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VAT on digital goods to be levied locally under new EU
rules
New European Union tax rules, which come into force
this Thursday, will see digital products taxed at
the VAT rate applicable in the consumer’s member
state rather than the seller’s.
The rules
are being introduced to stop companies that trade
online – such as Amazon, Apple and Google – from
routing purchases through low- VAT countries such as
Luxembourg.
VAT on digital products such as ebooks, music
downloads and apps used to be charged in the country
of the supplier. However, after January 1st, VAT
will be payable in the country where the digital
product is bought. This means Irish SMEs potentially
have to charge and account for up to 75 different
VAT rates in 28 countries.
Jarlath O’Keefe, head of indirect taxes at Grant
Thornton, said Irish suppliers of digital products
and services will need to determine where their
customers are established or usually reside and will
need to account for VAT at the applicable rate in
that member state. He said this could result in
suppliers having to register for VAT in all EU
states where they have customers.
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Revenue Commissioners: As an alternative to
multiple VAT registrations in member states, affected
Irish suppliers may be able to opt to account for VAT
across the EU via a single electronic declaration with
the Revenue Commissioners, he said..
The
mini-one-stop-shop scheme (Moss) allows Irish businesses
to submit returns and pay the relevant VAT due to member
states to the Revenue, rather than registering in each
country. E-commerce website Etsy, which has its European
headquarters in Dublin, said sellers on its site will be
expected to collect and pay VAT themselves.
“Historically, Etsy has acted as a venue on which
individual entrepreneurs run their businesses, with Etsy
sellers responsible for paying appropriate sales taxes
for those businesses. We are treating VAT the same way,”
the company said. “We understand that the new
regulations will be an added burden for shops that sell
digital items and deliver them electronically to EU
customers and we’re working on a tool that will make the
process easier.”
Website refitting:
Meanwhile, Irish-based technology company Taxamo has
launched a plug-in with e-commerce platform WooCommerce,
which enables any e-commerce business to quickly adjust
their website to comply with the new rules.
The plug-in will collect customer-location evidence per
transaction, validate business-to-business transactions
and calculate VAT for 28 EU states. It will also
calculate ongoing VAT liability, create quarterly EU
MOSS returns, create audit files for EU tax authorities
and securely archive data for 10 years, as mandated.
Taxamo chief executive John McCarthy said the plug-in
will enable “merchants to achieve full EU VAT compliance
in a matter of minutes”.
Minister for Finance
Michael Noonan has said Ireland could gain from the VAT
changes because it is a net recipient of electronic and
broadcasting services. In terms of inward supplies, the
estimate is driven by UK-based television services and
Luxembourg-based electronically supplied services.
Source::::
THE IRISH TIMES, dated 29/12/2014......... |
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