Definition of e-services in the EU

Thu Jan 30, 2014

The definition of e-services? Surprisingly, the EU VAT directive does not provide a definition, any clarification of what constitutes an e-service is found in the Implementing Regulation 2822011.

The fact that the definition is provided in the regulation means that the EU is able to change the e-services definition faster. This means that the definition might be adjusted sometimes in the future. Definition of e-services

If you need a technical solution for your e-commerce website to comply with the new EU VAT rules, just contact Taxamo.

There has been much debate about the exact definition of e-services, but what is certain is the role of technology in the delivery of these services.

So, it is established that the following elements together form an e-service:

  • service (i.e. not goods)

  • delivered via the internet, or an electronic network

  • supply is essentially automated, or involves only minimal human intervention

  • it is impossible to ensure in the absence of information technology

There is also an additional condition, which is not explicitly stated in the legislation, but can be extracted from the existing EU VAT case-law:

  • supply is made for consideration (i.e. for payment)

Definition of e-services:

The implementing regulation further provides some examples of e-services. These are:

  • The supply of digitised products generally, including software and changes to or upgrades of software

  • Services providing or supporting a business or personal presence on an electronic network such as a website or a webpage

  • Services automatically generated from a computer via the internet or an electronic network, in response to specific data input by the recipient

  • The transfer for consideration of the right to put goods or services up for sale on an Internet site operating as an online market on which potential buyers make their bids by an automated procedure and on which the parties are notified of a sale by electronic mail automatically generated from a computer

  • Internet Service Packages (ISP) of information in which the telecommunications component forms an ancillary and subordinate part (i.e. packages going beyond mere Internet access and including other elements such as content pages giving access to news, weather or travel reports; playgrounds; website hosting; access to online debates etc.)

The Annex to the VAT Directive provides a short indicative list of e-services, which is further expanded in the Annex to the Implementing Regulation.

Here’s the consolidated version of the examples from the two documents:

1. Website supply, web-hosting, distance maintenance of programmes and equipment:

  • Website hosting and webpage hosting;

  • Automated, online and distance maintenance of programmes;

  • Remote systems administration;

  • Online data warehousing where specific data is stored and retrieved electronically;

  • Online supply of on-demand disc space.

2. Supply of software and updating thereof:

  • Accessing or downloading software (including procurement/accountancy programmes and anti-virus software) plus updates;

  • Software to block banner adverts showing, otherwise known as Bannerblockers;

  • Download drivers, such as software that interfaces computers with peripheral equipment (such as printers);

  • Online automated installation of filters on websites;

  • Online automated installation of firewalls.

3. Supply of images, text and information and making available of databases:

  • Accessing or downloading desktop themes;

  • Accessing or downloading photographic or pictorial images or screensavers;

  • The digitised content of books and other electronic publications;

  • Subscription to online newspapers and journals;

  • Weblogs and website statistics;

  • Online news, traffic information and weather reports;

  • Online information generated automatically by software from specific data input by the customer, such as legal and financial data, (in particular such data as continually updated stock market data, in real time);

  • The provision of advertising space including banner ads on a website/web page;

  • Use of search engines and Internet directories.

4. Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events:

  • Accessing or downloading of music on to computers and mobile phones;

  • Accessing or downloading of jingles, excerpts, ringtones, or other sounds;

  • Accessing or downloading of films;

  • Downloading of games on to computers and mobile phones;

  • Accessing automated online games which are dependent on the Internet, or other similar electronic networks, where players are geographically remote from one

5. Supply of distance teaching:

  • Automated distance teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the Internet or similar electronic network is used as a tool simply for communication between the teacher and student;

  • Workbooks completed by pupils online and marked automatically, without human intervention.

Note: Taxamo content is created for guidance only, please consult your local tax advisor for professional advice.

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