EU VAT Changes in 2015: Registration Thresholds

Illustration by Tuomas Ikonen

Are you selling software or a service as a software to European consumers? If yes, the new taxation rules apply to you. From 2015, you need to know your buyers’ country of residence, use that country’s VAT rate and report your sales to that country’s taxation authority.

GigaOm writes:

The problem here is that there are 28 EU member states, each of which has its own value-added tax (VAT) rates, and its own minimum thresholds for having to charge VAT in the first place. For many digital services businesses, this will add a degree of complexity.

Yes, this definitely adds a degree of complexity.

I called the local tax authority about the minimum thresholds and how to apply those in different countries. The representative answered me that “It’s complicated”:

It is really burdensome for us to find out local rules, thresholds and tax rates. My interpretation is that if your business does not go above the target country’s revenue threshold, you can sell tax free to that country.

If you’re a small business from the target country’s perspective, you’ll actually pay less taxes than before 2015. Previously, as a Finnish company, you had to pay VAT to Finland even when selling to a French consumer. Now, if your sales to France stays below the threshold, 34.900 EUR, you don’t need to pay VAT at all. The tax man referred to the official Finnish guidelines and put it like this:

When selling to France, use the rules, rates and thresholds of France.

It was not trivial to find the latest official rates and thresholds on the EU taxation portal so I’ll share the numbers here.

VAT rates and thresholds for VAT exemption in EU member states

Btw: if you are selling through Appstore or Google Play, then you don’t need to do any new tricks. An expalantion by Google:

Summary in FI: 1.1.2015 alkaen kuluttajille myydyn softan ALV:na pitää käyttää kuluttajan asuinmaan ALV-kantaa ja raportoida myynnit verottajan erityisjärjestelmällä. Verottaja vastasi kysymykseeni, että vähäinen toiminta eri EU-maissa lasketaan maakohtaisesti. Eli vaikka Suomessa toiminta on arvonlisäverovelvollista, Ranskassa ei ole jos myynti pysyy alle Ranskan rajan.

Olennainen kohta verottajan ohjeessa on:

Yrityksellä voi olla velvollisuus suorittaa veroa toiseen EU-maahan, vaikka toiminta olisi vähäistä. Yrityksen täytyy selvittää verovelvollisuuden edellytykset kulutusjäsenvaltiosta, eli siitä valtiosta, johon ostaja on sijoittautunut.

Eli kääntäen: yrityksellä ei ole velvollisuutta suorittaa veroa toiseen EU-maahan, jos toiminta on vähäistä, ko. maan säännösten mukaan.

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