Digital services provided by entrepreneurs in non-EU countries
Digital services (telecommunication, broadcasting and electronic services) are subject to different rules. Digital services are taxed in the country where your customer lives or is established. It makes no difference whether your customer is a private citizen or a business.
The mini One Stop Shop (MOSS) scheme has been introduced to prevent you from having to register in each EU country to which you provide digital services. This scheme makes it possible for entrepreneurs to declare the VAT for the digital services that they provide to private citizens via one EU country. More information about the MOSS scheme is given under EU VAT declaration with MOSS for entrepreneurs in non-EU countries.
Which digital services does this cover?
The digital services in question are as follows:
- electronic services
These are services provided using the internet or a digital network. They are largely computerised and cannot be provided without using information technology. Examples include online traffic information and weather forecasts, online newspapers and magazines, online data storage, access to or downloading software, the use of search engines and online gaming.
- Telecommunication services;
These services entail the transmission, sending or receiving of signals, text, images, sounds or information via cable, radio waves, optical or other electromagnetic systems. This includes the transfer and granting of the right to use capacity for such transmission, sending or receiving. Examples include telephony, SMS, internet access and voicemail.
- radio and television broadcasting services
These are services with audio and audiovisual content, such as radio and television programmes offered via communication networks to the general public for simultaneous listening or viewing under the editorial responsibility of a media services provider on the basis of a programme schedule.
How do you determine the place of delivery of the digital services?
The key principle is that digital services for private citizens are taxed in your customer's country of residence.
For certain digital services you determine the place of the service on the basis of:
- the physical location
This is the case if you provide the service at a certain location, such as a Wi-Fi hotspot, telephone cell, internet cafe, restaurant or hotel lobby.
- the place of departure of the passenger transport
This is the case if you provide the service on board a ship, aircraft or train for passenger transport within the EU.
- the place where the private citizen's land line is installed
This is the case if you provide the service via a land line.
- the country code of the private citizen's SIM card
This is the case if you provide the service via a mobile telephone.
- the location of the decoder, or the place to which the viewing card is sent
This is the case if a decoder or viewing card is needed for the service.
You can apply the guidelines set out above to reduce your administrative burden without having to obtain any other information from your customer.
If you do not wish to follow these guidelines, you can determine your customer's place of residence yourself. For this purpose you will need 3 non-conflicting means of evidence such as the invoice address, bank details, the internet protocol address (IP address) or other commercial details.
If you provide digital services other than electronic services, telecommunication services or radio and television services, you will need 2 non-conflicting commercial means of evidence to determine your customer's place of residence.
Explanation of the changes to the EU VAT rules
An explanation of the changes to the rules for digital services has been published. You can read it on the website of the European Commission.