You are based outside the EU and provide electronically supplied services to EU consumers. Can you decrease your VAT burden? Yes, we found a way…

What is the rule?

A Japanese company is selling software online that you can download with a simple click.

The consumer is German without VAT – number. The Japanese seller must add German VAT on the sale. Strange but this is the rule?

But…

If you modify your services in such a way as to include more human intervention, you may be able to prevent your services from being classified as “electronically supplied services.” In general, services requiring human intervention are subject to VAT in the place where the supplier is established. Thus, a supplier established outside of the EU may not be obliged to collect VAT on such services. , maybe there is no VAT in the place where he is established, like Dubai. There is no clear definition of what constitutes “more than minimal human intervention”. 

One example

with specific reference to education services. Where an online course is not merely automated (i.e. text-based) but involves lectures or seminars delivered by tutors and streamed in real-time, such that the internet is merely a means of transmission, these features are not sufficient to constitute more than minimal human intervention. The level of human intervention is regarded as more than minimal only if the students have the option to ask questions to the tutor, even if the option is not exercised.

So, if you offer online courses, you need to provide the students with the opportunity to ask questions to the tutor in order to make sure that the level of human intervention is more than minimal.

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