If your services do not require your intervention, that is, they are automated (such as a web application that you have developed, or the download of an eBook you wrote a long time ago), these rules apply:
- If your customer is a European B2B (a company) with a valid VAT number, you do not add VAT (0%) and put the same clause.
- On the contrary, if your client does not have a VAT number, but is from Europe (individual or company), you add the VAT of your country of origin to the invoice. For a Spanish customer, that would be 21%.
- Finally, if your client is outside Europe, you do not add VAT (0%).
When your product is sold to individuals and it is downloaded by them automatically, without human intervention, it is considered to fall into the “digital downloads” category.
As it would be unfeasible to pay the collected VAT to the countries of each one of your clients, a scheme called MOSS was created. This scheme declares all VAT charged to all your European customers to the Estonian authorities only. Then, once a quarter, the Estonian government asks you to pay the whole amount of VAT you collected that quarter, and then distributes it to each European country appropriately. This procedure is quite convenient to avoid costs and time for the companies.
Therefore, if you enter the category of digital downloads, it is necessary to register in the MOSS (Mini One Stop Shop) scheme, specifying which of your products fall into that category, and make quarterly VAT returns. You must inform us to request the documentation and have you sign the MOSS statement.
If you sell less than 10,000 euros per year per country, you are exempt from joining the MOSS. Therefore, our recommendation is that until you exceed € 10,000 a year in any country, you don’t sign up for MOSS, and in that case you will charge your customers the Estonian VAT (20%).