2015 is coming, Mini One Stop Shop related Highlights
In the past months a lot of information was published around the new place of supply rules for telecommunication services, television and radio broadcasting services. These changes will apply as from the first of January 2015 and along with the place of supply changes a Mini One Stop Shop (MOSS) system will be introduced. In this summary we inform you regarding the important highlights, we discuss whether we are indeed talking about a simplification and the importance of the MOSS according to the European Commission.
What is MOSS again?
The Mini One Stop Shop is the possibility to account for the VAT via a web-portal in the member state in which the taxable person is VAT registered, which VAT is due in other member states. Businesses designate their Member State of identification as the single point of contact for Vat identification, submitting Vat Returns and paying the Vat due. MOSS will be only applicable for VAT on telecommunication services, television and radio broadcasting services and electronically supplied services, charged to consumers residing in other EU Member States (non-VAT taxable persons). Supplies of telecoms/broadcasting/electronic services to consumers will be taxed in the country where the customer is established, this is the member state of consumption. For more details we refer to our earlier publication ‘One Stop Shop for telecommunications, broadcasting and electronically supplied services’.
Explanatory notes: The explanatory notes were published on the website of the EU on 3 April 2014. In these notes you can find answers to a lot of questions regarding MOSS. These notes among others give a further explanation for which services exactly MOSS applies, how intermediaries should handle ‘MOSS’, what evidence is needed etc. The explanatory notes are recommendations,, they do not have any legal force.
Invoicing Rules: When a taxable person applies MOSS, he should comply with the invoice requirements in each of the member states in which the customers reside. Since the invoice requirements are not entirely the same, the commission will publish an overview of the invoicing rules per country in September 2014. As issues are expected, an update is already planned for February 2015.
Registering for MOSS: Businesses can register for MOSS as from 1 October 2014.
Guidelines for audits: As a MOSS return will include Vat due in multiple Member States, it is important that the Member States agree on how to best contact businesses as part of an audit and the method used to provide information required during an audit. Guidelines have been published, again these guidelines are not binding over national rules but merely provide recommendations. Contact should in principle be routed through the Member State of identification. Under circumstances direct contact through email could be required and the regular national procedures should be used. A list of countries that have agreed to these guidelines was also published. In addition the possibility to use a standard audit file for MOSS (SAF_MOSS) in xml format is recommended.
A main idea of MOSS is to lower the administrative burden for the suppliers in scope. However, the mentioned explanatory notes are published with a reason.
There are a lot of questions regarding the new place of supply rules . E.g. what is the right evidence for the place of establishment of the consumer for each supply? And how should the suppliers of the services collect and preserve this evidence for all countries? How will the new rules affect platforms? It is clear that it will not be easy to fulfil all requirements. The explanatory notes answer only a part of the questions which are important in practice. Even considering MOSS a simplification overall, there will be some difficulties in practice.
The importance of MOSS
According to the European Commission MOSS is an example for the way forward. There is a proposal for implementing it also for other Business to Consumer supplies, especially for distance sales (of goods). Also the OECD (Organisation For Economic Cooperation Development, global) considers MOSS as an example for future taxation. However, time will tell whether it will be such success as the European Commission thinks and whether the MOSS is suitable to be expanded to more supplies.