New EU VAT Rules Effective Immediately

New tax regulations imposed by the European Union require that from January 1st 2015, businesses who sell digital products and services to European customers should begin charging VAT at the rate of VAT in the country in which the customer is based. This is contrary to the previous rule, where VAT to EU buyers was to be charged at the rate of where the seller was based.

These new rules apply to the sale of most digital products and services, such as web hosting and domains names, including all Rapid Servers' products and services. The rules apply to all EU and non-EU based companies conducting business within the European Union.

How does it affect me?

In order to comply with the new rules, we will start charging VAT to all individuals and non-VAT registered businesses based in the European Union. If you currently live in one of the 28 EU member states, you will see VAT being added to your invoice at the rate applicable in your country. For example, if you are based in the Netherlands you will be charged 21% VAT on top of the monthly service fee. Each EU member country enforce a slightly varying VAT rate, ranging from 17% to 27%

Exemption for VAT-registered businesses

Registered companies with a valid VAT number are exempt from the rules and will not be charged VAT. The customer is responsible for paying the tax through the reverse-charge mechanism. If you are a VAT-registered business, it is therefore important that you update your account details with your VAT number.

For more information, see
http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/telecom/index_en.htm

A note on PayPal subscriptions

If you are affected by the new VAT rules and currently pay by PayPal Subscription, you will be required to manually alter the subscription to ensure you are paying the correct new amount. If you know this will affect you, we would recommend cancelling and creating a new PayPal subscription from the next invoice we issue to avoid any issues.

For reference, the 2015 VAT rates by country are available from this link.