MOSS stands for Mini One Stop Shop and is part of the VAT, but it only concerns digital goods or services. For example, services covered under the MOSS scheme include website hosting, a supply of software, access to databases, downloading apps or music, online gaming and distance teaching.
When selling digital goods and services, the regular rule is that the place of turnover is where your customer is located. So normally if you sell physical goods to a certain country, then at some point you have to get a VAT number in that country. But MOSS simplifies the process for digital goods and services which means you don’t have to get a VAT number in many different countries. For example, if an Estonian company sells digital services to different private persons all over the EU, then the company’s invoices will have an Estonian VAT number, but a client’s home country VAT rate. Meaning that your company will pay all the other countries’ VAT to the Estonian tax office who will then spread the VAT itself between those countries where the customers purchased your digital goods or services. Therefore, MOSS will save you a lot of time and money in the end.
MOSS scheme can be used only if the company is VAT liable. In Estonia, you have to declare MOSS in a special quarterly declaration. So, it is not part of the regular monthly VAT declaration, but additional reporting. You still have to submit monthly VAT declarations, even if most of the goods or services you sell, are covered with MOSS.
It is very important that you fully understand what selling digital goods and services means when it comes to MOSS. You will have to set up a very good system to gather all the information about your clients, the countries where they’re from, and the VAT rates of the countries where your customers completed the purchases, as this will greatly help from the tax reporting point of view.