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VAT, digital services, and Brexit

European Union has a VAT scheme for digital services which applies to all Member States – it’s called MOSS. MOSS simplifies VAT reporting for companies providing digital services in the EU. As the UK is one of the biggest and one of the most popular markets for all kinds of products and services in the EU, then there are many online entrepreneurs worried about how the reporting will be done after Brexit.

As Comistar is also registered for MOSS, we’ve received an e-mail from the UK government with explanation regarding after-Brexit VAT reporting on digital services sold to the UK. We will copy relevant information from the e-mail below.

This email contains important information concerning changes to the way businesses report the VAT due on supplies of digital services to non-business customers (consumers) in the UK, if the UK leaves the EU without a deal.

What will change?

The UK will no longer be a part of the VAT MOSS scheme. Businesses that sell digital services to UK consumers after the UK has left the EU will not be able to use the MOSS portal in their EU Member State of registration to declare VAT due in the UK.

The €10,000 annual threshold for cross border sales of digital services to consumers in the EU will no longer apply to sales into the UK. All supplies of digital services to UK consumers will immediately become liable for VAT in the UK.

What you will need to do:

If you continue to make supplies of digital services to UK consumers after the UK has left the EU then you will need to register for VAT in the UK. You must register as soon as you supply any digital services to UK consumers.

How to correct errors made on previous MOSS returns:

You will not be able to use the MOSS portal in your home Member State to amend a UK VAT figure contained in a previously submitted VAT MOSS return. If you need to amend the UK line of a previously submitted MOSS return after the UK has left the EU, then you should follow VAT correction guidance at gov.uk/vat-corrections.

Further information on registering for UK VAT can be found at: https://www.gov.uk/vat-registration/when-to-register.

Hope you found this helpful, and if you have any questions, don’t hesitate to let us know!

Comistar provides business, legal and tax support for e-residency companies. Our core focus is on Fintech licensing, e-commerce companies, blockchain industry and affiliate marketers. We’ve been operating for over 5 years and have helped more than 300 companies to get started in Estonia.