EU VAT on digital services
All EU countries have the destination principle for VAT for downloadable files from websites in another country to customers (non-business). You must invoice with the VAT-rate in the customer country. Then report it through the system called MOSS.
VAT on digital services to non-EU countries
Do you think it’s cumbersome to handle VAT when selling to other countries? Yes, it is! If you are going to manage this by yourself today, I must congratulate you on your two new full-time jobs, not including running your own company. But now there is finally a solution to this bureaucratic nightmare. Read more here.
Switzerland has reduced the VAT on e-books to 2.5% starting 2018. All other digital services have 7.7%.
The following countries have already introduced VAT on digital services from foreign websites:
- Norway (25%, >50K NOK)
- Switzerland (7,7% only if you sell globally for over the equivalent of 100K CHF, ebooks 2,5%)
- Iceland (24%, only >2M ISK)
- South Africa (14%, over 50K ZAR)
- Japan (8%, above 10M JPY; 10% 1 Oct 2019)
- Albania (20%, from the first customer)
- South Korea (10%, from the first customer)
- New Zeland (15%, over 60K NZD and also to companies!)
- India (18%, from the first customer)
- Turkey (18%, from the first customer…maybe)
- Russia (18%, from the first customer…maybe)
- Serbia (10%, from the first customer)
- Taiwan (5%, over 480K NTD)
- Australia (10%, over 75K AUD)
- Belarus (20%, only those over 200 USD / customer, but it is likely to require local VAT registration)
- Saudi Arabia (5%, >SR1M)
- United Arab Emirates (5%, >375000 AED)
Argentina, Bangladesh and Malaysia are next in line to introduce this horrendous madness.
Many countries are about to introduce the VAT principle on digital services (= bill with the recipient country’s VAT rate), and you must now soon keep track of every single VAT rate around the world and make as many VAT declarations as there are countries, if you sell downloadable files from your own website…
(this does not apply to you when selling through a marketplace like Apple App Store or Google Play)