In December 2017 the European Commission approved a series of planned reforms to the VATMOSS system, the controversial rules pertaining to the taxation of online services within Europe. The reforms will lessen the burdens on microbusinesses trading across borders online in Europe.
The reforms came about thanks to the positive, evidenced-based, and proactive work of the EUVat Action campaign, a grassroots project started by microbusinesses adversely affected by the legislation.
The reforms will come into effect across Europe on 1 January 2019.
It should be noted that given the lack of clarity from the UK Government on the shape and scope of Brexit, as of December 2017 Parliament has confirmed that they themselves do not know the future of the VATMOSS system within the UK.
Why you need to know
If you sell online services within or to customers in Europe, the VATMOSS system applies to you, even if you are not located within Europe.
These e-commerce taxation rules will also continue to apply to UK businesses trading within Europe after Brexit. Being out of the European Union, selling to European customers, but not collecting sales taxes, would be a form of tax evasion.
What will it mean for you
Until 1 January 2019, if you are a microbusiness trading online, you need to educate yourself on your tax obligations under the VATMOSS system.
If you exceed the definition of a microbusiness, you will need to remain in compliance with VATMOSS regardless of the reforms.
- Summary of the proposed changes (this blog, December 2016)
- EC press release on the changes (December 2017)
- Summary of discussions on the post-Brexit MOSS framework
- EU VAT Action campaign
- EC’s MOSS page
- EC’s basic information for microbusinesses supplying digital services (pdf)
- EC’s Digital Single Market page
- HMRC MOSS guidance
- Talk on the saga I gave in May 2016