A few weeks ago I found out about new VAT rules for the sale of digital products on the internet and this poses a real problem for all those small and big companies that sell digital products to end users in the EU.

The changes affect mainly those companies that sell directly to consumers in the EU. This new rule is effective since January 1st, 2015.

If you have clients that reside in the EU, you have to charge a tax based on the country where your client is located, no matter where the buyer is at the moment of the sale. Each country of the EU has its own tax rate.

This means that your company is responsible of charging the different tax rates when selling to different countries in the EU. In addition your company is also responsible of paying the tax in the country where your client is located.

What are Digital Products?

You are probably wondering what these products are. The new rule applies to pdfs, stock photos, online courses, software downloads, video game downloads, ebooks, music, hosting services, etc.

This is a huge problem for those businesses that want to continue to sell their digital products in the EU, as well as for the consumers. As a result of this new ruling, there isn’t the slightest doubt that costs of affected products and services are going to increase.

For more information you can read the article by Zarek Rahman:

VAT: Will it see the demise of the digital economy?

This post is mainly for information purposes. If you think that his will affect your business, it is important that you get advice from an expert in this area.