Moss VAT – what is it?
Moss VAT is the European Union VAT regime that applies to e-commerce operators that sell digital goods and services in other EU countries but do not have a permanent tax presence in those countries. Moss VAT allows such e-commerce operators to register in one EU country and fulfill their VAT obligations on sales of digital goods and services in other EU countries through this registration. This simplifies the VAT payment procedure and reduces bureaucratic costs for e-commerce operators who sell digital goods and services across the EU.
Moss VAT was introduced in 2015 in response to changes in EU tax legislation that dealt with the taxation of digital goods and services. Previously, e-commerce operators that sold digital goods and services in other EU countries had to register for VAT in each country where they sold their goods and services, which was a complicated and costly procedure.
With Moss VAT, e-commerce operators can register in one EU country and pay VAT on sales of digital goods and services in other EU countries through this registration. Thus, it facilitates the procedure for paying VAT and reduces bureaucratic costs for e-commerce operators who sell digital goods and services in different EU countries.
However, it is important to note that Moss VAT only applies to sales of digital goods and services such as e-books, software, music files, web hosting, etc. To sell physical goods and services, e-commerce operators still need to register for VAT in each country where they sell their goods and services.
In general, Moss VAT provides significant benefits for e-commerce operators, allowing them to simplify the procedure for paying VAT and reduce bureaucratic costs when selling digital goods and services in other EU countries.
But before delving into this topic, let’s understand what VAT is.
VAT (value added tax) is a tax that is levied at the stage of production or sale of goods and services, when a new value is added to an existing one. Basically, this means that the tax is levied on the difference between the selling price and the purchase price.
VAT is one of the main sources of income for government budgets in many countries around the world, including the European Union. In the European Union, VAT is the general system of taxation and applies to sales of goods and services within the Union. In other countries, a similar system of taxation may be used, for example, GST (Goods and Services Tax) in Australia and New Zealand.
The way VAT works is very simple: a business that sells goods or services collects a tax on its price and then pays it to the government. The buyer bears this tax, but gets the opportunity to return it if he himself is a registered VAT payer.
In most cases, VAT is calculated at the standard rate, which may vary from country to country. For example, in the European Union the standard VAT rate is 20%, but in some countries it may be higher or lower.
Also, in some cases, a special VAT rate may be applied for certain goods and services, such as food or books. There are several VAT rates in the European Union, including the standard, reduced and exempt rates.
In general, VAT is a widely used consumption tax in many countries of the world, which is levied at the stage of production or sale of goods and services, in order to provide government budget revenues.
Companies that provide digital services to customers in the European Union and do not have branches or offices in those countries must register with Moss VAT.
Digital services that may be subject to mandatory registration with Moss VAT include:
- Sales of e-books, music, films, games and software;
- Various online courses and tutorials;
- Online consultations and telemedicine services;
- Advertising services on the Internet;
- Data processing and storage services, cloud services and much more.
Companies that have branches or offices in the European Union may instead register for value added tax in the respective countries where their branches or offices are located.
Advantages and disadvantages of Moss VAT
Moss VAT Benefits:
- Simplification of the process of paying value added tax in the European Union for companies providing digital services, but not having branches or offices in the EU countries.
- Reducing bureaucratic procedures and reducing the time spent on tax reporting, which makes it easier for companies to do business.
- The ability to pay value added tax in only one country of the European Union in which the company is registered in Moss, which simplifies the process of paying tax for companies and reduces their tax accounting costs.
Moss VAT Disadvantages:
- Restrictions on the use of Moss VAT, as it is only for companies providing digital services in the European Union and is not suitable for other types of business.
- The need to register with Moss VAT and follow changes in tax legislation, which may require additional costs for specialist advice.
- The risk of errors in tax reporting, which can lead to violation of tax laws and fines from the tax authorities.
Moss VAT is a convenient and easy way for companies providing digital services in the European Union to pay value added tax. This allows you to reduce the time and costs of tax accounting and tax payment, as well as reduce bureaucratic procedures for business.
However, Moss VAT may not be suitable for all companies, as it is only for those providing digital services in the European Union. In addition, the need to register and comply with tax laws may require additional costs for expert advice.
All in all, Moss VAT is a useful tool for paying value added tax in the European Union and can help simplify the tax accounting process for many digital service companies.
For a detailed consultation and further calculation of the cost, terms and necessary documents, please contact White and Partners specialists by clicking on this link.