Do you supply music, video, gaming, gambling or any other services online to customers in Eastern Europe? You might have to start getting serious about your VAT obligations.
Around the world, more countries continue to impose VAT on electronic services, such as streaming and cloud computing. Digital services VAT is an increasingly important source of revenue in a digitalized global economy.
Digital service VAT has another important economic role. By requiring non-resident providers of electronic services to register and account for VAT, local and foreign companies are on an equal footing. In other words, the obligation to account for VAT applies to both local and foreign companies, depending on whether they meet the specified conditions.
Kosovo Reminds Suppliers of Digital Services Obligations
As with their counterparts in other parts of the world, Eastern European tax authorities are refining digital services VAT guidelines to meet the new economic realities.
Kosovo recently issued a notice to foreign providers of electronic services reminding them of their VAT obligations. Kosovo’s tax authority says that suppliers that fail to comply with tax legislation will be subject to penalties.
In Latvia, authorities have updated guidance on digital services VAT, including an updated list of applicable services.
No One-Size-Fits-All Digital VAT Checklist
It’s important to note that, although digital services VAT is fast becoming the global norm, the precise definitions and obligations are different in each country. Moreover, the definitions, thresholds and rules governing the place of supply are subject to change.
Anyone who provides services via the internet, therefore, needs an effective system to stay on top of changing global VAT rules, or they risk fines. Failing to comply with these rules could result in large fines and even criminal penalties. In some cases, you could even be barred from operating in a jurisdiction.
Suppliers Need an Integrated VAT Solution
Whether you run an e-services company or an e-commerce business, global VAT is complex and demanding. However, the risks of getting it wrong can be calamitous for your business.