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Change in European Union VAT rules per 1 January 2015 for telecommunications, broadcasting and electronic services

With the coming EU VAT change per 1 January 2015, the advantage for a company to locate its company in the EU-country with the lowest VAT rate for their B2C business in the field of telecommunication, broadcasting or electronic services will be eliminated. This means that foreign investors with a Dutch established company in this EU B2C market would be in a comparable competitive position towards its peers in other EU countries with respect to the VAT due on these services.

From this end, it is interesting for foreign companies in the telecom, broadcasting and e-service industry to (re)consider the Netherlands as their gateway to Europe for this growing market. On the other hand, the change in regulations also means that companies need to comply with new rules and requirements.

Who will be effected by the change?
- Providers of telecommunication services (sms/phone/internet access, etc)
- Providers of broadcasting (television and radio)
- Providers of electronic services (software downloads, cloud business, online gaming, certain e-learning, online payment services, etc)

What is going to change per 1 January 2015?
Based on this new VAT rule, your EU company must pay VAT in the EU country of establishment of your customers. In the above example, your Dutch company will have to pay different VAT rates applicable in each of the EU countries where your private customers are located. This means for example that your Dutch company will need to pay 21% Dutch VAT for the fees collected from your Dutch private customers, 25% Swedish VAT from your Swedish private customers and 19% German VAT from your German customers, etc. In principle this new rules mean that if you have private customers in each of the 28 EU countries, you will need to register for VAT in each of the 28 EU countries, file VAT returns in each of these 28 countries and charge local VAT with different rates in each of the 28 countries, etc.

Are you interested to read more? Read the full article here.

AB Consult
Nga Dang | Director