🔍 TL;DR – Digital Services and EU VAT

If your business supplies automated digital services to customers in the EU, you may have European VAT obligations — even if your business is established outside the EU.

A service may qualify as an electronically supplied service where it is:

• 💻 Delivered electronically
• 🤖 Essentially automated
• 👤 Provided with minimal human intervention
• 🌐 Dependent on information technology

For B2C sales, VAT may be due in the EU country where your customer is located.

Eligible non-EU businesses may be able to simplify their EU VAT compliance through Non-Union OSS.

hellotax can support qualifying businesses with relevant VAT and OSS compliance services.

🌐 What Is an Electronically Supplied Service?

Simply selling something through the internet does not automatically make it an electronically supplied service for VAT purposes.

The way the service is actually delivered is important.

Typical characteristics include:

✔ Electronic delivery
The customer receives the service through the internet or an electronic network.

✔ Automation
Technology performs most or all of the delivery process.

✔ Minimal human intervention
The individual service does not depend substantially on a person performing work for the customer.

✔ Reliance on technology
The service could not practically be provided without information technology.

💻 Examples of Digital Services

Depending on the particular business model, examples can include:

• Downloadable digital content
• Automated online courses
• Software and SaaS subscriptions
• Apps
• Digital media subscriptions
• Automated reports
• Automatically generated digital content
• Online databases
• Certain automated personalised digital products

The fact that something is personalised does not necessarily mean it isn't a digital service.

For example, software might collect information from a customer and automatically use that information to create personalised digital content.

If this happens without significant human intervention, the service may still qualify.

⚠️ What May NOT Qualify?

Services involving significant human participation require different consideration.

Examples can include:

• ❌ Live consultancy
• ❌ One-to-one coaching
• ❌ Live teaching
• ❌ Human-created individual reports
• ❌ Bespoke professional services
• ❌ Services delivered personally through video calls

Using Zoom, email, an app or another online platform does not automatically make a service an electronically supplied service.

The degree of automation and human involvement matters.

🇪🇺 Why Does This Matter for VAT?

For qualifying B2C electronically supplied services, VAT is generally determined according to the location of the EU consumer.

For example:

A customer in Germany may require German VAT.

A customer in France may require French VAT.

A customer in Italy may require Italian VAT.

This can potentially create VAT obligations across several EU countries.

Fortunately, OSS may considerably simplify the reporting process.

🤝 How Can hellotax Help?

If you're selling automated digital services to customers across Europe, hellotax can help you understand whether our VAT compliance solutions are appropriate for your business model.

The first step is understanding:

What are you selling? → How is it delivered? → Where is your business established? → Where are your customers? → Are they businesses or consumers?

These answers help determine the appropriate VAT solution.

✅ Key Takeaways

• Selling digital services can create EU VAT obligations.
• This can apply even when your company is established outside the EU.
• Automated electronically delivered services may qualify as electronically supplied services.
• Significant human intervention can change the VAT treatment.
• B2C and B2B transactions can be treated differently.
• hellotax may support qualifying businesses with their EU VAT and OSS compliance.