Last updated on OCTOBER 07, 2014
Applies to:Oracle E-Business Tax - Version 12.1.3 and later
Information in this document applies to any platform.
On : 12.1.3 version, Tax Set Up
European Union (EU) VAT changes from 2015 - EBT?
Could you please confirm if Oracle has released/going to release a patch to handle 'Change in European Union VAT rules per 1 January 2015 for telecommunications, broadcasting and electronic services'. So far, in EU, VAT in these sectors are not governed by ship to location but going forward as per this law change it will based on Customer ship to location.
WHO WILL BE EFFECTED BY THE CHANGE?
- Providers of telecommunication services (sms/phone/internet access, etc)
- Providers of broadcasting (television and radio)
- Providers of electronic services (software downloads, cloud business, online gaming, certain e-learning, online payment services, etc)
WHAT ARE THE CURRENT RULES?
Currently, if you have a company located in one of the European Union (EU) countries providing telecommunication, broadcasting or electronic services to private customers (B2C) in one of the EU countries, Your EU company must pay VAT in the EU country of establishment of your company. This means that if your company is located in the Netherlands and supplies telecommunication, broadcasting or electronic services to private customers in the EU, your company have to pay 21% Dutch VAT for the revenue collected from these customers in the different EU countries.
WHAT IS GOING TO CHANGE PER 1 JANUARY 2015?
Based on this new VAT rule, your EU company must pay VAT in the EU country of establishment of your customers. In the above example, your Dutch company will have to pay different VAT rates applicable in each of the EU countries where your private customers are located. This means for example that your Dutch company will need to pay 21% Dutch VAT for the fees collected from your Dutch private customers, 25% Swedish VAT from your Swedish private customers and 19% German VAT from your German customers, etc. In principle this new rules mean that if you have private customers in each of the 28 EU countries, you will need to register for VAT in each of the 28 EU countries, file VAT returns.
Rules must be created to allow new VAT rule which is changing on Jan 1 2015
Due to this issue, users cannot tax correctly.
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