Do we pay VAT on digital downloads?

[fd3]

e.g. MP3s?

[rusky]

Yes

[pcolbeck]

And on eBooks until it was scrapped on 1st May this year.

[philip]

One of the wierdest EU regulations is that an EU company selling digital services is required to charge and account for VAT according to the buyers country. Buy cycling kit from a French, say, company and they charge French VAT and submit it to French tax authority, but buy an MP3 from the same French company and they must charge UK VAT and submit to the UK.

[FifeingEejit]

That weird EU reg was because for the period when it was at the rate of vat for the selling company, a fair whack of products were being sold by Shell companies registered in Jersey and a lot of non Jersey based non shell companies cried foul.

I thought similar had been implemented for physical products too, as I've not had any CDs or other low value goods with a states of Jersey customs label ojln it for donkeys and I'm sure bike discount's prices vary by location. (for various reasons (of exchange rates and commission) I always put their website into euros Mode)

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[fuaran]

Bandcamp is annoying because they show prices without VAT. But then add it on when you get to the checkout.
If they were a UK company, I would complain about misleading advertising. But seems they are based in the US, so not sure if this would apply.

[Davef]

It was one of the worst bits of eu legislation. I understand the motivation to stop the likes of Netflix putting everything through Luxembourg but it was so badly written.

1) For the first few years there was no minimum amount. We mainly sell relatively expensive software to businesses but we also sell software at the £20 end of the market to consumers. 99.9% is to the uk. One sale per year might be to Romania but we had to account for VAT at the Romanian rate for that £20 of turnover and either register for vat in Romania or use the MOSS system in U.K.

2) there was a requirement to verify the delivery address* by two independent methods. Really for a one off £20 retail sale ?

3) it applied to companies that weren’t even vat registered ! I had a tenant who had a micro business selling knitting patterns. She supplied these as pdfs attached to emails for about £5. Despite the business being way below the vat threshold this rubbish legislation required them to charge vat at the rate applicable in the destination country and register for vat in the destination country or in U.K. to operate the VAT MOSS.

Edit: oh I had forgotten
4) if a British person with a British address paying by a British credit card happened to download our software whilst on holiday in Spain, we were meant to detect that and charge vat a the Spanish rate and account for it. Madness.

* delivery address - as this is a download there is no physical delivery. This is the physical location they are at when they are downloading the digital goods.

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[fd3]

I think it makes sense to charge based on the country - a hassle for the seller but logical for the purchaser/country they live in.  the alternative is companies only selling within their country (e.g. you cannot download from amazon US without a US address and credit card). 

Bandcamp will be following the US model of only charging tax at checkout, based on tax being different in every state.  It is really confusing shopping with them as each artist has a price in their own currency, then it gets converted to £s and taxed.  Still, my last purchase VAT was about twice what my card would have charged me for a foreign transaction (and some of that cost would have been made up by the poor rate my CC would have given me on the exchange).

[Mr Larrington]

You can't do click-and-collect orders from Walmart without a USAnian billing address on your card either.  The bastards.