Mini One Stop Shop
Over recent years there has been lots of VAT lost from digital services supplied to non-businesses because companies set-up and operated from low or no VAT rate countries.
The services include broadcasting, telecommunications and e-services from businesses, including the self-employed.
Up until 1st January 2015 the sales were deemed to take taken place where the suppler was based. But, now the sale is treated as being made where the customer is based.
So, if you sell a digital product in France you have to add French VAT and pay this to the French government.
This could be a nightmare if you sell in lots of countries. So, to save you registering for VAT in other countries you can register for the Mini One Stop Shop (MOSS). The only downside is that you need to be registered for VAT in the UK.
This causes a problem for non-VAT registered businesses because you could then have to charge VAT on all your sales. However, the VAT office have updated their guidance and if you turnover less than the VAT threshold, you do not need to charge VAT on UK sales.
However, you will be able to reclaim VAT on European sales and complete VAT returns but this could be as simple and entering zero everywhere.