The situation
Consumer subscriptions sold through the website and through app stores
A Berlin start-up sells a photo-editing app on monthly and annual plans. Most customers are consumers, a growing share of them in France. About half pay on the website through a card processor and half through the two mobile app stores. Some business users enter a VAT number at checkout; most do not.
The finance team is setting up the VAT logic for a new billing system. The questions are specific: is the product an electronically supplied service, how is the customer’s country proven, who is the supplier for app-store sales, and how are business customers without a VAT number treated?
What the research has to settle
The rules behind the answer
- Consumers are taxed where they live
- Electronically supplied services to consumers are taxed in the customer’s member state. A small supplier established in one member state can stay with home-country VAT below an EU-wide threshold, which also counts its distance sales of goods.
- Automated delivery is the test
- A service delivered over the internet that is essentially automated, with minimal human involvement, is electronically supplied. Live teaching by a person over the internet is not, so a plan that includes live coaching needs separate analysis.
- Location is proven by evidence
- The implementing rules set presumptions and accept non-contradictory evidence such as the billing address, the IP address and bank details. Smaller suppliers can rely on less evidence, and the research confirms which test applies.
- App stores are usually the supplier
- Where an electronic service is supplied through an app store that authorises the charge or sets the general terms, the store is presumed to act in its own name. The developer then supplies the store, not the consumer.
How it runs in azta
From the question to the document
The question, as you would type it
German company sells photo-editing app subscriptions to consumers across the EU, half through our website and half through app stores. What evidence of customer location do we need, who is the supplier for app-store sales, and how do we treat users who give no VAT number?
You start with
Consumer subscriptions sold through the website and through app stores
- 01
Describe the product and the channels
Give what the subscription includes, how it is delivered and how customers pay. azta searches the VAT Directive, the implementing rules and the German and French VAT acts.
Cited research· Free - 02
Read the implementing rules
Open the provisions on electronically supplied services, location evidence and app stores in the reader, with their in-force status.
Atlas statute reader - 03
Write the billing note
Ask for a note by channel and customer type, with the evidence to collect at checkout. Edit it in Canvas.
Canvas · Ask azta· Pro - 04
Hand it to the billing team
Export the note to Word for the billing project, with the citations kept in the research.
Word export· Pro You send
A VAT note on place of supply, evidence of location and reporting
What you get
A VAT note on place of supply, evidence of location and reporting
VAT note · draft
Consumer subscriptions: VAT set-up for the new billing system
Website sales to consumers. The subscription is an electronically supplied service. VAT is due in the customer’s member state at that country’s rate and is declared in our OSS return in Germany. Billing must record two non-contradictory pieces of evidence of location, such as the billing address and the country of the customer’s bank.
App-store sales. The app stores authorise the charge and set the terms, so they are presumed to supply the consumer. We supply the app stores, which are businesses. These sales are outside the OSS and are treated as business-to-business services.
Customers without a VAT number. A customer who gives no VAT number may be treated as a consumer. Business customers in another member state who give a valid number are invoiced under the reverse charge.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
18 minutes a month
At €90 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 16
- Capacity at your rate
- €1,458
- More billing VAT reviews a quarter
- 0.7
- Return on Pro
- 4.5×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoWhat stays with you
- Configuring the billing system and checkout.
- Confirming the app stores’ contract terms.
- Filing the OSS return.
Frequently asked questions
- Does azta give us the rate for each country?
- It cites the rate provisions in each country’s VAT law, with in-force status. Check the rate on the date of supply before you configure billing.
- What about customers in Switzerland or the UK?
- Those countries are outside the EU and have their own VAT rules for digital services. Ask about each country separately.
- What if we bundle the app with a physical product?
- Describe the bundle and azta researches whether it is one supply or two, with the case law on single and multiple supplies.
