VAT on Digital Products in Europe?

The EU operates Value Added Tax (VAT) and electronic goods and services are subject to VAT at the applicable rate. Each member state may set its own rate of VAT if they want. VAT regulations are very complicated and the intent of this article is not to provide definitive guidance but rather to list some of the relevant factors.

  • VAT is not collected from foreign EU businesses
  • A business must always charge VAT to non-VAT registered entities (i.e. consumers) but should not charge VAT to foreign EU VAT registered businesses who provide them with a VAT number. These foreign EU businesses are required to declare their purchase and the tax due to their own tax authorities. See http://ec.europa.eu
  • From 1st July 2003, EU suppliers will no longer be obliged to charge European VAT when selling on markets outside the EU.
  • When a non-EU supplier sells to business customers in the Union (at least 90% of this market), there will in practice be no change and the VAT implications will be handled by the acquiring company in the EU under self-assessment arrangements.
  • For the non-EU supplier whose EU customers are non-business individuals or organisations, there will now be an obligation to charge and account for VAT on these sales just as EU suppliers have to do.
  • The EU has issued a directive stating VAT on all electronic services and goods should be charged in the country where they are bought. That means that, if ou are selling a digital edition of a magazine to UK customers through Apple. the VAT charged will be 20 percent, not 15.

In other words, if you are charging £10 an issue, including £1.50 worth of VAT, the changes mean you would have put the cover price up by 50p, or give an extra 50p of revenue on every sale to the tax man. See www.themediabriefing.com

Next week we look at tax on digital goods.

Download these MS Office and Apple templates today

Acceptance Test Plan

Contingency Plan

Software Development Templates

Acquisition Plan

Conversion Plan

Software Requirements Specification

Action Plan

Cost Benefit Analysis

Software Testing

API Documentation

Database Design

Standard Operating Procedures (SOP)

Audience Analysis

Datasheet

Statement of Work

Availability Plan

Deployment Plan

System Administration Guide

Bill of Materials

Design Document

System Boundary

Business Case

Disaster Recovery Plan

System Design Document

Business Continuity

Disposition Plan

System Specifications

Business Plan

Documentation Plan

Technical Writing Templates

Business Process

Employee Handbook

Test Plan

Business Requirements

Error Message Guide

Training Plan

Business Rules

Expression of Interest

Transition Plan

Capacity Plan

Fact Sheet

Troubleshooting Guide

Case Study

Feasibility Study

Use Case

Change Management Plan

Functional Requirements

User Guide

Communication Plan

Grant Proposal

Verification and Validation Plan

Concept of Operations

Implementation Plan

White Papers

Concept Proposal

Installation Plan

Work Instructions

Configuration Management Plan

Interface Control Document

Software Development Templates

Acceptance Test Plan

Maintenance Plan

Software Requirements Specification

Acquisition Plan

Market Research

Software Testing

Action Plan

Marketing Plan

Standard Operating Procedures (SOP)

API Documentation

Needs Statement

Statement of Work

Audience Analysis

Operations Guide

System Administration Guide

Availability Plan

Policy Manual

System Boundary

Bill of Materials

Project Plan

System Design Document

Business Case

Proposal Manager Templates

System Specifications

Business Continuity

Proposal Template

Technical Writing Templates

Business Plan

Quality Assurance Plan

Test Plan

Business Process

Release Notes

Training Plan

Business Requirements

Request for Proposal

Transition Plan

Business Rules

Risk Management Plan

Troubleshooting Guide

Capacity Plan

Scope of Work

Use Case

Case Study

Security Plan

User Guide

Change Management Plan

Service Level Agreement (SLA)

Verification and Validation Plan

Communication Plan

Setup Guide

White Papers

Concept of Operations

Social Media Policy

Work Instructions

Concept Proposal

Contingency Plan

 

Configuration Management Plan

Conversion Plan