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Dear Dr. Ecommerce,
Can you please direct me to information that addresses the issue of paying VAT on computer software that is electronically downloaded to a customer. How is that VAT paid to the local customs office? What forms are used? etc.
Thanks,
Frank
Dear Frank:
Firstly, let's be realistic. Very, very few consumers who purchase software or other digital products over the web are likely to voluntarily pay VAT (value added tax) on them. It's a situation that is nearly impossible to police - for the time being anyway.
Secondly, although we are aiming for VAT harmonisation throughout the European Union, it is still a long way off. Hence, each member state has its own regulations regarding VAT payment - for the time being (and my opinion is that harmonisation is still a long way off). So, if you want clear information for each member state, you will need to contact each member state. The best way to do this would be via the commercial offices of their Embassies.
Companies, on the other hand, would benefit from declaring the cost of software, particularly if the cost is significant, as they can claim the cost of the software on their taxes and the do not ultimately pay VAT. In the case of businesses, VAT is filed and paid or claimed at the tax office, not customs.
Consumers if they were feeling honest would likewise need to contact their customs office for customs duties and possibly VAT payment. Otherwise, they would need to contact their local tax office to make VAT payment.
For more information on VAT and customs at the European level, please visit the Taxation and Customs Union Directorate General's web site. You might also find some useful documents at the ECLIP web site.
Good luck,
Dr. Ecommerce