The MOSS VAT procedure explained
The MOSS VAT procedure is important for electronic billing of services from companies outside the EU
The MOSS sales tax procedure is a simplified sales tax accounting, which should make it possible to account for electronic services. Here we explain this form of accounting by means of the MOSS procedure.
For many Swiss companies, exporting to EU countries is an important sales channel. There is also a simplified VAT procedure for services provided to the EU, which was introduced in 2015. Here we briefly explain what the MOSS procedure (Mini One Stop Shop) involves, what it is and how you can briefly apply it yourself.
Scope for MOSS procedures
- Only B2C business relationships are affected (i.e. only services to private individuals).
Within the EU, the place of residence of a private individual as the recipient of services is considered the place of performance for services provided electronically.
- Private individuals are all those who do not provide a VAT ID number when receiving services § 3a para. 5 UStG-Germany.
- For entrepreneurs (B2B), the reverse charge procedure applies as before.
- The entrepreneur providing the service is expected to be able to determine the place of residence and record/document it.
Which electronic services are affected?
- Services provided purely electronically are affected
- The service must be provided essentially without human intervention.
- There is no established case law on this yet, but in Germany the Federal Fiscal
- Court considered a dating platform to be a portal for electronic services. This was justified by the fact that the portal members essentially inform each other via profiles and the interaction of the portal members with each other does not require any “human” interaction by the operator.
- Extensive “human” preparatory work, e.g., programming the portal, is irrelevant. Thus, preliminary work or maintenance work is not required.
Therefore, the following services are affected with a very high degree of certainty:
- Downloads against payment (photos, images, e-books)
- Streaming portals against payment
- Dating portals
- E-learning, if used on demand or as software
- Online game platforms
- Database portals
- Chat portals etc.
Exceptions from electronic services
- Human services provided electronically are not covered by the MOSS procedure.
- Educational services provided “live” via a web portal are not affected by this. Here, the human service is in the foreground.
- Where the line can be drawn with life streaming is not yet clear. For price calculation purposes, it should be assumed that value-added tax is payable in the EU.
Advantages of the MOSS process
- Anyone who provides electronic services to many EU countries as a Swiss entrepreneur would normally have to file a VAT return in each country. Often, registration is also required upon commencement of the activity. This is very time-consuming for the administration and the service provider, especially in the case of very small sales to an EU country. Above all, high tax consultancy or fiscal representative costs (analogous to the trustee) quickly arise abroad.
- This should be facilitated by the MOSS procedure. Therefore, the Swiss entrepreneur can choose an EU country and submit an “overall” advance VAT return for all EU countries via the MOSS procedure. The transfer of the VAT for all EU countries is also only made to one office in the selected country. In Germany, this is the Federal Central Tax Office www.bzst.de.
- Legal source § 18h UStG-Germany
- The input taxes (i.e. sales taxes on purchased services), if any are incurred in the EU, e.g. for a server, can also be credited using the MOSS procedure.
Disadvantages of the MOSS process
- Online retailers who provide mail order services in all EU countries and have exceeded the respective delivery threshold must submit a VAT return in the respective EU country anyway and are not allowed to claim input taxes for electronic services in the MOSS procedure.
- Therefore, the use of the MOSS procedure would be additional effort here.
- Zero reporting is also required once you have registered.
- The MOSS procedure is always applicable only for the future, so every entrepreneur concerned should register as a precaution when providing electronic services to the EU.
- Once you have registered for the MOSS procedure, you must submit a report every quarter – even a zero report is mandatory.
- The MOSS report must be submitted electronically every quarter by the 20th of the following month. So in Germany via the portal of the www.bzst.de
- Tax amounts are to be declared in Euro.
- The tax is a declaration tax, i.e. it has to be transferred directly by the entrepreneur to the respective tax authority.
- There is no obligation to appoint a fiscal representative, each entrepreneur can also submit the MOSS declaration himself.
- In the future, de minimis limits are planned, but currently it is still the case that every turnover is subject to declaration – either by MOSS or by VAT declaration in the respective country of residence.
- In principle, a Swiss entrepreneur is not considered a small business in the EU.
- Unlike in Switzerland, in most EU countries the small business status only applies if you have a permanent establishment in the respective EU country – therefore, a Swiss entrepreneur is liable for VAT in the EU even if he would be a small business owner in Switzerland.
Guest author: Matthias Steger, tax consultant, graduate in business administration (univ.) / graduate in finance (FH),
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