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VAT and sales tax

Overview

By working with Avangate, you already benefit from a full set of tax management services, including sales tax and VAT determination and collection, and tax redirection to the appropriate authorities in a number of markets around the world.

Europe VAT

Starting with the 1st of January, 2015, a new set of European Union regulations for VAT (Value Added Tax) came into effect, directly impacting suppliers and customers of telecommunications, broadcasting and electronic services located in the EU.

Before 2015, when the aforementioned type of services were supplied to non-taxable persons, VAT was accounted for by the supplier based on its location. Per the new regulations, any telecommunications, broadcasting or electronically delivered services sold by suppliers located in the EU are taxable in the Member State where the customer is established, has a permanent address or normally resides.

Non-EU companies providing electronic services to customers in multiple EU countries are encouraged to use MOSS (Mini One-Stop Shop) to collect and distribute VAT in an easier manner.

What is MOSS?

The Mini One-Stop Shop, or MOSS, is a new procedure introduced by the European Commission that allows non-EU companies that provide electronic services to customers in the EU to register for VAT in only one EU country, regardless of how many EU countries they are selling to. That country will collect and distribute VAT on behalf of all the other countries. VAT will be charged at the corresponding rate for each customer's country.

Impact on your company

Because you're working with Avangate, your company will automatically comply with the new VAT regulations starting with 2015. There are no additional requirements for you. As an e-commerce services provider, Avangate is fully responsible for the fiscal and legal compliance.

Impact on Avangate

As a provider of electronic services, Avangate will comply to the new regulations starting with January 2015. At the moment of writing this document, EU customers are charged the 21% Dutch VAT rate for Avangate services, since our company is legally based in the Netherlands. As of 1st of January 2015, all of the purchases made by EU shoppers will be charged a VAT rate according to the country they belong in.

Impact on the Avangate Affiliate Network

The 2015 VAT regulations changes do not impact companies and affiliates enrolled in the Avangate Affiliate Network.

Impact on Channel Manager Models

Impact on the Reseller Model

Once the 2015 VAT regulations are implemented, VAT rates will be calculated according to your partners' country VAT rates.

Impact on the Service Provider Model

The VAT regulations changes do not affect the way you work with your partners. You and your partners are solely responsible for managing the VAT rates.

List of EU member states and their standard VAT rate

Refererence table for VAT rates that will apply to your purchases after the 1st of January 2015. The information in the table above can be subject to change according to each country's regulations.

EU MEMBER STATES

STANDARD VAT RATE

Belgium

21%

Bulgaria

20%

Czech Republic

21%

Denmark

25%

Germany

19%

Estonia

20%

Greece

24%

Spain

21%

France

20%

Croatia

25%

Ireland

23%

Italy

22%

Cyprus

19%

Latvia

21%

Lithuania

21%

Luxembourg

17%

Hungary

27%

Malta

18%

Netherlands

21%

Austria

20%

Poland

23%

Portugal

23%

Romania

19%

Slovenia

22%

Slovakia

20%

Finland

24%

Sweden

25%

United Kingdom

20%

VAT exemption

VAT-registered business customers based in the European Union can pay for their orders while being charged according to the VAT ID they provide. VAT ID support is available for all Avangate purchase flows, including Express PayPal Checkout.

Frequently Asked Questions

  1. How does Avangate identify the shopper's country?
    • We determine the shopper's country by using two matching elements of the billing details provided by the shopper. The elements can include the shopper's IP address, the country of the bank that issued the credit/debit card, the billing address or the mobile country code used to identify the shopper's phone number.
  2. Should I sign up for MOSS?
    • All the taxable persons involved in the supply of telecommunications, broadcasting and electronic services to customers that are not VAT taxable persons can sign up for MOSS. Avangate encourages you to seek specialized tax and accounting advice for this matter.
  3. How is the VAT calculated for orders where I ship a CD and an electronic license key?
    • CDs are a back-up media, an additional service for the main product, thus they follow the same regime as the main product. Consequently, Avangate applies the same VAT as to the main transaction of the license.
  4. It appears that the place of supply is calculated differently for phone consulting and software. Do I have to tell you what kind of service I am selling when I bill someone?
    • Yes, you should provide an accurate description of your products in the Order Form/Contract so that we can represent it correctly when we resell them.
  5. How do the new regulations affect each type of order (new acquisition, renewal, chargeback/refund)?
    • New acquisitions: the new rules will be applied starting with the 1st of January 2015.
    • Renewals: renewals will be updated to include the new VAT regulations and shoppers will be notified through the renewal notification email about the new VAT regulations.
    • Chargebacks and refunds: all chargebacks and refunds will be closed using previous VAT regulations (applying the VAT regulations used at the moment of the initial order).

Non-EU countries with special tax status

Sales made by Avangate B.V. to customers in Iceland, Norway and Switzerland are subject to each country’s VAT rate. The VAT rate for these countries are:

  • Iceland: 24%
  • Norway: 25% - companies with valid VAT ID’s are VAT exempted *
  • Russia: 18%. Avangate does not collect domestic VAT from Russian shoppers purchasing from Russia-based businesses. Russian companies are responsible for collecting and transferring the appropriate VAT to the local authorities.
  • Switzerland: 8%
  • Turkey: 18%
  • Japan: 8% 
  • South Korea: 10%

United States sales tax

Avangate collects sales tax for a number of US states, however, tax rate vary depending on the zip code shoppers use as part of their billing address.

Sales tax

 

Order with

Backup Media

Order without

Backup Media

California

YES

(for the full value of the order)

NO

Florida

YES

(for the full value of the order)

NO

Georgia

YES

(for the value of Backup Media if it's price is stated separately)

NO

Illinois

YES

(for the full value of the order)

YES

(for the full value of the order)

Minnesota

YES

(for the full value of the order)

YES

(for the full value of the order)

Nebraska

YES

(for the full value of the order)

YES

(for the full value of the order)

Ohio

YES

(for the full value of the order)

YES

(for the full value of the order)

Texas

YES

(for the full value of the order)

YES

(for the full value of the order)

Pennsylvania

YES

(for the full value of the order)

YES

(for the full value of the order)