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VAT rates applicable to digital services in different European Union countries

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VAT rates applicable to digital services in different European Union countries


What are the Changes to the rules of location?

From 1 January 2015 all telecommunications services, broadcasting services or television and services electronically to final consumers should be taxed in the Member State in which the customer is established, has his domicile or habitual residence ( unlike most other services taxed in the member State of establishment of the provider).

This change Means That the services will be taxed in the Member State Where consumption Takes place.

What is meant by electronic services?

Services provided electronically include services provided online or through an electronic network that, due to their nature, are basically automated and require minimum human implication, and which are not viable without the use of information technology, including: Web site and of web page hosting. Remote maintenance of programs and computers. Access to or download of programs and their updates.The supply of images, text, information and making databases available. Access to or download of music, films, games, including games of chance or involving money, magazines and online newspapers, digitalised contents from books and other electronic publications. Automated remote teaching that depends on the Internet to work and that does not need, or barely needs, human implication. Packets of internet services related to information and in which the telecommunications component is secondary and subordinate (service packets that go further than simple access to the Internet and include other elements like contents pages with links to news, weather or tourist information, games, website hosting, access to online debates, etc.).

The fact that the service provider and the recipient communicate by e-mail does not imply, in and of itself, that the service is a service provided electronically; therefore electronic services do not cover, among others: Goods which are ordered or processed electronically. Professional services, such as lawyers and financial consultants, who advise their clients by e-mail. Teaching services in which the contents of the course are taught by a teacher online or through an electronic network. Telephone help services.

Who will have to deposit the VAT for such services?

The service provider will be obliged to deposit the VAT except when the recipient is a business established in a different Member State from the State where the provider has its activity headquarters or a permanent establishment from which it carries out the service, in which case it will be the customer who will deposit the tax through the mechanism of taxpayer reversal. The service provider may consider that a customer established in the Community is not a business as long as said customer has not communicated their NIF-VAT to the provider, regardless of if the provider has information that indicates the opposite.

When the place of establishment, residence or usual place of residence of the end-consumer cannot be determined with certainty, where will it be presumed to be?

It will be presumed that the customer is established, has his or her residence or usual place of residence: For services provided in locations that require the physical presence of the user (e.g. telephone booth, wireless WI-FI access zone, cyber café, restaurant or hotel entrance): in said location. If such a location is situated on board a ship, an aeroplane or a train that transports passengers in the Community, the location country will be the country of departure for the passenger transport. Services provided through a land line telephone: in the place of installation of the line. Services provided through mobile networks: in the country identified by the national mobile telephone code of the SIM card.

Services for which it is necessary to use a decoder device or similar device or a TV card for which a land line is not used: in the place where the decoder or similar device is located or, if that place is not known, in the place where the TV card is sent. In circumstances other than the previous, in the place determined by the provider based on two non-contradictory elements of proof out of the following:

The customer's invoice address.

The IP address of the device used by the customer or any geolocation system.

The bank information (e.g. location of bank account used for payment or the customer's invoice address that the bank has).

The mobile country code (MCC) of the international identity of the mobile service subscriber stored in the SIM card.

The location of the land line phone.

Other relevant information from a business point of view.

Josep Navarro's picture
Josep Navarro es Licenciado en Económicas por la UB, especializado en Inspecciones Tributarias, con más de 25 años de experiencia en asesoría fiscal para empresas y particulares en España.