Tuesday, December 02, 2014

New Electronic Services Value Added Tax (VAT) Rules (and Record Keeping) in Effect in the European Union Starting 1 January 2015

European Union Value Added Tax (VAT) Rules (and corresponding record keeping) for telecommunications, radio and TV broadcasting and electronic services supplied in the EU Member States change starting January 1, 2015.

Under the new rules, the location of the customer is determinative for the VAT applied.

For example, we today received an email notice from Amazon's Kindle Direct Publishing (KDP) about the new rules, which informed us, inter alia:
"On January 1, 2015, European Union (EU) tax laws regarding the taxation of digital products (including eBooks) will change: previously, Value Added Tax (VAT) was applied based on the seller’s country – as of January 1st, VAT will be applied based on the buyer’s country. As a result, starting on January 1st, KDP authors must set list prices to be inclusive of VAT.  We will also make a one-time adjustment for existing books published through KDP to move from VAT-exclusive list prices to list prices which include VAT. We'll put these changes into effect starting January 1st; you may always change your prices at any time, but you do not need to take any action unless you wish to do so."
Accordingly, one can see that the new rules have very broad implications.

See the European Commission website page on VAT on electronic services.

For practical aspects of implementing the new rules in daily business,
see Tax Briefing at Revenue.ie
and
Taxamo.

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