VAT MOSS: B2C e-services from 1 Jan 2015

The new B2C e-services VAT rules

If you started making supplies of e-services in January 2015 or earlier you must register under the UK Union VAT MOSS scheme before 10 February 2015.  Otherwise you will have to register and account for VAT everywhere in the EU where you sell to consumers (B2C).

Under new EU laws effective from 1 January 2015 the place of supply  of B2C “e-services” (as well as telecommunications and broadcasting) shifted from attracting “supplier” based country VAT to “customer” based country VAT.  E.g Roger has a UK based business from whose web site customers (individuals) in France, Germany and other EU member states download software.  Up to the end of 2014 Roger’s business would only have to charge UK VAT at 20{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} in respect of EU-wide sales.  From 1 January 2015 Roger needs to adjust his VAT accounting to charge and collect the VAT of the EU country his cross-border B2C customers are resident in.  E.g. in respect of French-resident individuals Roger needs to collect 20{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} French VAT, for German residents 19{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} German VAT and so on for each separate EU country.

Who is affected?

This new law will hugely increase the compliance burden of both EU based businesses as well as non-EU based businesses which have previously chosen to register for VAT in a single member state of the EU.  An example might be a USA software company which had chosen to VAT register in Luxembourg and which was previously billing B2C across the EU with Luxembourg VAT of 15{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d}.  Under the new rules the US company’s Luxembourg subsidiary will now be in the same boat as EU-resident businesses, i.e have to charge the VAT of the customers’ countries.  The new rules will also effect sellers on Amazon, e-bay and other such third-party platforms as well as the listing and other fees charged by the platforms to the sellers.

Increased compliance (use VAT MOSS in the UK)

Technically, suppliers need to register for VAT everywhere (in all 28 member states) if they are making EU-wide supplies. However, if a UK company is set-up it is possible to register with only HMRC tax authority of the UK under the “Mini One Stop Shop” (MOSS).  Under MOSS only a single electronic VAT return needs to be submitted to HMRC rather than 28 different sets of VAT returns to 28 different tax authorities. However, the different VAT of the customers’ countries must still be collected as outlined above but a single payment of all the VAT collected can be made to HMRC.  Suppliers are still subject to audit by the different tax authorities but the queries may be directed via a single point.


It is expected suppliers will have many questions:

  • What exactly is an “e-service”?
  • What are the factors I need to consider to work out in which EU member state my customer is “resident”?
  • What documents do I need to retain to prove the country my customer is resident in?
  • What happens if different EU countries are involved e.g. my customer normally lives in Sweden but downloads my software when travelling in France?  Which country’s VAT do I charge? Mobile apps suppliers will be concerned.
  • How will I know if my customer is a “business” or an “individual”? (Different VAT rules apply to cross-border B2B).
  • What happens if there is a “supply chain” involved with e-platforms, aggregators, third-parties, commission agents, affiliates – who is responsible for ultimately collecting the VAT?

There are many other considerations suppliers need to be aware of such as how is the supply delivered – wi-fi hot spots, telephone boxes, internet cafe. land lines, mobile network, de coder or viewing card, via a hotel and the corresponding evidence in each case.  Evidence will consist of credit / debit card billing address, IP address, bank details, SIM card country code, location of fixed land line, etc.

Help is at hand

The VAT-ability of B2C cross-border e-services is clearly a complex matter.  RKG Consulting have specialised in this area for many years and will be pleased to guide e-services providers all along the way including VAT registration under the VAT MOSS rules.