Asia: The physical side of ecommerce

Ecommerce in Asia is booming. China alone is forecast to grow to an over US $350 billion industry by 2016. While some markets may already be considered mature (Australia, for example), the growth of internet connectivity and consumer purchasing power cannot be ignored by either small-to-medium enterprises or multi-national corporations looking to reach new consumers.

Ultimately, e-commerce is likely to continue growing because it can more easily provide a wide variety of products at  lower prices and greater flexibility to customers, which in turn leads to an enhanced shopping experience.

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EU: ebooks infrigement procedure – second act

As you are probably aware, France and Luxembourg have on 1 January 2012 started to tax the sales of ebooks at reduced VAT rate instead of applying the standard VAT rate. This means that ebusinesses selling ebooks through a sales entity in Luxembourg were able to tax them at 3% rate instead of 15% and in France at 7% rate (5,5% as of 1 January 2013) instead of 19,6%.

The EU Commission in its role of the guardian of the EU Treaties and legislation does not agree with the unilateral decision of France and Luxembourg and has therefore initiated a formal infringement procedure and has in July 2012 send them a Letter of Formal Notice.

A very good and conveniently brief explanation on the infringement procedure and its implications can be found here.

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Singapore: Goods and Services Tax for e-commerce transactions in Singapore

To provide clarity on the Goods and Services Tax (“GST”) treatment for e-commerce transactions, the Inland Revenue Authority of Singapore (“IRAS”) has issued a new e-tax guide: “GST: Guide for e-Commerce”.

The e-tax guide clarifies that the medium through which a transaction occurs does not alter the taxability of the transaction. In other words, a supply of goods or services made via the Internet or other electronic media is no different from that made via traditional methods. As such, a GST-registered business is required to charge and account for GST on such transactions, as applicable. The e-tax guide also provides guidance on the GST treatment for the supply of physical goods, digitised goods and services made via the Internet and other electronic media.

What does this mean for you?

If you do business in Singapore and also have a GST registration, you should be aware that GST should be applied to all goods that are ordered or delivered on-line.

EU: Proposal of the new Voucher Directive

As reported some time ago the EU Commission is working on the proposal of a Voucher Directive, which will amend the VAT Directive with rules on vouchers.

Please find the current draft of the proposal here.

This is another topic that will be discussed during our meeting of the B2C 2015 Working Group on 24 October 2012 in Brussels. If you are not already member of this group, contact Sophie Claessens directly.

EU: Mini one stop shop (MOSS) regulation for ebusinesses adopted

The Council Regulation (EU) No 967/2012 laying down rules on the application of the provisions of the VAT Directive concerning special schemes for taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons (i.e. B2C) has been published.

The Regulation amends Council Implementing Regulation (EU) No 282/2011 and introduces new measures covering both “mini one stop shop” special schemes for EU and non-EU ebusinesses to be applied as from 1 January 2015.

For additional information you can access the Minutes of the Council (page 13) and text of the proposal.

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Germany implements Lebara decision on prepaid telecom cards

On 24 September 2012 the German Ministry of Finance issued a decree  (only available in German language) implementing the principles of the ECJ decision in the “Lebara” case. You can read more of this case here, here and here.

Each sale of single purpose prepaid cards is regarded as a telecommunication service if these cards are sold in the supplier’s own name. Otherwise, if the sale is made in the name of a third person, an intermediary service is on hand. Whether there is a telecommunication service or an intermediary service should be considered on each distribution level.

A single purpose prepaid card in the sense of the decree requires that it can exclusively be used for telephone calls by means of the provided infrastructure, and that it contains all information necessary to make calls.

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EU: Public consultation on new VAT rates – important for ebooks, digital newspapers and other eservices

In line with its previous indications the European Commission launched a public consultation last week in relation to the review of the reduced VAT rates. The public is invited to give their opinion on certain reduced VAT rates to see if they efficiently serve the purpose what they were created for.

The consultation forms part of the Commission’s VAT reform plans to build “a simpler, more robust and efficient VAT system”. And Commission is asking business for their input to this matter. It is your chance to have a saying in the much aniticpated reform of the EU VAT system.

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Finland: Proposed increase of VAT rates as of 1 January 2013

The Finnish government has recently proposed to have both the reduced and the standard VAT rates increased by 1%. According to the proposal the standard rate would increase from 23% to 24% and the lower rates of 9% and 13% to 10% and 14% respectively.

The proposal is yet to be adopted by the Finnish Parliament. This will probably take place in December 2012 to have the rate hikes incorporated before the expected effective date of 1 January 2013.

What does this mean for you?

If you are registered for VAT in Finland or are a non-EU company supplying B2C e-services to Finnish residents under the one-stop-shop scheme, you will need to be ready to update your ERP system and VAT codes.

Who are B2C clients for VAT purposes?

This article is again about one of the most frequently asked questions we are facing in our discussions with ebusinesses: What are “B2B” and what “B2C” clients?

The logical and expected explanation would be: B2B are all legal persons and B2C all natural persons / private individuals.

Unfortunately VAT follows its own logic – which is in most cases illogical when considered in everyday content. The above explanation therefore cannot be applied for VAT purposes.

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EU: VAT reporting rules for telecommunications, broadcasting and eservices mini one stop shop scheme

The Implementing Regulation No 815/2012 defining the VAT reporting rules for the mini one stop shop scheme (“MOSS”) for B2C telecommunication, broadcasting and eservices in the EU has been made officially available.
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