Regarding VAT Tax

The European Union passed a May Directive (2002/38/EC) and Regulation (No, 792/2002) amending the Sixth VAT Directive (77/388/EEC) of which became effective July 1, 2003 that requires that all software sold electronically in European countries is subject to a VAT tax.

eSellerate, Pixel Genius's software fulfillment service is fully compliant with these current regulations for non-EU business selling into EU member states. eSellerate's compliance has been verified by the some of the world's leading tax authorities as well as the countries eSellerate is registered with in the EU for VAT submission and administration.

When is the vat applied?
The value-added tax is applied to an order only when a customer who resides in a member state of the EU purchases electronically supplied services from a non-EU supplier.

Do EU suppliers have to collect VAT as well or does this only apply to non-EU suppliers?
Suppliers located in the EU have VAT obligations as well and have had for some time. The new EU directives apply to non-EU suppliers in an attempt to level the playing field between EU and non-EU suppliers of electronic services.

Is this applicable to other e-commerce providers and if so, are these other providers generally prepared?
This is applicable to all non-EU businesses selling electronically supplied service into the EU. While there are companies like eSellerate that are well prepared, there remains much confusion on these directives as well as complete ignorance on the existence of these directives or defiance that has and will continue to leave other providers, whether competitive or not, out of compliance and causing an enormous liability for themselves directly as well as for the customers in which they service

What is an "electronically supplied service"?
Taken from the EU guidelines, an "electronically supplied service" is one that:
- in the first instance is delivered over the Internet or an electronic network (i.e. reliant on the Internet or similar network for its provision); and then
- the nature of the service in question is heavily dependent on information technology for its supply (i.e. the service is essentially automated, involving minimal human intervention and in the absence of information technology does not have viability).


Therefore, on the basis of this two step test, an "electronically supplied
service" includes:
-"digitized products" generally, such as software and changes to or upgrades of software; or
- "a service" which provides, or supports a business or personal presence on an electronic network (e.g., web site or web page); or
- "a service automatically generated from a computer", via the Internet or an electronic network, in response to specific data input by the customer; or
- "services, other than those specifically mentioned which are automated and dependent on the Internet or an electronic network for their provision."


In general, the use of the Internet or other electronic networks by parties to communicate with respect to transactions or to facilitate trading does not, any more than the use of a phone or fax, affect the normal VAT rules that apply.

About VAT ID:

The Value Added Tax (VAT) ID number applies only if you are placing a business order for a business in the European Union that has a current VAT ID. For all other orders, you should leave this field blank.If you have a VAT ID and have question about using it, click HERE.