to customers who are established and reside in another Member State;
  • the total value of TBE services supplied to other Member States does not exceed EUR 10,000 (exclusive of VAT) in the current and previous calendar year.

A taxable person who has already been using the MOSS and the total value of TBE services in other Member States is below or equal to the threshold of EUR 10 000 can deregister from MOSS as of 1 January 2019 voluntarily. A quarantine period of two calendar quarters will apply during which the taxable person will not be able to register for MOSS.

2. EUR 100,000 threshold– one piece of evidence (Council Implementing Regulation (EU) 2459/2017, Article 1)

A taxable person (the supplier) established in one Member State supplying TBE services to a non-taxable person (the customer)in another Member State must, keep two items of non-contradictory evidence to identify the Member State of the customer and in that case the Member State of the customer is the where the supply is subject to VAT (the place of supply).

A threshold of EUR 100,000, applicable from 1 January 2019 onwards, has been introduced up to which one piece of evidence is sufficient to determine the place of supply. The application of this threshold is subject to the following conditions:

  1. the total value of TBE services provided by the supplier from his business establishment in a Member State to customers who are established in other Member States does not exceed EUR 100 000 (exclusive of VAT) in the current and previous calendar year;

  2. the item of evidence is provided by a person involved in the supply of the services other than the supplier or the customer;

As soon as the threshold is exceeded during a calendar year, the normal rules apply, meaning that again two pieces of evidence are required.

3. Invoicing rules (Directive 2017/2455, Article 1, point (2))

From 1 January 2019 onwards,a supplier using the MOSS will only have to respect the invoicing rules of the Member State in which he is identified for MOSS purposes, irrespective of the Member State of the customer.

The invoicing rules of the Member States (in particular whether or not an invoice is required) can be consulted on the MOSS Portal (tab ‘National VAT rules’).

https://ec.europa.eu/taxation_customs/business/vat/telecommunications-broadcasting-electronic-services/node_en

4. Non-Union scheme – Eligibility (Directive 2017/2455, Article 1, points (3) and (4))

A taxable person who is not established within the EU but who is registered or is obliged to register for VAT purposes in one of the Member States cannot use the MOSS. As of 1 January 2019 onwards, such a taxable person will be allowed to use the non- Union scheme, which is the MOSS regime for taxable persons not established in the EU supplying TBE services to customers in the EU.

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marinos marinou

Marinos Marinou

Graduated from Liverpool John Moores University in 2011. Became a member of the Institute of Chartered Accountants of England and Wales (ICAEW) in 2015. Currently undergoing Certified Fraud Examiner (CFE) Level 1. Member of the International Tax Planning Association (ITPA).

 

Marinos is specialized in International Tax Planning, Advanced Consulting, and Corporate Services.

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