Everything wrong with VATMOSS in one image

Important VATMOSS update
On 1 December 2016 the European Commission announced a package of proposed reforms to the VATMOSS scheme. Please read this post for the latest updates, as some of the proposed changes may affect the situation described in the post below.

Here is everything that is wrong with VATMOSS in one image, as tweeted by Ysolda Teague.

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We can fill in the full story from Ysolda’s tweet stream. It goes like this.

  • Ysolda has correctly used the UK’s MOSS portal to report the whopping £15 (€21) worth of VATMOSS-eligible digital sales she has made in Q2.
  • A portion of that £15 worth of tax revenues goes to Luxembourg, where she made at least one digital sale in Q2.
  • The Luxembourgish tax authority has contacted Ysolda directly to inform her that “her” calculations used the wrong Luxembourg tax rate, and that she should correct and re-file her return.
  • Ysolda then did her research and learned that Luxembourg changed their VAT rate from 15% to 17% on the 17th of April, backdated to 1 January.
  • She has made a tax payment to Luxembourg. The dispute is over that additional 2%, in other words, 2% of the eligible portion of a £15 tax payment. For the record, she says that the 2% amount is 5 pence (0.07 EUR).
  • So sum up, a national tax authority has directly contacted a seller in another country over a top-up payment of 5p, because “level playing field”.
  • (Update) That tax authority has now written back to Ysolda to say that it is her responsibility to amend her tax return over that disputed 5p and that “if the UK web-portal does not allow to amend VAT rates, the portal shall be fixed”, which doesn’t even make any sense.

About the author

Heather Burns is a digital law specialist in Glasgow, Scotland. She researches, writes, publishes, consults, and speaks extensively on internet laws and policies which affect the crafts of web design and development. She has been designing and developing web sites since 1997 and has been a professional web site designer since 2007. She holds a postgraduate certification in internet law and policy from the University of Strathclyde. Learn about hiring Heather to write, speak, or consult.