There is a massive change about to take place for VAT registered businesses who supply cross border EC supplies of digital services to consumers.
From the 1st January 2015 businesses supplying broadcasting, telecommunications and electronically supplied services will be affected as the place of supply will now be regarded as where the supply is consumed. This means that if you are trading from, for example, Luxemburg to the UK as you have a UK consumer the UK is the country you are indebted to in terms of tax on the supply.
Now we know what you must be thinking, within these new rules businesses will have to register in multiple countries and file multiple returns but the authorities are one step ahead. To simplify the transition for affected companies instead of registering in numerous jurisdictions you can register for the mini one stop shop aka MOSS.
Under the old rules these new regulations would mean that you would potentially have to file 28 returns (the maximum number of EC countries) but with MOSS you file just one return with all of the information.
Any company selling electronically supplied services will need to join the MOSS scheme if they are over the VAT threshold in their country.
Companies defined as selling electronically supplied services are those delivering services or supplies over the internet with the nature of the supply rendering them automated and involving minimal human interaction for example Apps, e-books and electronic template documents. Services explicitly not included are tickets booked online, car hire booked online and distant learning via webinars.
If your company is VAT registered, makes electronic supplies and supplies consumers in EC countries then you must register 10 days after the first month you start making relevant supplies.
It is essential to get MOSS returns right as once submitted any mistakes cannot be adjusted on the next return instead the incorrect return must be amended with and those corrections must be made within 3 years.
The accounting burden will increase significantly. Many EC member states will now require sales invoices to be issued to the consumer for every supply made; The EC countries may fine your company if these requirements are not met. Spain for example could fine 150 Euros for every invoice not issued.