Source - http://www.accountingweb.co.uk/article/ ... arn/564247Businesses who make and sell apps or provide digital services to consumers in the European Union will see their paperwork increase in January due to new legislation to counter tax avoidance, experts have warned.
Currently VAT on digital services is charged at the national rate where the supplier is. Providers of electronic services such as Amazon have been criticised for basing their European headquarters in countries such as Luxembourg where VAT rates used are much lower than the UK.
From the 1 January 2015, businesses supplying broadcasting, telecommunications and digital services to consumers will have to charge customers VAT at the rate of the country where the customer buys the service from.
So a UK business selling an app to a customer in Luxembourg, will have to charge VAT at 15%, but at 27% for same app if the customer lives in Hungary.
This is going to create major headaches for opencart users who supply digital goods, because you will now how to apply VAT Rates based on customers address and NOT store address.
Theres 28 European countries with 30 different VAT Rates.
