VAT on Digital Services to EU Customers

With effect from 1 January 2015, the EU introduced new rules affecting the VAT place of supply for sales of digital services to from a business to a consumer. The place of taxation will be determined by the location of the consumer.

Where digital services are supplied on a business to consumer basis, the supplier is responsible for accounting for VAT on the supply:

  • to the tax authority
  • at the VAT rate applicable

in the consumer’s EU member state.

 

You should carefully follow the appropriate regulations in your country to ensure that you are meeting the requirements. If you are based in the UK, then the relevant documentation can be found on HMRC's website at https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

 

Create appropriate Tax Rates

In order to correctly account for these transactions, you must first create a a new Tax Rate for each country that you are (or intending to) make EU Digital Sales to:

  • Name: Any relevant name to help you uniquely identify this tax rate. An example may be "France - EU Digital Sales"
  • Rate: Ensure that you use the correct rate for the relevant country. An example may be 23%
  • Tax Type: Ensure that you have selected Sales - Digital Services to EU.

Follow the above steps for each country that you make EU Digital Sales to.

 

Using the Digital Services Tax Rates in your transactions

When creating or editing transactions, you will now be able to use the relevant EU Digital Services tax rates where appropriate.

 

Reporting on EU Digital Services transactions (VAT MOSS)

Please see the section on EU Digital Services reports for more information.

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