All businesses who sell digital services (such as ebooks, online video etc) to non-business customers in other EU countries need to account for the VAT due at the rate applicable in the country where the customer belongs, through the VAT MOSS system. The VAT MOSS regulations currently apply to any value of digital services provided across EU borders, there is no de-minimise threshold.
This is about to change from 1 January 2019. Following an intensive campaign by micro-businesses a de-minimise threshold of €10,000 (£8,818 for UK sellers) will be introduced for services covered by the VAT MOSS rules. The regulations are still in draft form, but as they don’t have to be discussed in Parliament to be passed, it is very likely the law will be changed before 2019.
A business will be able to ignore the VAT MOSS rules if the value of the digital services it supplies to EU customers in other Eu countries in the calendar year is below the turnover threshold, and the value of its digital services made across the EU in the preceding year were also under that threshold. The business will have to apply the VAT rules of its home country to any sales it makes.
For many UK micro-businesses this means they will be able to de-register from the VAT MOSS system in 2019, after they have submitted their final quarterly return for 2018, which is due by 20 January 2019.
The bad news is that this de-minimise sales threshold only applies to businesses which are located within an EU country. When the UK leaves the EU on 29 March 2019, unless the VAT MOSS rules are covered in the EU withdrawal agreement, this new de-minimise threshold will cease to apply for UK businesses. As UK businesses will then be outside the EU they will have to register for the VAT MOSS non-EU scheme (which has no de-minimise threshold) in another EU member state.