E-business VAT regulations: Our top tips to stay one step ahead of the curve with your e-business
Don’t get caught out by these 2015 changes to EU VAT regulation
Do you sell electronically supplied services, such as online training, music and film downloads, or software? If so, is your e-business ready to face the fast approaching changes to EU VAT regulation? These come into effect on the 1st of January 2015.
Under the new legislation the country of taxation of electronically supplied services and telecoms will change to the country in which the consumer is resident (rather than the country in which the supplier is established as is the case under the current rules). This means that, rather than applying a single VAT rate in the country of establishment of the supplier, an e-business in the EU will potentially now have to apply up to 27 different VAT rates.
Consequently, your business will also have to register in every EU country where your customers reside and charge VAT at the local VAT rate (this tax obligation is already applicable to non-EU based e-business).
The changes to EU VAT regulation seem daunting, so is there anything you can do to simplify the process?
A solution to the changes to EU VAT regulation is provided by the so called “Mini One Stop Shop” (“MOSS”). MOSS is a vehicle for cross-border E-commerce service providers to be registered in only one European member state.
This option will enable businesses to register for VAT in a single EU country, electronically submit quarterly VAT returns in that country, and report the VAT due per country of their customers’ residency. They can then pay their total VAT liability in this same country and this country will then distribute the payment to other EU countries.
This new regulation puts all EU countries on a level playing field. As of January 2015, when deciding where to locate your e business in the EU, the local VAT rate will no longer be relevant. There is no longer an incentive to set up in the EU country with the lowest VAT rate, so you can rethink your European position strategy and focus on other important factors when choosing your global or European hub. These are some of the important factors to consider when deciding where to locate your e-business and the reasons why France meets your needs:
- Local infrastructure – France has a high quality and technologically advanced rail system, the world’s eighth busiest airport and a sophisticated road network.
- Availability of a skilled workforce– France has a very educated and skilled workforce. France is ranked third in the European Union for the hourly productivity of its workforce, after Belgium and the Netherlands but ahead of both Germany and the United Kingdom.
- Reputation – Two foreign companies set up in France every day, and there are currently around 20,000 successful foreign businesses operating here.
- IP and legal protection – France’s intellectual property code protects business assets in the field of innovation and intellectual property. Procedures can be completed online (filing patents, registering trademarks, etc.).
- Financial benefits – There are a lot of very generous tax credits available for foreign companies in France such as the CIR and the JEI initiative. If you know how to navigate the system, and if you use local experts, your company can gain substantial financial benefits.
So, is your business ready for the changes to EU VAT regulation? If not, let us help you with this process by explaining the MOSS in more detail, and registering you with the appropriate organizations. Our team of qualified CPAs specializes in helping foreign companies hit the ground running with their operations in France, covering, securing and mastering all your financial, accounting and legal needs.