2015 EU VAT Changes
Before 2015, VAT on online purchases are charged according to the country of residence of the online retailer. Starting 1 January 2015, this will no longer be the case – the applied VAT will now be based according to the country of residence of the buyer.
Rules applicable as of 2015:
From 1 January 2015, telecommunications, broadcasting and electronic services will always be taxed in the country where the customer belongs* – regardless of whether the customer is a business or consumer – regardless of whether the supplier based in the EU or outside
* For a business (taxable person) = either the country where it is registered or the country where it has fixed premises receiving the service.
* For a consumer (non-taxable person) = the country where they are registered, have their permanent address or usually live.
In other words, if you are selling digital goods (such as CD keys, e-books, and the like), it is your responsibility as the seller to charge the VAT according to your customer’s country of origin.
Example: The consumer is Romanian: you should apply the Romanian VAT. If the consumer is English, English VAT, etc…
To simplify this complexity that our governments have put in place for our business, a Mini One-Stop Shop (MOSS) has been set up:
This scheme will allow taxable persons established in France who/which deliver electronically supplied services to end customers in Member States in which they are not established to file returns and pay the VAT owed on these services through a single portal.
This streamlining measure will allow EU traders to avoid registering, filing and paying the VAT owed in each Member State of consumption.
Traders established outside the EU delivering electronically supplied services to non-taxable persons residing in the EU can also register with the MOSS in only one Member State even if they have customers in several MSs (“non-EU scheme”).
*Source for the following information: impots.gov.fr
Any taxable person established in France (or outside the EU) may register with the MOSS provided he/she/it supplies telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons in Member States in which he/she/it is neither established nor registered for VAT (e.g. for distance sales). These new arrangements are available to taxpayers either established in France (“EU scheme”) or outside the EU (“non-EU scheme”).
Taxable persons established in France (or established outside the EU) will be able to register for the MOSS scheme from end of November 2014 and file returns and pay the VAT owed on digital distribution services provided to consumers residing in another Member State. Registration will take effect from the first day of the calendar quarter following that in which the taxable person informs the French tax administration that he/she/it wishes to start using the scheme.
The taxable person must have a valid “espace professionnel” (professional tax account) to access this e-service. The trader will then be able to choose the online service (“Access the EU VAT Mini One Stop Shop”). A registration form can then be completed and submitted online.
The online “Access the EU VAT Mini One Stop Shop” service will be available during the last quarter of 2014 in addition to the online tax services offered in the “professional tax account” on the www.impots.gouv.fr website.
Registration details to be provided :
- Individual VAT Identification Number ;
- Company name ;
- Address ;
- E-mail address and Website ;
- Contact ;
- Contact’s telephone number ;
- Bank account details ;
- Date from which scheme will apply ;
- Activity type.
The MOSS only applies to services provided by electronic means (“digital distribution”); telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons residing in the EU (“business to consumer” or “B2C”).
Examples of e-services include (non-exhaustive list):
- VOD ;
- Downloaded applications (“Apps”) ;
- Music downloads ;
- Gaming ;
- E-books ;
- Anti-virus software ;
- Online auctions.
Distribution of physical products such as CDs, DVDs, video games or books is outside the scope of the mini One-stop shop.
The following table shows the VAT rates applicable in EU Member States: