From 1st January 2015 HMRC introduced the VAT MOSS scheme. This scheme stipulates that UK businesses supplying digital services to EU based non-business customers in the telecommunications and e-services sectors, will have to charge, and account for, the VAT rate of each customer's member state.
Navigate to Settings > Organisation > Details & Tax.
Click on the Tax link in the table on the left-hand side and then click on the switch to a VAT scheme link.
Add a new VAT scheme selecting VAT registered for MOSS only. Hit the Add button to complete.
Navigate to Sales > Invoice > Create Invoices.
Fill in the invoice details for a VAT MOSS enabled customer. In the VAT treatment box select Digital Services to EU Customer. The VAT rate drop-down list will populate with all the VAT treatments specific to the customer's location.
Please ensure that both the country in the customer's details and the VAT treatment are correct as VAT MOSS rules will be applied to non-EU based customers and the invoices will appear on your VAT returns if the Digital Services to EU Customer treatment is selected.
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