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Mail order and distance purchasing

Goods

The rules applicable to mail order and distance purchasing are identical whether goods are ordered by telephone, from a catalogue or via the internet.

The general rule for supplies of goods to private individuals in the single market is the "origin" principle. This means that private individuals pay VAT in the Member State of purchase, and do not have additional VAT to pay on return to their own Member State.

However, for "distance selling" (where the supplier and the customer are located in different Member States, and the goods are dispatched to the customer), there are a number of different possibilities, all related to the level of trade of the supplier, which determines whether the "origin" or "destination" principles apply.

The general rule is that it is the VAT rate of the supplier which applies ("origin" principle). However, if the level of sales in any one Member State exceed a certain threshold (either €35.000 or €100.000 depending on the Member State)or if the supplier opts, then he must register for VAT and charge VAT at the rate applicable in that Member State ("destination" principle).

This means that distance sellers must charge the VAT rate applicable in the Member State of the customer where the supplies to all customers in that Member State exceed the relevant threshold.

Goods supplied from outside the European Union are subject to VAT on importation.

Services

Digital services purchased over the internet are liable to VAT. The rate of VAT applicable to private individuals will depend on the status of the vendor. If the vendor is established in the European Union, he will charge the rate of VAT applicable in his Member State of establishment. If the vendor is not established in the European Union, he will charge VAT at the rate applicable in the Member State of consumption of the service.

Telecom services when provided by a telecommunications operator established in the EU to private consumers will be subject to VAT at the rate of the Member State where the supplier is established. If the same telecom service is supplied by a supplier established in a non-European Union country, the VAT charged will be the VAT of the Member State where the private person uses the telecom service.

From 1st January 2015, operators providing theses services established in the EU will charge VAT at the rate applicable in the Member State where the customer resides (for further information see the Directive 2008/8/ECpdf).