Since the introduction of the digital VAT rules, selling e-services, software-as-a-service (SaaS), and electronic downloads to customers in the European Union has become a significant compliance challenge for businesses outside the EU.
Whether your clients are based in the UK, US, or elsewhere, if they sell digital services to EU consumers, they must navigate place of supply rules and registration thresholds.
1. The B2C Place of Supply Rule
For digital services sold to consumers (B2C), VAT is always payable in the country where the customer resides or is established, rather than where the seller is located.
2. The One Stop Shop (OSS) Solution
To prevent companies from having to register for VAT in all 27 EU member states, the EU created the One Stop Shop (OSS) (specifically the Non-Union OSS for non-EU sellers).
3. B2B Transactions: The Reverse Charge
For sales to businesses (B2B), the rules are simpler. If the customer provides a valid EU VAT number:
