As reported in our VAT update in August 2014 (and referred to above), the MOSS was  introduced in January 2015 for suppliers of e-services. The simplified MOSS reporting portal has led to some widespread confusion for many UK businesses which are now required to register for VAT for the first time.

During a recent EU Parliamentary debate, MEPs from Ireland, Germany and the Netherlands confirmed that the poor uptake of the changes is not only a UK problem.

The changes were designed to bring EU VAT on consumer electronic services sales in line with other services. The Commission’s original estimate was that one million businesses would register with the new scheme, however, less than 10,000 businesses having registered.

The Commission Vice President has called for the Commission to consider a €100,000 VAT registration threshold to lift micro-businesses out of the new limits. The current UK VAT threshold is £82,000 but in other EU states the rate is much lower and many small business are finding themselves forced to register for VAT in order to process EU VAT sales through MOSS. This support from the Parliament will come as welcome news to the UK Government who requested a review by the Commission in March. However, other states may resist any changes because of the potential effect on their tax revenues.