With the arrival of 2015, borders begin to have a renewed importance. Especially when discussing e-commerce and taxes. Starting on January 1st – when the new European legislation will go into effect – if a song, an application, or even a communications service is acquired online a tax must be paid according to the country that the acquirer resides in and will no longer be based on where the company that offers the product is located.
It is important, however, to clearly define the object of the acquisition. The rules, in fact, change only for a specific category of electronic commerce: the “direct acquisitions” between enterprises and final consumers. But let’s first take a look at how the different types of online acquisitions are defined.
How an acquisition on the web is classified – on the basis of what is acquired
E-commerce includes both the sale of material goods (clothing, books, furniture) as well immaterial goods (communications services, music, film, images, data) with a modality that permits the payment and execution of the online order, or the download of the acquired content. Based on this premise, therefore, two types of electronic commerce are distinguished: indirect and direct.
Indirect electronic commerce refers to the physical transfer of objects. In this case the web is used solely for the conclusion of the acquisition and allows for payments. The sold good, however, arrives using traditional methods and the VAT is therefore calculated based on sales via post.
Direct electronic commerce, instead, consists of electronic sales of virtual goods or services like websites, programs, images, texts, information, access to data banks, music, films, and games. These are not only acquired and paid for via Internet, but they are also downloaded directly online. To calculate VAT on these items they are considered a performed service and, thus, have a different fiscal treatment.
How a web acquisition is classified – based on who is making the acquisition
Based on who buys and who sells online, electronic commerce is classified in the following categories:
• Business to consumer (B2C): when goods and services are exchanged between businesses and final consumers.
• Business to business (B2B): when commerce occurs between two businesses.
With these premises it is easier to understand how the rules will change. Starting on January 1, 2015 all supplies of telecommunications, broadcasting and electronic services will be taxable at the place where the customer belongs and no longer where the supplier is located. Those who make acquisitions from Italy will, therefore, pay a VAT tax of 22%. This is why those who are selling online services must create a VAT position in the member state according to the so-called “special regime ” governed by art. 360 and following Directive 2006/112 / EC.
Some examples of what will change
With the implementation of Italy’s VAT the cost of some services will definitely change, some will increase and some will decrease. For Airbnb services it will become advantageous, because the company is headquartered in Dublin and up until the end of 2014 the VAT is set at 23%, one point higher than Italy’s VAT that will be applied.
Taxes, on the other hand, paid for Skype services will increase, because the company currently applies a 15% VAT that, come January, will rise by 7%.
The Apps that enter into the above-mentioned categories that are sold at very low prices should not have any significant consequences for consumers. The problem, however, will be for developers who will be forced to manage tax impositions that are different for each Member State where their Apps are sold. Google, however, has already announced that the company itself will manage the VAT prices of Android apps on behalf of developers.