MOSS Helps Alleviate New EU VAT Rules Burden The new EU VAT rules come into effect on January 1, 2015 - that date is set in stone. Merchants with B2C digital sales in the EU must now understand and comply with the new rules. The key change is that the location of the end consumer determines what VAT rate will be applied. There’s a lot of extra administration attached to the new EU VAT rules, a burden that is acknowledged by the EU. So, to their credit, they have also incorporated a system which aims to alleviate some of the complexities involved in trying to - potentially - deal with 28 tax jurisdictions, all with varying VAT rates. The Mini One Stop Shop (or MOSS) system is the EU’s panacea to administrative headaches.
The MOSS system allows a merchant to register with a tax administration in the EU, typically that will be the tax authority where the merchant is based. That country’s tax authority then becomes the Member State of Identification (MSI).
The merchant will declare all VAT charged on their EU sales with the MSI. In turn the MSI will allocate the VAT due in other EU countries, relevant to the merchants’ sales. For example, if a UK company has sales in France, Germany and Belgium and registers with the HMRC MOSS system (registration for which opens in October 2014 by the way) then HMRC will distribute the French, German and Belgian VAT to the relevant authorities.
However, the MOSS VAT registration system is optional. The alternative is for merchants to register with each EU tax authority in which they have B2C sales separately. If choosing this route then merchants must assess their resources as this will require language expertise as well as increased accounting expertise, due to varying VAT rates (up to 28 if the merchant has sales in all EU countries).
The MOSS system must be seen as an aid to compliance. The EU is aware that in their quest for increased revenues this rule change will lead to increased administration, MOSS can help smooth the path to compliance for eMerchants with sales in the E-seller.