VAT MOSS explained: a guide for small businesses

If you run a business that provides online services, you may have come across the term VAT MOSS - but what exactly is it, and how do you register? Our guide will help you get to grips with it.

What is VAT MOSS?

VAT MOSS is a way of paying VAT if your business supplies certain digital services to other EU countries.

A change in the law that was brought in on 1 January 2015 means that you now have to pay VAT based on the country where the customer bought your product, not the country the seller is based in.

VAT MOSS (which stands for Value Added Tax: Mini One Stop Shop) was introduced so that UK sellers could just pay VAT to HMRC, instead of having to register for VAT in every EU country.

What sort of businesses need to register for VAT MOSS?

The change to VAT was brought in to stop big corporations from reaping the benefits of setting up in countries with very low VAT, like Luxembourg, but because of the way the way the law is worded, certain small businesses were swept up in the net.

The law covers telecommunications, broadcasting, and e-services that are sold direct to consumers (rather than to other businesses). Most small businesses are not likely to be selling broadband to the French, but if any of your products come in digital form and could be purchased by someone in the EU, then you might need to register for VAT MOSS.

Say you run an Etsy shop where you provide PDF versions of sewing patterns. If someone in Germany were to purchase one of your PDF patterns, you would need to charge them German VAT.

How do you register for and pay VAT MOSS?

To register for VAT MOSS you first have to register for UK VAT. Once you’ve done that, you’ll be able to add VAT MOSS to your HMRC account.

You need to register for VAT MOSS within ten days of making your first digital sale to someone outside of the UK. Once you’re registered, you then need to pay your VAT MOSS quarterly by the following dates:

  • 20 April for the quarter ending 31 March
  • 20 July for the quarter ending 30 June
  • 20 October for the quarter ending 30 September
  • 20 January for the quarter ending 31 December

It’s a complicated process that wasn’t designed with small businesses in mind, so if you’re still feeling a bit at sea then check out the government’s website for all the details.

Will VAT MOSS change after Brexit?

Like a great number of things to do with trade between the UK and the EU, VAT MOSS could change once Article 50 is triggered.

We won’t know for certain what those changes will be until the government announces them, but we’ll update this article should needs be.

How has VAT MOSS changed how you run your business? Let us know in the comments

Is your online store insured?

400,000 UK business policies. Plus, a 9/10 satisfaction score. Why not take a look at our specialised online retail insurance options - including public liability insurance and stock cover - and run a quick quote?

Start your quote