2015 EU VAT changes – Determining customer location
By now most of you will be aware of the EU VAT changes to digital downloads, where the VAT is now charged for the country it is downloaded in rather than from where it is supplied, however many businesses are questioning how they determine their customers place of supply. Many people now a days use many different installs or plugins etc. to change their perceived location, for example there are many chrome plug ins that allow you to set your location to different countries in order to access certain video streaming services or websites otherwise blocked or different in the country that they are in, but will this affect the VAT rate that they pay for digital downloads? Could you for example be in Hungary and set your location to Luxembourg in order to only pay 17% (new 2015 rate) instead of 27%? And if so how to companies prevent this from happening and inadvertently committing VAT fraud.
Which means that the key issue for suppliers will be to correctly identify where their customers belong, so they can apply the correct rate of VAT. In order to try to provide both clarity and certainty on this point the regulations contain a number of presumptions which will have legal effect in all 28 EU Member States. Continue Reading