What digital services will be affected by new EU VAT rules If you are a business with a product that requires the internet to be supplied then more likely than not the new EU VAT rules apply to you. This is a simple way of explaining who is caught in the net. If the product requires access to the internet to be supplied then it is subject to the VAT reform. Specifically, the new rules relate to broadcasting, telecommunications and electronic services.
So, what does broadcasting refer to? Broadcasts and events be they political, cultural, artistic, sporting, scientific and entertainment. Web-based broadcasting that is only provided over the internet and is not simultaneously broadcast over a traditional radio or television network will be affected.
What does telecommunications refer to? Telecommunications in the new EU VAT rules refer to the supply of:Internet Services Packages (ISPs) in which the telecommunications component is an ancillary and subordinate part (i.e. a package that goes beyond mere Internet access, comprising various elements (e.g. content pages containing news, weather, travel information; games fora; web-hosting; access to chat lines, etc.))
What does electronic services refer to? In effect electronic services can refer to everything else that is supplied via the internet. Examples include the download and streaming of films and music; the download of images; website hosting; ebooks, and the download of anti-virus software,
What services are not included? Telecommunications that do not come under the scope of the new EU VAT rulesrefer to the supply of: • Videophone services (i.e. telephone services with a video component • Access to the internet and the world wide web • Telephony (i.e. telephone service provided through the internet) In broadcasting terms, the supply of a radio and TV broadcast over the internet simultaneous to a broadcast provided on traditional radio and TV is not affected by the EU VAT reform. Example of electronic services that are not affected include: • • • •
A physical good, where the order was processed via the internet Interactive online teaching services Offline data-warehousing Telephone helpdesk services
The new rules cover a huge and growing marketplace and it is crucial that all eMerchants in this space seek advice as to whether they are affected.At 1 Jan 2015 new EU vat rules will be applied to e-merchants, so prepare yourself and to get more detail visit www.taxamo.com