18 December 2007

EU agrees to overhaul VAT on digital services

(OUT-LAW News)
Downloads of software, ringtones, games, music and movies sold to consumers will be taxed where the consumer is located instead of where the supplier is based with effect from 2015 under changes to Europe's VAT regime. The changes are intended to prevent distortions of competition between member states that operate different VAT rates. For business-to-consumer supplies of telecoms, broadcasting and electronic services, taxation will be determined by the place of consumption. VAT will therefore be payable in the EU member state where the consumer is based at the rate prevailing in that state. Business-to-business supplies of telecoms and electronic services will not be affected by the changes as these are already taxed by reference to where the customer is located.