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12 December 2014 No Comment

VAT MOSS applies to all businesses whether or not they are currently VAT registered! Do you sell (or are you planning to sell) digital products (eServices) over the web?

From 1 Jan 2015 the rules change and as a result, some non-VAT registered business will need to review their business methods and may be forced to register for VAT. Businesses which are already VAT registered may need to collect more data from their customers and charge a different VAT rate depending on where their customer lives.

The rules were developed to make companies like Amazon and Google pay their fair share of taxes. However, there are two unanticipated problems which adversely affect small businesses:

      1. Businesses with a small amount of sales (£81,000 in the UK and generally €10,000 in most other EU states) normally don’t need to register and therefore don’t need to worry about VAT. The limit can be reduced to about €35,000 under “Distance Selling” regulations, so that still leaves a lot of really small UK businesses that do not have to register. Unexpectedly, the European Commission has not been able to agree a threshold figure for sales of eServices in the 28 EU states and as a result the “default threshold” is NIL. That means that if you sell a single eService to a single EU B2C customer (not in the UK) then you will be required to register for VAT on account of just one sale; and to complete a UK VAT return; and to complete either one UK VAT MOSS return, or complete multiple foreign VAT returns for every one of the 27 remaining EU states in which you have customers. As a result of this ill considered legislation non-VAT registered business caught by the eServices rules from 1 Jan 2015 can choose to (a) prevent sales to customers who are resident in the other 27 EU states, limiting their sales of eServices to the UK and to “Rest of the World” or (b) register for VAT and spend time and/or money complying with the rules.
      2. From 1 Jan 2015, VAT registered businesses (which sell eServices) need to collect a minimum of two “non-conflicting” items of data from this HMRC list (see item 1.5 on this page) and it’s up to you how you do that. VAT registered businesses also need to charge EU B2C customers (who buy eServices) at the customer’s local VAT rate rather than at the UK VAT rate.

In order to see how this might work (charging the correct one out of 28 VAT rates, and collecting the relevant data) I have built a demo site at:


Try out the demo. Luxembourg has the lowest VAT rate. Hungary the highest. See how that affects the way the invoice appears, and see how much the net and gross figures vary depending on whether you add VAT to your price, or take the hit and accept that your price “figures in” the local VAT rate.

The demo has a basic dataset of 28 EU VAT rates hard coded into the site. Nowhere on the HMRC site, nor the European Commission site, can I find a dataset which gives me a full overview of all the EU VAT rates that you and I need (and need to check regularly to see if and when the rates change).

If you can help me find a dataset like this, then I’d really appreciate it. I have written to my own VAT office asking for help with this. Anecdotally I have learnt that an eBook sold to a Luxembourg B2C customer will be liable to 3% Luxembourg VAT rather than the standard rate of 15% for most Luxembourg sales.

The best resource I have found so far is independently maintained by Adam Cooke on Github though it won’t automatically know which country’s VAT rates are going to change and on which days. Anecdotally, I have also learnt that the rate in Italy will change from 22% on 3 May 2015 to 24% on 4 May 2015.

How we are supposed to know all this and get it right truly baffles me. The grapevine is insufficient!

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