An Overview of Consumption Tax Implications on Sale of Digital Downloads in the European Union

Abstract

This article gives an overview of the current VAT treatment in the EU of digital downloads of films, audio, text, and other media provided by established as well as non-established companies to taxable and non-taxable persons. Four specific issues are discussed; the classification of electronically supplied services, an overview of who may be regarded as a taxable person, the definition of a fixed establishment and where electronically supplied services are deemed to be supplied. Proposed changes of the VAT treatment for established companies and their possible effects are also evaluated in relation to the last issue.

Key Words:

• consumption taxation
• VAT
• digital services
• electronically supplied services
• fixed establishment
• content downloads