There will be some things to consider when choosing the country you wish to VAT register in for through Europe’s mini one stop shop. Although the eCommerce package has been postponed till 1 July 2021, doing your research now will make for better business and compliance decisions.
Background to the MOSS and EU eCommerce Package
But first, let’s recap on what the eCommerce Package and the MOSS are:
The European Commission aims at simplifying VAT obligations for companies carrying out cross-border sales of goods or services (mainly online) to final consumers and to ensure that VAT on such supplies is paid correctly to the Member State of the customer, in line with the principle of taxation in the Member State of destination. This Regulation provides the details for the registration in the VAT One Stop Shop, including the Import One Stop Shop, and for the VAT One Stop Shop return. (Read here for more background)
What is the MOSS?
The VAT Mini One Stop Shop (MOSS) is an optional scheme that allows you to account for VAT – normally due in multiple EU countries – in just one EU country.
If you supply cross-border telecommunication, television and radio broadcasting, or digital services to non-taxable persons, you may be eligible for the scheme. Services covered under the MOSS scheme include:
- website hosting;
- supply of software;
- access to databases;
- downloading apps or music;
- online gaming;
- distance teaching.
MOSS means you don’t need to register with tax authorities in every EU country you sell to, instead, you can register for VAT, file VAT returns and make payments in one single place. You must apply the rules of the MOSS scheme to your customers in all EU countries that you supply to.
There are two schemes running under MOSS:
- the union scheme, for businesses established in the EU or with at least one branch based in an EU country.
- the non-union scheme, for businesses not established in the EU and without any branches based in the EU.
What should you be considering when choosing where to register for the Moss?
One: Every European Country wants you to register with them
European countries are currently dashing to get implement their portals and requirements ready to make the MOSS as easy for you and your business as possible. Some faster than others. For example, Luxembourg, Italy and the UK have already made good progress in establishing their Mini One Stop Shops and the requirements for registration. This is in the hopes that businesses will choose their portals over others. But why the mad dash?
Two: Some Healthy Competition
Although Europe, for the most part, is one big happy family, an edge of competitiveness still exists when it comes to the VAT MOSS. Each member state will want you to the tax over to them and they’ll ultimately disperse that tax to other countries in due course. However, it’s still a revenue generator for the country you choose to register. Whichever country you choose, they stand to gain the following:
- They avoid the risk of relying on another EU member state to pay over the tax (revenue). This only becomes a problem if say one member state is having cash flow problems and may not disperse the tax as quickly as it should.
- It could create other revenues such as customs duties and ancillary benefits. For example, the country may consider your business for an establishment.
Three: Fixed or Permanent Establishment
If you have operations (permanent or fixed establishment) in a particular EU member state, then you will have to VAT register in that country.
Four: Language is a big consideration
Language will play a major role in choosing your VAT MOSS. Registration, filing and reporting are made that much easier when you understand the portal you’re working with and its instructions. To illustrate, if you’re from an English speaking country such as the USA, South Africa or the UK (who will technically not be part of the EU come 1 January 2021) then you may choose to register through Ireland’s VAT MOSS. And if you’re french-speaking (Morocco, Algeria, Senegal, Canada) choosing France’s VAT MOSS portal would be ideal.
It’s worth noting that the same consideration should apply when choosing a VAT agent or fiscal representative. Having a VAT specialist who speaks your language will be an invaluable asset to your continuous international VAT compliance strategy. For more on this, read here.
Five: Stability is key
You’ll want to choose a country that has a stable economy and an innovative and proactive approach to their VAT compliance and VAT fraud mitigation policies. Any EU country going through economic downturns or instability won’t have the resources or funds to manage, care for, protect and improve its VAT MOSS portal.
Six: User Experience
Like all things online, it all comes down to an efficient, easy-to-use experience. Although most VAT MOSS portals will eventually feel and look similar, there will be those which will have a better UX. Simplicity and design will attract more registrations. Ultimately, uncomplicated portals and processes will attract more registrations.
The eCommerce package has been set up to combat VAT fraud across the EU. However, it will also provide an easy platform for eCommerce and digital businesses to ensure compliance which means better business all round. Vatglobal is able to offer any assistance your business may need with managed compliance for eCommerce, digital service and multinational organisations. To speak to us, email us on firstname.lastname@example.org or contact us through our website.