VATMOSS. You are not prepared!

Selling digital goods to consumers? Prepare for new red tape!

Could someone in the EU buy your digital product or service? An eBook, music, video or the like? If yes, you are going to be liable for a crazy new VAT system coming into force January 2015.

Ahh, I hear you say “But I’m a small business well beneath the UK VAT threshold!“. Sorry, Brussels doesn’t care, this is going to affect you too. In fact this crazy scheme could affect many of my clients.

It gets worse. 27 other countries in the EU; that means 27 different languages, laws, tax rules and rates. Oh and quarterly reports on your sales to each. With proof in triplicate of a customers nation of purchase/residence. I’m really not making that up.

Enter MOSS (mini one stop shop); the UK’s scheme to manage that nightmare. With MOSS you report to one UK authority and they sort out distribution to the rest of the EU. So no need to learn Hungarian tax law. You will still need that proof of customer nationality though. Oh and hold that data for 10 years.

Why is this happening? This is an EU response to large enterprise (think Google/Amazon) making money in several EU countries and then declaring that money somewhere else where it suits them best for tax purposes. You as a small business are collateral damage.

Will this really affect you? I’m no lawyer/accountant so if in doubt you need to get some professional help on the matter.