We are a Netherlands based company and our platform qualifies as a so-called digital service provider. As such we apply VAT and related Sales Taxes whenever required by local law.
Whether or not any taxes are applied on your Membership purchases depends on YOUR location, because your location basically determines what tax rules we need to apply to that transaction. For further explanation on this please see below at background.
When you are located in one of the EU countries we are required by law to charge the VAT rate applicable in your country. Thus if you are located in France we apply the French VAT rate and if you are located in Italy we apply the Italian VAT rate.
At this moment, for EU VAT purposes all our Membership transactions are treated as Business to Consumer transactions, meaning that these rules are applied. Going forward, we might treat certain transactions as Business to Business as a result of which the VAT treatment might be different (i.e. no VAT charged on such EU transaction because of the reverse charge mechanism). However, in order to do so we need to include additional and complicated functionality to our platform which can better be done at a later stage.
Outside European Union
When you are located outside the EU we do not have to apply any EU VAT charges on your Membership purchase.
However, basis the VAT / Sales Tax rules in your country we may be obliged to apply local taxes on your Membership purchase. For now we do not apply any taxes on Membership purchases from countries located outside the EU. The reason for this is that we still fall below the local taxation thresholds or in other words we do not sell enough Memberships in non-EU countries for local taxes to kick in.
Payment of Taxes to the local Tax Authorities
All taxes charged and collected are on-paid by us to the respective local tax authorities, in line with local / international tax rules.
For the EU VAT charges made this means that we pay the collected VAT to the Dutch tax authorities and they on-pay this to the local EU tax authorities.
As our platform evolves we might be obliged to apply local foreign taxes on Membership purchases from outside the EU and when this is the case we will do so.
Background & Taxamo Solution
The Memberships you purchase on our platform qualify as so-called digital services. Many tax jurisdictions across the world are implementing new rules on the taxation of digital services.
Currently, 30+ countries are actively enforcing place of consumption based taxation. These tax changes require digital service providers, like Consultants 500, to account for tax based on the location of the consumer. Depending on this consumer location, there are specific tax calculation and reporting requirements.
While similar in nature, digital tax rules vary by region and each are unique in terms of qualifying sales thresholds, specific tax calculation requirements and data retention periods.
Can you imagine how complex this is for a platform like Consultants 500 because for each of our Customer location we need to apply different rules, account for different tax percentages, administrate different things in our bookkeeping systems, and report and on pay the taxes charged to the respective tax authorities.
For small to medium sized global operating digital service providers, like Consultants 500, complying with these continuously changing rules would be a showstopper. Because no way it would be possible for us to account for and comply with these rules without investing in minimal 3 FTEs who would be dealing with taxes alone on a daily basis year around.
But lucky for us a digital tax service provider, called Taxamo, has solved this global issue with one solution for small to medium sized players like us! And we are very happy about that, because otherwise we could not exist!
Taxamo has developed a fully compliant digital tax solution that satisfies requirements in all regions and will continue to add new countries in-line with international tax regulation. And we, Consultants 500, are making use of this digital tax solution for all our paid transactions.