EU: 2015 Place of Supply Changes - Mini One-Stop-Shop
From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private individuals and non-business customers will be taxable in the Member State of the customer.
This change is the final phase of the EU VAT Package, which introduced new place of supply of services rules for VAT in the EU and new intra-EU VAT refund processes. The first phase of the VAT Package came into force on 1 January 2010.
The one-stop shop or VAT on e-services (VoES) scheme will also be adjusted to align to the new rules with effect from 1 January 2015.
Alternative Mini One-Stop Shop Scheme (MOSS)
A business which is registered for MOSS will need to submit quarterly VAT returns detailing its sales of telecommunications, broadcasting and electronic services to non-taxable persons in other Member States, along with the VAT due. The returns will be filed in the business’ Member State of identification (typically the Member State in which the business has its business establishment). These returns and the VAT payable will then be transmitted to the relevant Member State of consumption via a secure communications network.
The MOSS VAT Returns are additional to the ‘normal’ VAT returns a business renders to its Member State under its domestic VAT obligations. Hence, if it signs up for MOSS it will be incurring additional administrative burdens. It will also need to be able to separate from its accounting system the different types of supplies it makes.
MOSS will be available to businesses which are established in the EU (the “union scheme”). For businesses which are not established within the EU the current VoES scheme will be known as the MOSS “non-union scheme”. Without MOSS, a supplier would be required to register in each Member State in which it has a customer.
That said, MOSS is an optional scheme for businesses and a business may choose to register in each EU Member State if it wishes. However, if MOSS is used then it must be applied in all applicable Member State (it is not optional on an individual Member State by Member State basis). The only exception to this is when a business also has an establishment in another EU Member State from which it makes relevant supplies. In that instance, those supplies should be declared on a domestic VAT return in that country, not via MOSS.
A taxable person who opts to use MOSS will register for it in the country where it has its business establishment or head office. The taxable person will be identified for MOSS with the same VAT identification number with which it is identified for its domestic VAT returns.
If a taxable person has not established its business in the EU, it can choose any Member State in which it has a fixed establishment to register.
A taxable person can only have one MOSS registration across the whole of the EU.
A taxable person using either of the special schemes will be required to submit, by electronic means, a MOSS VAT return for each calendar quarter. If there have not been any supplies in a period then a NIL return must be submitted. The MOSS VAT return and accompanying payment is required to be submitted within 20 days of the end of the period covered by the return.
The MOSS VAT return should contain the details of sales made across the EU by the taxable person using the scheme.
The Member State of Identification (“MSI”) generates a unique reference number for each MOSS VAT return, and informs the taxable person of this number. This number is important, as the taxable person must make a reference to it when it makes the corresponding payment.
Any VAT is due to the tax authority in the country for which it has registered for MOSS. It pays one amount, for the total of the MOSS VAT return (i.e. in respect of every country where it has made supplies). The money is then distributed to other Member States by the tax authority in the MSI.
The supplier will need to adhere to the invoicing rules in place where the customer belongs. This means the supplier will need to be aware of the relevant rules in all the Member States where they make B2C supplies.
Suppliers will be subject to audits in respect of these supplies from the tax authority in each Member State where it makes supplies. However, any questions and the audit itself will be coordinated by the tax authority of the Member State in which it is established. That said, the foreign tax authority may be allowed to visit during inspections and the taxable person will have to consider how to manage that position (i.e. how will it present its information, what language will be used, etc).
EU Commission Guide to the VAT mini one stop shop
DG Taxud prepared a practical guide in order to provide a better understanding of the EU legislation relating to the mini one stop shop, as well as the functional and technical specifications for the EU and non-EU MOSS schemes. This guide is not legally binding and only provides practical and informal guidance. The guide is not to be considered final and will be completed later by the explanatory notes on the 2015 place of supply changes.