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UK VAT MOSS

Overview

HMRC’s VAT MOSS (Mini One Stop Shop) scheme is for businesses which supply Digital Services from UK to Consumers (Private individuals or non-business entities) in the European Union(EU). VAT will be levied according to the consumer’s location.

Digital Services

Broadcasting, telecommunications and e-services fall under the digital services category. Examples of e-services are app downloads, video on demand, gaming, e-invoice, anti-virus software etc.

Why VAT MOSS?

If your business from UK sells digital services to consumers in an EU country, VAT will be levied in accordance with the EU member country. Your business needs to be registered for VAT with every EU member state where the digital services are being sold which is a pretty tenous process.

By registering for the UK VAT MOSS Scheme, your business can skip the process of registering with every EU member state where you supply digital services to consumers.

Once the business registers with the UK VAT MOSS scheme a single MOSS VAT Return and a VAT Payment should be submitted to HMRC every quarter. HMRC will take care of forwarding the return and tax payments to the tax authorities of the EU member states.

Conditions for VAT MOSS to be applicable?

VAT MOSS is applicable for digital services which are completely automated or electronically supplied over the internet with minimal/no human intervention.

These are the condition for VAT MOSS to be applicable:

Who are not affected?

Communicating by email and sending attachments, using the internet to facilitate trade does not constitute e-services. Services that use the internet and does not come under the scheme:


Enabling VAT MOSS

To enable VAT MOSS in Zoho invoice:

VAT Setting

Enable VAT MOSS


Adding a Member State VAT Rate

To add a VAT rate for a EU country where you sell digital services,

Add a New Member Country VAT Rate


Creating a Digital Service as an Item

To create a digital service in Zoho invoice:

Create Digital Service

Insight: If you select a UK VAT rate for the digital service item while creating, it will be applied only on sales inside UK.


VAT MOSS in Sales Transactions

VAT MOSS is applicable only on the sales of a digital service to a EU-Non VAT Registered customer. When creating a sales transaction i.e: Estimate, Invoice, Sales Order etc, make sure that,

VAT MOSS Customer

VAT MOSS item

Insight:

  • You cannot record sales of digital services for different countries in a single sales transaction (Invoice, Estimate, Sales Order etc.). Each country should have a separate sales transaction.
  • VAT rate of other member countries cannot be used for VAT Treatments other than EU-Non VAT Registered & item type as Digital Service.
  • Any number of Digital Service items can be added in a single sales transaction for the same country.

Pro Tip: While processing the sale of cross-border digital services, it is important to know the place of supply so as to apply the correct VAT rate. To ease the process of obtaining this information, you can presume your customers’ place of residence based on any accompanying evidence and apply the VAT applicable in that country.
While Zoho Invoice does not have the option to enter the evidence information directly, we recommend that you use Custom Fields to store this information for your reference while creating invoices.


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