VATMESS – EU harmonisation gone wrong for SaaS

Since 1 January 2015 online traders in the EU, selling items like “laser swords” in an app, have to apply the applicable value-added tax (VAT) rate to their purchases and submit the tax to the applicable tax authority of the responsible European member state. The new rules affect “laser swords”, document templates and SaaS but not traditional ecommerce trade of physical goods. Fortunately there is a “mini-one-stop-shop”, that is a single point of contact, subject to your registration, to declare and distribute the VAT. For your apps you have to engineer complicated solutions to determine the applicable member state of a net customer. The situation gets easier when your customer is a company with a VATIN, that is the European number of a VAT registered company.