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Tax handling in different jurisdictions
Peter Mottram edited this page Mar 18, 2014
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Just a skeleton of a document so far but need somewhere to document & discuss.
NOTE: Non-EU businesses which sell electronic services (includes webhosting and music downloads amongst other things) to private customers in the EU must charge VAT on the sale.
USA + other - lots to fill in here
Wkikpedia has a lot of info though not all accurate and many VAT rates are wrong/missing.
- B2B priced exclusive of VAT.
- In UK & MT (and in most EU I would guess) retailers who advertise prices inclusive of VAT calculate VAT deduction based on gross price.
- Cross-border B2B 'intra-EU supply' between VAT registered entities subject to 'reverse charge'.
- Small entities may be VAT exempt. Annual turnover requirements for this depend on local laws.
- Place VAT is charged for intra-EU supply to non-VAT registered entities may depend on turnover of supplier.
- Place of supply also depends on who transports the goods.
- Standard VAT rate at least 15%. Countries may also have 1 or 2 lower rates which must be at least 5%. Certain goods and services can be exempt. Example in Malta: dive shops sell most equipment and all services at 18%, with some course manuals at 5% (though if sold in a pack with non-book items then all at 18%), diving regulators are classed as exempt (weird) and hotel accommodation is at 7% (correct 15/3/14).
Malta VAT department has some decision trees which demonstrate how complex cross-border supply really is.
Out-law.com has a good article on taxation of e-commerce based on UK law which includes a reminder that provision of electronic services from outside the EU to private customers residing in EU member states is liable to VAT in the customer's member state.