The draft VAT MOSS regulations have now been passed. This means a de-minimise turnover threshold of £8,818 will apply to the VAT MOSS scheme from 1 January 2019.
UK traders who supply digital services (e.g ebooks) to non-business customers in other EU countries will be able to take advantage of this de-minimise threshold, if all of the following apply:
- The trader is only based in the UK and doesn’t have a base in another EU country.
- The total value of all digital services supplied to consumers in other EU countries is expected to be less than £8,818 for 2019.
- The total value of the electronic services supplied to non-business consumers in other EU countries less than £8,818 in 2018.
Where the de-minimis threshold applies, the place of supply of all the digital services supplied by the trader will be deemed to be in the trader’s home country, so for a UK based trader, in the UK. It follows that a UK trader will only have to apply VAT to those sales if they are registered for UK VAT.
A business which makes digital sales to EU customers of less than £8,818 will be able to de-register from VAT MOSS. If the total vatable sales are less than £85,000, the business will also be able cancel their UK VAT registration, which was a requirement of having to register.
The amended guidance on VAT MOSS says the trader must tell HMRC at least 15 days before the end of the quarter which ends before the date they want to leave the VAT MOSS scheme. So to leave VAT MOSS on 1 January 2019 the trader should tell HMRC by 15 December 2018.
It is not clear how a trader will submit the last VAT MOSS return, if they have already left the VAT MOSS scheme and have also de-registered for UK VAT. A prudent course of action would be to submit the final return (due by 20 Jan 2019 for the quarter to 31 Dec 2018), on or before 31 December 2018, before the VAT MOSS registration ceases.