VAT Reporting Concerns

[elboligrafo]

How does a company(eg. Facebook, Amazon) located outside of a VAT/GST jurisdiction(eg. USA) charge VAT legally to a customer located in a VAT jurisdiction (eg. UK) and does the company do VAT collection on behalf of their customers' country's Tax Department(eg. HMRC) and does the company report financial transactions to their customers' country's Tax Department?

 

[Sols]

Facebook and Amazon have subsidiaries in the EU/EEA, UK, and so on.

However, even if they didn't, they would be required to pay VAT on digital services sold to EU/EEA and UK residents. That has been a legal requirement for many years now, but EU/EEA lacks the resources to after every company on the market. They would have no problem going after big companies, though, which is why you might see some non-EU/EEA companies charge VAT even if they aren't based there.

 

[elboligrafo]

Facebook and Amazon have subsidiaries in the EU/EEA, UK, and so on.

However, even if they didn't, they would be required to pay VAT on digital services sold to EU/EEA and UK residents. That has been a legal requirement for many years now, but EU/EEA lacks the resources to after every company on the market. They would have no problem going after big companies, though, which is why you might see some non-EU/EEA companies charge VAT even if they aren't based there.

So basically the VAT jurisdiction country is charging the big companies VAT off the TOP (by way of their internet website/data streaming through the internet networks) and then the big company charges the VAT jurisdiction customer VAT? Does that also imply that the big companies report ALL of their financial transactions to the VAT jurisdiction country?

 

[Sols]

So basically the VAT jurisdiction country is charging the big companies VAT off the TOP (by way of their internet website/data streaming through the internet networks) and then the big company charges the VAT jurisdiction customer VAT?

VAT for these companies works the same as VAT for other companies.

If you are an EU resident who buys services from Facebook, you usually buy services from Facebook's subsidiary in Ireland or Luxembourg. Doesn't matter that its parent company is in the US.

If you buy from a non-EU/EEA seller who's complying with EU/EEA VAT rules, they'll charge VAT and then they pay that VAT to the EU/EEA VAT authority they have registered with. Look into VAT MOSS (non-union scheme). VAT on digital services/MOSS: What services are covered? - Your Europe

Does that also imply that the big companies report ALL of their financial transactions to the VAT jurisdiction country?

They report what's required under each jurisdiction's reporting requirements.