As the economy continues to digitalise problems arise when it comes to the effective and consistent collection of VAT/GST on cross-border sales. That is why recent guidance from the Organisation for Economic Cooperation and Development (OECD) on the matter is most welcome.
The OECD guidance revealed in late October 2017 identifies two approaches, contractual and deemed supplier, as the most effective collection mechanisms of VAT/GST from foreign-based suppliers. The information in the OECD report is most welcome and provides tax jurisdictions with significant clarity.
Across the globe indirect VAT/GST rules are being amended to ensure that foreign digital suppliers become liable for the collection and remittance of these taxes.
This pace of change, from a taxation perspective, is rapid. In the first half of 2017 alone Russia, Serbia, Taiwan, India, and Australia all amended their indirect taxation laws (or in India’s case introduced a whole new system).
The Organisation for Economic Co-Operation and Development (OECD) has already approved the destination-based principle in Action 1 of its Base Erosion and Profit Shifting (BEPS) report.
In a move that will have major implications for digital businesses across the globe Brazil – home to 120 million internet shoppers – is about to change how digital services are taxed.
A Brazilian State Agreement (Convênio ICMS 106⁄2017) has revealed plans to tax digital services – e.g. games, streaming services, music and image downloads, etc — via the State tax mechanism (ICMS). ICMS is a state tax applied in Brazil’s federal states to the supply of goods and services.
The new Argentine government has wasted no time in announcing a set of taxation measures, that include significant reform to how digital service supplies from non-residents are to be taxed.
On Tuesday, October 31, it was revealed that non-residents supplying digital services – such as streaming and music downloads – will be subject to a 21% from a provisional start date of 2019.
According to local news reports the Federal Public Revenue Administration (AFIP) in Argentina will start charging taxes through credit cards to digital service platforms.
This post focuses on some basics: what is the difference between B2B clients and B2C clients and how are they dealt with within EU VAT B2C law?
B2B (business-to-business: commercial transactions between businesses) are all legal persons and B2C (business-to-consumer: the sale of finished product) are all natural persons/private individuals.
Simply put: B2B (business-to-business: commercial transactions between businesses) are all legal persons and B2C (business-to-consumer: the sale of finished product) are all natural persons/private individuals.
The Organisation for Economic Co-Operation and Development (OECD) has revealed its guidance for the effective and consistent collection of VAT/GST on cross-border digital sales. In doing so they have provided a blueprint for tax authorities planning to amend laws to tax the cross-border supply of digital services.
The issue of how to tax cross-border supplies from non-resident businesses is a pressing one in international taxation. Specifically, the digital economy has created headaches for tax jurisdictions as they grapple with how best to tax these cross-border supplies.
Malaysia looks set to become the latest tax jurisdiction to seek a levelling of the playing field between traditional and digital businesses by amending their GST system to tax foreign-supplied digital services.
In mid-September 2017 Royal Malaysian Customs Department director-general Datuk Seri Subromaniam Tholasy told reporters after a GST conference in Malaysia that:
“We are amending a few of the tax laws, especially with regard to the GST to collect taxes from foreign companies that offer digital services in Malaysia.
VAT, GST, consumption tax, sales tax, use tax – no matter what term, or name, is used it is clear that the taxation of the digital economy is growing in popularity.
Here we outline the tax jurisdictions where such destination-based indirect tax rules are in place.
European Union Value-Added Tax (VAT) rate: 28 EU Member State VAT rates - taxation depends on location of the consumer In January 2015 new rules on the taxation of cross-border supplies of digital services to EU-based consumers came into force.
A new report from Canadian public policy think-tank, the C.D. Howe Institute, has highlighted a digital services market imbalance between domestic and foreign-based suppliers of digital services. The report recommends that Canada’s Excise Tax Act be amended so as to apply to businesses that supply digital goods and service for consumption within Canada.
The report mirrors the reasons that tax authorities worldwide have amended their Value Added Tax (VAT)/Goods and Services Tax (GST) system.
In the final part of a three-part series concentrating on the Software-as-a-Service (SaaS) model we analyse how international tax compliance processes can be improved for SaaS businesses.
Previous posts in this series: Part one: global challenges for the SaaS model Part two: CFO headaches as tax reforms targeting SaaS businesses affect strategy, globalization, and compliance It is astounding in this digital age that a majority of businesses still rely on manual processes for international VAT/GST calculation and compliance-related reporting.
In part two of a three-part series concentrating on the Software-as-a-Service (SaaS) model we look at the issues facing CFOs of a modern software delivery enterprise.
Part one: global challenges for the SaaS model In the last decade cloud computing has transformed how software is purchased, delivered, and consumed.
The year 2006 is loosely pinpointed as the date when cloud computing entered the lexicon of the masses. Since then business models have changed dramatically and SaaS companies have led the new wave.
The long-anticipated introduction of a new Value-Added Tax (VAT) system in Bangladesh has, once again, been hit with delays.
Due to internal pressures the Bangladesh government has reversed on a recent decision to implement the Value Added Tax and Supplementary Duty Act, 2012. The proposed VAT reform is unlikely to take place until the next elections in Bangladesh in two years time.
This news had caught many digital businesses around the world off guard as it gave them just three weeks lead-in time to update their platforms.
Providing Taxamo merchants with fully compliant tax settlement reports for our supported regions is one of the key features of our global digital tax compliance solution.
Here’s a brief region-by-region settlement report summary:
European Union European Union (EU) VAT returns are now due. Merchants have 20 days from the end a quarter to file their return. Therefore the Q2 2017 deadline is Thursday, July 20.
Norway Norwegian VAT returns are now due.
“It is unfair that overseas-based businesses selling services into Australia may not charge GST when local businesses have to charge GST. A local business that employs Australians pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system. We will level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to the GST.
When the Lok Sabha (India’s lower house of parliament) finally passed the Goods and Services Tax (GST) Bill in late March this year the country’s Prime Minister Narendra Modi congratulated all with the declaration: ‘New year, new law, new India’.
For international sellers of digital services, however, the new law brings new burdens. One of the major revelations in India’s GST bill is that there is no sales threshold to registration for foreign digital service providers.
In part one of a three-part series concentrating on the Software-as-a-Service (SaaS) model we look at the changing global indirect tax landscape and how it affects this growing economy.
‘Subscribe Now’ - two words that have become the clarion call of the online world! This simple call-to-action has come to underpin an entire business model: that of Software-as-a-Service (SaaS).
The SaaS model has transformed the software development industry connecting, as it does, users via cloud computing.
The devil is always in the detail: this is particularly true regarding the July 1 introduction of the new Indian Goods and Services Tax (GST) system.
We now know that there is NO sales threshold below which foreign suppliers of digital services to Indian consumers would not need to register. This means that every non-Indian seller of digital services who makes a single sale to an Indian consumer needs to register for GST in India.
The connected car of the not-too-distant future will be a revenue-generating machine on wheels: with data transmission at its epicentre. This movement of data will, given global trends, lead to burdens for owners of the potentially lucrative connected car platform as tax architects continue to recalibrate systems to account for the evolving digital economy.
CRUISE CONTROL: A woman (above) on board a test driverless car. Source: Wikimedia Commons. This image has not been changed.
Digital disruption has laid waste to numerous traditional industries, from the ramifications of internet publishing on the print media to the effects of the Uber and AirBnB models on the car travel and lodging sectors.
An increasingly connected (and smartphone-obsessed) population expects this disruption. Today, consumption is all about the now economy. It is now easier than ever, thanks to infrastructural advances in broadband and WiFi, for consumers to access digital content from anywhere in the world.
By 2020 the global digital video game market is predicted to become a USD$90 billion industry. Less than two decades ago it was an industry struggling with declining sales due to its over-reliance on physical video games. Today, thanks to advances in information technology – specifically improvements in broadband quality and the birth of the smartphone – there has been a stunning renaissance.
Today, the growth in in-game microtransactions and downloadable content (DLC) is giving the industry another shot in the arm.
Taiwan’s tax on the digital economy is now a reality. The Taiwan Tax Administration is also getting serious on enforcement with details in the country’s new digital Value Added Tax (VAT) legislation including the possible loss of a license for non-compliant foreign businesses.
The rules mean foreign businesses that supply digital services (e.g. video gaming, streaming, image downloads, etc) to Taiwan residents will have to register for VAT in Taiwan, file VAT returns, and pay VAT to the Taiwan Tax Administration.
-- A seminal moment in global digital taxation is upon us.
The Organisation for Economic Co-Operation and Development (OECD) has introduced new guidelines endorsing place of consumption rules.
In publishing the ‘International Value Added Tax (VAT)/Goods and Services Tax (GST) Guidelines’ the OECD are further building on work that started in Ottawa, Canada, back in 1998. Eighteen months ago, in November 2015, the initial guidelines were included as part of Action 1 of the Base Erosion and Profit Shifting (BEPS) report released by the OECD in relation to the tax challenges of the digital economy.
From April 1, 2017, international digital businesses with Serbia-based consumers will see an impact on operating costs, regulatory burdens, and resource management as Serbian VAT rules extend to cover their digital supplies.
Here are seven difficulties that any international digital business with consumers in Serbia should be aware for:
1. Tax advice Before you can think of making any inroads in relation to compliance with Serbia’s extension of VAT to cover cross-border digital supplies there is the significant cost in sourcing expert tax advice in relation to the law change.
Australia Digital GST liabilities are to become a reality for international digital service suppliers on the 1st of July.
On July 1, 2017, Australia’s Goods and Services Tax (GST) will – as outlined here new law — be extended to the cross-border supplies of digital services bought by Australian consumers. These supplies include digital services (e.g. the streaming, or downloading, of movies, music, apps, games, e-books) in addition to services such as architectural or legal services.
Snapchat, the image messaging platform founded in 2011, was valued at USD$40 billion in early March after a record-breaking IPO – making it more valuable than Delta, Target, and CBS.
These eye-watering figures are yet another example of how the sale, download, use, and sharing of digital imagery, music, and video is now big business. According to IBM we create 2.5 quintillion bytes of data every day. The sources of this data boom are everywhere online with all major social media sites depending heavily on user-generated images and videos.
Since the dawn of 2017 there has been a flurry of activity around online sales taxes in the U.S.
International digital service providers need to be aware of this as the potential domino effect of legislative change in the U.S. will have a major impact on business models.
States are now seeking ways to introduce and apply online sales tax legislation. To date the focus has been on how to tax out of state US ecommerce businesses.
On January 1, 2017, Russia became the latest country to change laws aimed at taxing the digital economy.
The specific change in Russia is that 18% value added tax (VAT) is now applied to the sale of a digital service based on the location of the end consumer in Russia, rather than the supplier’s location. Russia, mirroring the EU taxation approach, requires two pieces of evidence to be collected during the transaction and there is no threshold for compliance.
You requested, we listened, and now we can reveal five great new features that we believe will further improve our users’ interaction with Taxamo.
Continually refining and improving our service offering is important to us and that’s why we are pleased to reveal the fruits of our recent development work.
1. New mode: allow and report contradictory evidence for transactions In some cases a merchant may prefer that a transaction proceeds with contradictory evidence.
Let’s start with the last first.
The ugly: Did you know that the Indian Government is charging digital businesses a fee for collecting tax on their behalf. This fee is over 1% and comes off the digital business’ bottom line. It is not borne by the Indian consumer who pays the service tax.
This fee is charged by way of a margined FX rate. This rate must be used by a foreign business when converting the tax that the business has collected in foreign currency from Indian consumers.
International suppliers of digital services have just two weeks to prepare for new place of consumption tax rules just introduced in India.
On November 9 India’s Central Board of Excise and Customs (CBEC) released an official circular identifying and explaining the rule change. The new rules come into effect on Thursday, December 1, and specifically target the cross-border supply of Business-to-Consumer (B2C) digital services to India-based consumers. The technical tax development here is the withdrawal of the exemption on these B2C cross-border sales.
Last month the League of Legends World Championship 2016 was won by a South Korean team, SK Telecom T1. The win netted the six team members a share of the $2 million-plus first prize: $338,000 each to be precise. Back in 1980 the first Atari Space Invaders Championship was held in New York when players competed (merely) for the highest scores. Just so you know: Bill Heineman of Whittier, California, won that competition with a score of 165,200.
New service means digital businesses can retain their existing payment service provider and also meet global VAT liabilities Digital sellers rejoice: you can now retain your existing payments provider while also meeting your global VAT liabilities.
Taxamo have made this possible by developing our new service: Assure.
From our peerless experience in providing digital tax solutions to businesses operating worldwide we have learned that something is missing in the digital payments model.
Fittingly, on the 30th anniversary of its goods and services tax (GST) system introduction, New Zealand continues its taxation evolution by extending GST to remote digital service supplies. Taxamo, of course, will support this extension when introduced on October 1, 2016.
In October 1986, when New Zealand introduced GST, there was no digital economy. Now, 30 years on, New Zealand will become one of the first tax jurisdictions to implement a ground-breaking Organisation for Economic Co-operation and Development (OECD) recommendation on how to tax the digital economy.
On October 1 New Zealand will become the latest country to seek to tax the burgeoning global digital economy by extending the scope of their indirect taxation system.
From this date forward, international companies supplying digital services (e.g. the download of music and images, online gaming subscriptions, and streaming services) to New Zealand-based consumers will have to add, collect, and remit a goods and services tax (GST) at the rate of 15%.
Digital sales taxes in the U.S. are becoming increasingly common as States begin to tax digital services such as Netflix, Hulu, Spotify, and games such as Pokémon GO. This taxation evolution is taking place within States as the Federal legislators drag their heels on potential legislation taxing the digital economy in the U.S.
At the start of August Pennsylvania became the latest State to extend its sales tax to include the download of books, music, games, movies, and apps.
India – one of the world’s fastest-growing large economies – is finally about to introduce a new taxation system, including a plan to tax the country’s digital economy.
As reflected in recent international approaches, the trend of enacting destination-based indirect tax legislation is to the fore. Ever since the release of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) report in October 2015 tax jurisdictions across the globe have taken stock of their existing tax collection systems and reassessing options.
Compliance with international tax regimes can be a mountain to climb for merchants that’s why we continue to expand and today can unveil our Swiss VAT support. Swiss VAT support: the key element to digital sales Since January 1, 2010, the Swiss Federal Tax Authority (FTA) has levied a value added tax (VAT) on the supply of services from non-resident companies to Swiss residents.
Article 10 of the Swiss VAT Act states that VAT is applied to a service supplied from “any person who carries on a business based abroad that supplies telecommunication or electronic services on Swiss territory to recipients who are not liable to the tax”.
Thursday, June 23, was a seminal moment in the UK’s political history as it’s citizens voted by a margin of 52% to 48% to leave the European Union (EU).
But what does the Brexit vote mean for digital service multinationals already based in the UK, or for ones considering a base there?
The first thing to note is that it is not yet clear what relationship the UK will have with the EU once Brexit has officially come into effect.
In 100 days time New Zealand will become the latest global tax jurisdiction to harness the power of the rapidly-expanding digital economy. On October 1, 2016, a goods and services tax (GST) at a rate of 15% will be added to the supply of online services (such as software and music downloads) to New Zealand residents from an offshore supplier. Image: Pixabay.com
On October 1, 2016, the New Zealand Taxation (Residential Land Withholding Tax, GST on Online Services and Student Loans) Act 2015 becomes law.
South Korea has long been admired as a digital economy visionary so it’s with great pleasure that we reveal our support for South Korean VAT compliance.
We understand that South Korea is a key marketplace for digital service merchants and compliance with the local tax laws is non-negotiable. Now, with Taxamo, merchants can achieve this compliance without major upheaval to their existing strategies and systems.
We have distilled our international digital tax compliance solution into one simple integration.
The standard rate of VAT in Greece is to increase from 23% to 24% on June 1 after the relevant tax bill amendments were adopted by the Greek Parliament on May 22.
The tax rate increases approved on Sunday will have a broad impact as increases were announced to the taxation of cars, fuel, cable TV, lotteries, telephone subscriptions, beer, and cigars.
The background to these taxation measures was the May 24 meeting of Eurozone finance ministers in Brussels.
Australia’s new digital GST has moved a step closer as one of the last acts of Malcolm Turnbull’s government was the passing of the digital goods and services tax (GST) bill.
On Wednesday, May 4, the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 finally passed both houses of the Australian Parliament. Four days later Turnbull’s government was dissolved and an election called for July 2.
New Zealand GST on digital services supplied from abroad to New Zealand-based consumers will come into effect on October 1, 2016.
Details of the proposed new digital GST – due to come into effect on October 1, 2016 – passed a third reading in the New Zealand parliament on May 10. The hurdling of this latest legislative barrier now leaves the path clear for the new rules concerning the supply of digital services by foreign companies to New Zealand consumers to be introduced at the start of Q4 2016.
We have been working hard on improving Taxamo and today we are proud to announce five fantastic new features.
These features take into account the fluid nature of the digital economy – as our merchants grow so too does our market-leading international digital tax compliance solution.
1. Invoicing templates and credit notes First off, we are thrilled to announce a series of updates to our popular invoicing offering.
Last month we were delighted to feature in The Sunday Business Post’s prestigious 100 Hot Start-Ups list among some top digital companies.
The publication, which featured a host of FinTech and RegTech companies based in Ireland, was produced in conjunction with Enterprise Ireland to highlight the success of companies that continue to break new ground in domestic and international business.
We are pleased, and proud, to feature in such an excellent publication.
If you are a Canadian merchant selling digital goods and services in Canada you can now use Taxamo for Canada sales tax compliance.
Here at Taxamo we have had feedback from our Canadian digital service merchants that they found it difficult to comply with domestic tax reporting requirements while also complying with new global digital tax requirements.
Taxamo has launched support of Canadian sales tax compliance for our merchants who have a Canadian domestic reporting requirement.
Australia could recoup as much as AU$3.2 billion from a new 10% digital services GST revealed in the 2015 budget.
Draft laws for the new Australian digital services GST were introduced to the Australian Parliament on February 10, 2016. Treasurer Scott Morrison told The Australian Parliament why he was introducing such rules:
It ensures Australian businesses selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia.
There have been some major digital tax developments in the Asia-Pacific region this month. In early February 2016 Ernst & Young urged the Singapore Government to introduce a new tax on international digital service suppliers in the island city-state’s 2016 Budget. Photo: Pixabay
The Asia-Pacific region, in general, has been very active in the realm of digital taxation.
In October 2015 Japan amended their consumption tax laws. Now, all foreign businesses supplying digital services to Japanese consumers must collect and remit an 8% consumption tax to the Japanese tax authorities.
Standing still in the rapidly evolving world of digital taxation was never an option for us here at Taxamo.
That is why we have improved our market-leading digital tax compliance solution. Here are the recent updates to the Taxamo digital tax compliance solution:
1. Product-specific checkout form We know the checkout form is a crucial element of online business. It is, typically, the final frontier between online window shoppers and that priceless customer.
Japanese eCommerce has been revamped with the government now requiring foreign businesses supplying eServices to Japanese consumers to account for the current 8% consumption tax. The new rules came into effect on October 1, 2015.
The bill amending the Japanese Consumption Tax (JCT) was passed on March 31. Registrations for the new digital consumption tax opened on July 1 and on August 17 Japan’s National Tax Agency (NTA) released a list of foreign digital service businesses thus far registered.
Norway VOES has been a resounding success since introduced in July 2011, with over €266.5m raised Taxamo is delighted to announce that support for the Norway VOES (VAT on eServices) system has been added to our growing list of countries supported for digital service sales.
Norway has been a pioneer in the digital taxation sphere introducing such legislation as far back as July 1, 2011, when the Norway VOES system was first unveiled.
We are proud to announce that we have released yet another powerful feature for Taxamo – Webhooks, with an optional Zapier integration.
Taking best practice in API design, Taxamo now allows merchant software to subscribe to events and notifications related to transactions processed by Taxamo. This gives Taxamo customers unparalleled flexibility in how they, and the services they use, interface with Taxamo.
To help clients easily make full use of Taxamo’s APIs, Taxamo has also integrated into Zapier.
Russia digital VAT looks set to become a reality by 2017.
But why is Russia making this move now?
First, some context. At the start of December 2015 it was revealed that Russia plans to introduce a new value-added tax (VAT) on digital services provided by foreign companies in January 2017.
This new 18% VAT (the standard rate) will mirror similar taxation intentions in the European Union (EU), and is aimed at non-Russian digital service companies supplying Russian consumers.
Tax jurisdictions across the world are implementing new rules on the taxation of digital services, akin to the new EU VAT rules introduced at the start of 2015.
In early December a draft digital VAT bill was passed in the Russian Duma. The bill effectively mirrors the EU VAT rules on the supply of digital services. Once this bill passes through the remaining legislative hoops it is planned to come into effect on January 1, 2017.
In less than two decades eLearning has revolutionised how we receive knowledge and improve skills: these needs are combining to produce an industry that within a decade will become a $250 billion market.
Forbes have estimated that the 2015 global eLearning market is worth $107 billion. Others have predicted that the industry will grow at 10% per annum, to be worth a whopping $243.8 billion by 2022. A simple Google search will unveil a plethora of reports and predictions, all estimating a marketplace growing in the billions.
As of today Taxamo provides support for merchants seeking to comply with the South Africa digital VAT system.
The South African Revenue Service (SARS) was one of the international pioneers in changing the approach to taxing digital services. On June 1, 2014, non-resident suppliers of certain “electronic services” to South African residents (or if payment originates from South Africa) are required to register for VAT.
All the key details of the South African VAT system are contained in the ‘Registration Guide for Foreign Suppliers of Electronic Services’ , we have also compiled a useful list of FAQs on the topic.
There have been some interesting US digital tax developments of late, with the common driving force being the amount of potential revenue going unclaimed by tax jurisdictions.
In late October 2015 Chicago officially rubber-stamped their new amusement tax (commonly referred to as a ‘Netflix Tax’ and in operation since July 1, 2015), while both the city of New York and the State of Georgia have received budgetary advice on the need to tax digital services.
On Monday, October 5, the Organisation for Economic Cooperation and Development (OECD) released their final BEPS report including a section on ‘Addressing the Tax Challenges of the Digital Economy’.
The report – according to KPMG in the UK – is seen as the biggest rewrite of the international tax landscape since the League of Nations proposed the first bilateral tax treaty in 1928. The OECD approach has indeed been exhaustive featuring 23 discussion drafts; 12,000 pages of commentary, and 11 public consultations.
A new fiscal brief from New York’s Independent Budget Office (IBO) has urged officials to explore a New York digital tax.
The IBO is a publicly-funded agency that provides non-partisan information about New York City’s budget to the public and their elected officials. In its September fiscal brief (available here) the IBO stated that New York is foregoing significant revenue from the lack of a tax on digital services.
As eCommerce has grown in popularity with consumers so too have international digital tax laws with legislators. It is for this reason that the Taxamo service continues to expand.
By the end of 2015 36 countries had introduced new ‘place of supply’ tax rules on digital service sales or ‘digital downloads’.
Japan became the 36th country to do so on October 1, 2015. Already 49 multinational digital service companies have registered for Japan’s new consumption tax.
Since September 10 Albania, Norway, and Morocco are treated differently by Google Play due to new digital tax rules.
A recent email from Google Play stated that due to a VAT [value added tax] law in the three countries Google will now be “responsible for determining, charging, and remitting VAT for Google Play paid apps and in-app sales to customers in Albania, Norway, and Morocco.”
The September 3 email from the Google Play Team to Google Play developers also included details on how the VAT is to be remitted to the appropriate tax jurisdiction:
This week New Zealand became the latest tax jurisdiction to reveal digital sales tax plans with a new 15% online GST on digital services.
NZ Prime Minister John Key pointed out that up to a dozen jurisdictions worldwide already have systems in place “that work” regarding the taxation of digital services such as the download of images, music, and films.
In this blog we take a look at the some of the features that Taxamo has developed as a result of expanding digital taxation rules and why just this week Taxamo was chosen by Silicon Republic as one of the top 30 Irish start-ups in the Fintech space.
Forty years ago it took Kodak’s Steven Sassoon 46 seconds to record and display the world’s first digital image. Today, on the photo-sharing platform Snapchat 404,616 photos are shared every 46 seconds!
Technological advances and the proliferation of social media has led to an explosion in digital imagery. We take 1.5 million digital photos every 46 seconds across the globe, most are uploaded, shared and stored on the web.
Switzerland has pushed out the introduction of a zero-threshold for taxing digital services supplied by multinationals to Swiss consumers.
The change to Switzerland EU VAT legislation was to have taken place at the end of this year but will now not come into effect until January 1, 2017. This move gives digital service multinationals supplying consumers in Switzerland some breathing space, it gives them time to comply.
The new rules, being introduced as part of the new Swiss VAT act, include a change to the VAT registration threshold for foreign companies and most non-residents who are providing taxable supplies in Switzerland.
The cover of Time magazine is a good gauge of cultural relevance: so when Shawn Fanning adorned its cover in October 2000 people sat up and took notice. Most did so as it was probably the first time they had ever seen Fanning’s face, prompting the question: why was he on the cover of Time?
Fanning is one of the godfathers of peer-to-peer file sharing. In 1999 he – along with his brother, John, and Sean Parker – co-founded Napster, the pioneering audio file sharing site that shook the music world to its core.
In this post we are covering how the non-Eurozone Member States require VAT MOSS users of their portals to submit returns, and in what currency.
There are nine non-Eurozone countries: Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom.
When it came to VAT MOSS return requirements these nine EU Member States had the option of requiring the return to be submitted in their local currency or in euro.
Taxamo is going global. Our digital tax solution is now needed worldwide – in Q1 2015 Taxamo’s digital merchants had sales in 108 countries – so the natural next step for us was to expand the number of jurisdictions which our solution supports.
Over the coming year Taxamo will be rolling out our service for tax management on digital goods and services to multiple new jurisdictions.
This new expanded offering follows our flagship EU VAT solution that handles all aspects of consumer location detection and tax reporting on digital sales in line with new EU regulations.
The spectre of commoditization, with ever decreasing margins, looms over the payment industry. A key strategy for payment services providers (PSPs) is to move up the payments value chain by innovating in adjacent industries. Let us explain.
There has been a stream of vanilla services in the past half-decade all promising pretty much the same thing. This impact of this industry evolution has been for rivals to primarily compete solely on price.
The power of eLearning has tripled in just four years. In 2015 this booming industry is tipped to expand to $107 billion in revenue, up from $35.6 billion in 2011.
Why is this happening? Here we outline five reasons as to why the eLearning industry is booming:
1. Cloud formation The key catalyst for the eLearning boom has been the development of the Cloud. The Cloud has enabled the creation of multiple service-as-a-software (SaaS) business models that are perfect for the supply of eLearning courses.
The Digital Single Market strategy launched on May 6 is an attempt to bring order to the chaos that is the digital economy.
It is chaotic for numerous reasons, chief among them being the fact that many digital service providers still do not comply with taxation rules. The problem here is that many of these rules were created before certain digital economy industry segments even existed. Apply – and collecting – tax to cloud computing and online streaming services is a new headache for legislators.
Compliance with EU VAT regulations just became a whole lot easier. Taxamo have launched a new feature that enables merchants to retrospectively import historical transaction data to their Taxamo account.
In other words, if you weren’t ready by Jan 1, you can catch up!
What is this new feature? We make the reporting process easier and smoother for online merchants, allowing you to upload your historical transaction data via a custom CSV file.
Our new electronic invoicing feature is now available for Taxamo account-holders.
We recognise the fact that electronic invoicing is a critical component for every online merchant’s business model. Now, thanks to our optional new feature, we can provide our account-holders with considerable peace of mind when it comes to sending payment receipt invoices for confirmed transactions to their own customers.
Online merchants supplying customers in the EU are (since the introduction of the new rules on January 1, 2015) required to comply with the VAT invoicing rules (overview here) of the Member State where the supply is made.
The second VAT Mini One-Stop Shop (MOSS) return is due within 20 days of the end of the second quarter. that is: July 20.
Merchants who have registered with the EU’s new MOSS system are always allowed 20 days from the end of each calendar quarter to submit their VAT MOSS return to their chosen Member State of Identification (MSI).
The MSI is the EU tax authority with which a merchant registers with for the purposes of declaring all of the VAT collected on their pan-EU supplies.
Filing online VAT MOSS returns is a new approach to tax filing for many businesses so we’ll try to simplify the processes involved. Unfortunately, there is no EU standard VATOSS return as EU Member States all require separate technical and financial details.
FAQs: Click here for more VAT MOSS information
Taxamo has prepared a step-by-step guide for our merchants to access their VAT MOSS settlement data. Having spent months speaking directly to European Union tax authorities this is the information required by each Member State.
Payment interruptions are not acceptable. Customers don’t need an excuse to abandon their shopping cart, so don’t give them one.
Take a tour of our dashboard!
Taxamo have created an EU VAT compliance solution that operates in real-time mirroring the customer journey. A Taxamo account holder can rest easy, safe in the knowledge that they comply with the new EU VAT rules on the cross-border supply of digital services.
EU VAT registration should be high on the agenda of any non-EU digital service supplier as the deadline looms for compliance. Against this backdrop Taxamo hosted the third in a series of webinars focusing on the tax implications for US digital companies ahead of the January 2015 EU VAT rule change.
The webinar featured Taxamo CEO John McCarthy and EU VAT expert Esteban van Goor, of Baker McKenzie. The following is the transcript of the Q&A session section of the webinar.
** We didn’t make the the rules but we do have a solution to solve the headaches created by the new 2015 EU Digital VAT rules. **
Time is running out for digital service suppliers to put in place a system that will enable compliance with the 2015 EU Digital VAT rules. Taxamo solves all the complex administration headaches faced by these merchants. Photo: Pixabay
We’re pro-business (our company legacy is one of entrepreneurship over 30 years in the payment and technology space) so it has genuinely pained us to see that many digital services suppliers are contemplating a restriction of their online offerings.
A series of myths have been perpetuated since the new EU digital VAT rules were established. It is time these were shattered.
Before we proceed with our myth demolition let’s get one thing straight: these new rules are going to come into effect on January 1, 2015. This date has already been agreed to by all of the 28 EU Member States – it will not be moved, or postponed.
Few realize that rules regarding the supply of services by US digital companies to customers in the EU have been in place since July 1, 2003.
The rules may have existed but compliance with the VAT on eServices (VOES) scheme as it was called had been “mixed and indifferent”, according to Andrew Webb, of the UK’s tax authority HMRC. Mr Webb was speaking at a Taxamo-organised webinar in London prior to the introduction of the new rules.
App developers will need to forensically trawl over their contracts with app marketplaces and other platforms ahead of the introduction of new EU VAT rules on January 1, 2015.
How contracts are written between developers and app stores will be crucial as regards who pays the EU VAT on the cross-border supply of digital services. For example, Google and Apple will pay the VAT – but what about other app stores and intermediaries?
The EU Commission has just released crucial MOSS invoicing requirements detail for each EU member state ahead of the introduction of new VAT rules on January 1, 2015.
The European Commission has released crucial MOSS invoicing requirements.
These new rules affect the cross-border supply of digital services between a taxable person (supplier) and a non-taxable person (customer) in the EU. The new rules only affect B2C sales of these digital services.
Looking for the definitive list on MOSS registration? Look no further.
MOSS (the Mini One-Stop Shop) is a system designed to – as the EU Commission has previously stated – ‘ease the administrative burden’ on digital service merchants.
MOSS web portals across the EU are opening to accept registrations from merchants ahead of the new EU VAT rules due to come into effect on January 1, 2015.
The tax authorities of member states operate the MOSS web portals.
You asked us and now we answer your questions about the new EU VAT rules. The 20 questions in this blog post were posed by participants – online and in person – during Taxamo’s seminar in London. Our full EU VAT event is online here.
1. How is it determined who is making the digital service supply? Article 9(A) of the implementing regulations outlines who will be affected by these new cross-border rules.
A poll taken during Taxamo’s 100-day countdown to the EU VAT rules event in London has revealed that digital service merchants are still very much in the dark ahead of the introduction of these new rules.
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Some 51% answered ‘don’t know’ to the question: could the new rules impact your profitability in 2015? In a further reinforcement of the doubt among digital service merchants some 46% of the poll respondents answered ‘yes’.
REFUNDS are a headache for businesses, but also a necessary evil. The prompt refund of transactions or overpayments paints a business in a good light, no matter the industry.
When a business is charged VAT based on the new EU VAT rules they must liaise with the eMerchant and not the EU member state where the sale took place for a refund. Photo: eFile989/Flickr
The reform of EU VAT legislation in relation to the cross-border supply of digital services provides detailed guidance as to how a refund would take place post-2015.
The European Commission has just released MOSS audit guidelines for EU member states.
Interestingly, the guidelines – which are not binding on EU member states – are followed by the initials of all the countries that have agreed to implement them. Thus far none of the guidelines are followed by the initials of all 28 EU member states. France and Italy, for example, have yet to agree to any of the recommended guidelines in relation to the auditing of Mini One Stop Shop (MOSS) registrations.
WE have blogged on technological trends before and how the EU VAT Directive is framed to take advantage. These technological trends have already revamped our lives and are about to become much more important (or, indeed, instrusive, depending on your outlook).
The EU has gone to great lengths to ensure that technological trends are catered for in their 2015 VAT Directive. Photo: Getty Images
Well, the EU Expert Group on the Taxation of the Digital Economy gives us some fascinating insight into what the European Commission is keeping a close eye on.
IN late April 2014 the EU’s expert group on the taxation of the digital economy held their fourth-ever meeting in Brussels. The EU had already taken the first steps towards taxing the digital economy with the 2015 VAT Directive, now the expert group was exploring other sources of digital economy tax.
Internet traffic is doubling every two to three years and mobile internet traffic every year.
The group’s get-togethers ran parallel with the OECD’s own probe into the tax challenges of the digital economy.
THE digital economy is the electrification of the modern era. That is one of the views of an EU expert group on taxing the digital economy which met throughout early 2014.
The EU’s expert group on taxing the digital economy have now held three meetings at EU HQ in Berlaymont. Photo: Getty Images
The group in their summary of the digital economy feel that if certain conditions are met that Information and Communication Technologies could increase productivity and innovation, thus leading to GDP growth in much the same way that electrification did in the late 1800s/early 1900s.
Here are some practical examples of digital services unaffected by the 2015 EU VAT rule change, i.e. services not regarded as being electronically supplied (source: revenue.ie):
Example 1 of digital services unaffected
The supply of a game on a DVD or CD-ROM is not affected by the 2015 EU VAT change.
A supply of
A good, where the order and processing is done electronically
A CD-ROM, floppy disc or similar tangible media
Digital services affected by the 2015 EU VAT change span across the digital economy. Here, we give some practical example of those digital services affected by the new rules to come into effect on January 1, 2015 (source: revenue.ie).
The downloading of electronic services will be vatable from January 1, 2015. Photo: Getty Images
Example 1 of digital services affected: Web site supply, web-hosting and distance maintenance of programmes and equipment
Taxing the digital economy is a priority for tax jurisdictions across the globe but the EU’s attempt may well become the global template. These new rules covering the supply of digital services in the EU come into effect on January 1, 2015.
The expert group on the taxation of the digital economy is up and running. Image from EU Commission website.
This statement was just one of the nuggets mined from a January 2014 meeting of the EU expert group on the taxation of the digital economy.
The VAT explanatory notes (final discussion took place on Monday, February 17) were drafted to provide a better understanding of the legislation adopted by the EU in October 2013. The notes themselves do not replace VAT committee guidelines which has its own role in the process. They are a guidance tool for businesses to clarify the practical application for of the new rules for BTE (broadcasting, telecommunications and electronic services).
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 282⁄2011.
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. If you need a technical solution for your e-commerce website to comply with the new EU VAT rules, just contact Taxamo.
The VAT Information Exchange System (VIES) was put in place by the EU to assist in the policing of the new VAT arrangements from January 1, 1993. Under the VIES legislation, all VAT-registered traders who make intra-community supplies of goods must furnish the relevant EU member state tax authorities with a VIES statement listing such supplies.
Under the new VAT system intra-Community supplies of goods are exempt from VAT in the member state of despatch when they are made to a taxable person in another member state who will account for the VAT on arrival.
As of the start of 2015 there will be new EU B2C VAT rules for e-service providers. To accompany the new system, e-service providers will have the option of using the single VAT declaration scheme – a mini one-stop shop (MOSS) – or opt to declare VAT separately in each EU member state in which they do business.
MOSS also has two separate optional schemes, one for non-EU businesses and one for EU businesses.
European legislators hope that the new EU VAT registration system will act as a painkiller to the headaches of doing business in the EU.
The new Mini One-Stop Shop (MOSS) system has been set up to enable digital service providers make a single declaration for B2C (business to customer) VAT. From January 1, 2015, digital service providers will charge VAT in accordance with where their customer is located in the EU.