VAT for e-services of foreign companies
What is VAT?
VAT (a value-added tax) is a consumption tax placed on a product whenever value added at each stage of the supply chain, from production to the point of sale. You can only charge VAT if your business registered for VAT.
Most countries regulate the VAT payments for companies established in this country as well as for foreign companies that supply services for customers from this country.
What are electronically supplied services of foreign companies?
Services supplied from abroad which are delivered over the Internet or an electronic network (supply games, website supply, supply of software and its updates and others).
When buying electronically supplied services online, VAT is due. The seller will charge the VAT rate applicable in the country where the customer is established, has a permanent address or usually reside.
For instance, if a private person residing in Germany buys a game from an online store in France, according to the rules of VAT paid in the EU, the French company must charge from the buyer the VAT amount at German rates and has to pay its VAT to Germany.
Actual rates applied vary between countries and between certain types of products.
You can check the VAT rates applied in each country:
|Republic of Korea||KRW||10%|
|USA||USD||up to 20% *|
* - the rate depends on the state
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