New de minimis threshold for MOSS

Legislation has been passed to introduce an £8,818 de minimis threshold before your business will need to register for MOSS in relation to e-services sales. How will this operate in practice?

Law. Since 1 January 2015, any UK business making B2C sales of broadcasting, telecommunication and electronic services (known collectively as e-services) to EU customers has been required to register forthe mini one stop shop (MOSS) with HMRC (see The next step ) and pay VAT according to the rate that applies in the customer’s country. There has been a zero threshold until now but that will change.

Threshold. If your total B2C sales of e-services to EU non-business customers is less than £8,818 on a calendar year basis, and was also less than this figure in the previous calendar year, you will not need to register for MOSS. This means that if you are VAT registered in the UK, you will continue to charge UK VAT at 20% on these sales. The new threshold applies to sales made on or after 1 January 2019.

Tip. It is important that you recognise that the test only applies to B2C sales made to EU customers and not B2B sales. The latter are covered by the general B2B rule which means they are not subject to UK VAT and your customer will do a reverse charge calculation on their return.

Trap. Another condition of the deminimisthreshold is that you must only be based in one EU country to get the threshold.

There is nothing to stop you registering forMOSS if you trade below the threshold. This might be appropriate if you are a growing business and anticipate exceeding the £8,818 threshold quite quickly, so don’t want to have to adjust your accounting system and invoicing procedures when this happens. You might also favour this approach if you sell e-services on a VAT-inclusive basis and mainly trade with EU countries that have a lower VAT rate than the UK.

Reproduced with the permission of Indicator – FL Memo Limited. For subscription information call 01233 653500;