Featured: VAT and cloud computing – understand your VAT obligation

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This publication prepared by PwC US takes the US view on the VAT treatment of eservices supplied through the Cloud (electronically) in Europe and takes a look at the global trends in the VAT treatment of cross-border eservices delivered via the cloud.

In brief

Value Added Tax (VAT), including Goods and Services Tax (GST), and similar consumption tax systems have been implemented in more than 150 countries around the world, with seven more countries considering implementation by 2013. VAT is a transaction based tax which applies to nearly all transactions where either the purchaser or the seller is located in a VAT jurisdiction.

Whether the seller has any physical presence in a country is often not determinative of whether it has any VAT obligations in the country.

Topics include:

  • How does VAT work?
  • How does VAT apply to cloud computing?
  • Global trends in the VAT treatment of cross-border services delivered via the cloud
  • General rules in the European Union (EU)
  • Update on Croatia and the five EU candidate countries, and current VAT obligations in these countries
  • Update on VAT regimes in Norway, Switzerland, and other countries

Providers of services delivered via the Cloud to seek professional VAT advice based on its particular circumstances before it enters a new market. Not doing so could have a significant impact on a seller’s profit margin where it is later discovered that VAT should have applied and thus lead to hefty penalties and interest charges for non-compliance.

About Nathan Trautwein

Director - Indirect Taxes - VAT PwC US email: nathan.a.trautwein@us.pwc.com Mobile: +1 415 786 3970 Office: +1 415 498 6342

Nathan Trautwein is a Director in PwC's indirect tax practice and specializes in value-added taxes. He has over 12 years of experience in helping US multinationals understand, plan for and manage their global indirect tax needs. On a day to day basis Nathan helps his clients identify the VAT treatment of their off shore sales or purchses, register for VAT overseas if necessary, recover VAT where applicable, implement VAT efficient supply chains and improve internal VAT processes and procedures. Nathan is also responsible for leading the US VAT Practice's efforts in assisting US based eCommerce businesses identify global indirect tax liabilities related to the sale of digitally supplied services or plan for and set up processes for managing any VAT liabilities on a go forward basis.