The New Regime Governing Value Added Tax On Electronic ServicesMay 7th 2002, the European Commission adopted the Directive 2002/38/EC concerning the application of value added taxes on services that are supplied over the Internet. This Directive amends the sixth Directive 77/388/EC, and changes the rules on where tax should be applied in order to level the playing field between EU and non-EU traders selling within the European Community. Apart from eliminating imbalances and harmonising the VAT rules, the new regime should facilitate the tax activities of non-EU businesses through the creation of a special scheme.
The following questions have been addressed in this article:Who must comply with the requirements set out in the Directive?
What categories of sales are covered by the new Directive?
What procedures should sellers follow if they operate in different EU Member States?
What tax rates will apply?