VAT NL.com Information

As form January 1, 2015, any B2C (Business-to-Customer) company selling e-services to non-business customers within the European Union must charge VAT based on the point of e-services consumption, instead of where that e-services provider is located, known as ‘the place of supply’. The tax represents a potentially huge financial, technical and administrative headache for e-services companies including European and global telecommunications, broadcasting, software maintenance, and distance-learning providers. Organizations unable to comply with the change in taxation or registering late or whose filings contain errors, will be penalized depending on which EU member’s tax regulation they are deemed to have broken. Fines will vary across the EU, but may be as high as double the amount of unpaid VAT, and, in some EU member states, companies may also face legal and criminal proceedings. E-services providers will have to provide proof of customer location beyond a billing address, such as the IP address the customer is using to purchase or download their services. Affected businesses will need to register for VAT in each EU member state in which they supply such services. Alternatively they can register for the Mini-One-Stop-Shop (MOSS) system in their own Member State which will allow for sales and VAT compliance throughout the EU. This will enable an affected business to submit one return and payment to the tax authorities in their own country to account for the foreign VAT charged to its customers in all other EU member states.