Monika| Tue Dec 09 2014 CET| Cleeng Nuts & Bolts
Previously, VAT was applied based on the seller’s country – as of January 1st, VAT will be applied based on your customer’s/ buyer’s country. So if you sell to multiple EU countries, the VAT will be different per country. Here’s a practical application of this change:
If your customers lives in France, where the VAT is 20%, at the moment a subscription to your videos costs €11.75 (€10 subscription plus €1.75 VAT at 15%). After 1 January, 2015, the same subscription will cost them €12 (€10 subscription plus €2 VAT at 20%). So as you can see the VAT rate used to calculate the VAT charged will change from 15% to 20%.
The new VAT regulations are observed by the digital sellers in EU with a big concern, and even have caused a real outrage of Twitter discussions accompanied by a #VATMess hashtag, (currently covered also by the press outlets):
— TechCrunch Europe (@TCEurope) November 25, 2014
For sure, managing 75 different VAT rates in 28 different countries isn’t easy, especially if you add to this different currencies and the necessity of keeping a record of all purchasers’ details for 10 years!
The new law is aimed at preventing big tech companies such as Skype, Apple and Amazon, from getting a un-fair competitive advantage from funneling EU sales through low-VAT Luxembourg. Unfortunately, if you are big or small, in the US or in Europe, if you are using US based platforms like Vimeo On-Demand to sell your videos, or organize worldwide Pay-Per-View events, you have to charge VAT to your European consumers. If you want to avoid any trouble with the fiscal authorities, you’d better be compliant.
Being far ahead of the evolving financial and legal environment of the EU, we’ve already prepared our platform from a legal and tech standpoint, to make sure you’re benefiting from a fully compliant and smooth selling experience. No fuss, no worries.
If you need to sell videos, live and on-demand in Europe, Cleeng is more than ever the solution you need. We work in accordance with the fiscal and legal regulations and thus fully responsible for handling the VAT operations on your behalf. Your customers will be automatically charged the correct VAT rate, in line with the new VAT regulations, starting in Jan 2015.
All payments and payouts will be provided in your local currency, in the same transparent and efficient way we used to do until now.
If you have any questions please reach out to our support: firstname.lastname@example.org