The new EU rules for VAT on digital services have been a source of discontent and confusion, and various publications and even “action groups” have taken the opportunity to publish inflammatory and at best incorrect materials on the Internet. However, this is mainly a compliance issue for smaller EU-based e-businesses.
For U.S. based sellers of e-services (intangibles) to overseas individuals, nothing has changed in terms of the taxation rules. VAT is due at the rate of the customer’s country, and that hasn’t changed over the past 11 years.
What did change is that there are now a few more countries that require VAT collection. I refer to Tom Borec’s blog here: http://ebiz.tax/e-commerce-tax-australia-japan-israel-turkey-india-eu/ with more information on non-EU countries.
The other thing that changed is the compliance system in the EU that were used for the VAT filings of U.S. e-businesses. What was called “VOES” is now “MOSS” (“Mini One Stop Shop”).
Most US e-businesses have registered in the UK for filing their EU VAT obligations. As you know, VOES (and now MOSS) allow for a single VAT registration, and through that one registration VAT revenue will be distributed among 28 EU member states. US e-businesses overwhelmingly chose the UK, assuming that filings will take place in English. (Although one of my clients called me a few weeks ago, asking for an explanation for “some English lingo that I am not familiar with”)
MOSS is not a whole lot different from VOES, but it is useful to review these VAT filing guides issued by the UK VAT authorities:
and this is the MOSS return template: