Electronically supplied services: Annex L categories

VAT & Internet:  Electronically supplied services

The following are the detailed electronically supplied services within each Item of Annex L to Directive 77/388/EEC.  We are giving examples of possible real life scenarios.  Please contact us if you need advice regarding the VAT treatment of any of the types of electronically supplied services listed below:

Electronically supplied  serviceScenarioVAT implications
Item 1 of Annex L   
(a)    Website hosting & webpage hostingWebHosts Inc, a US based web hosting supplier hosts the websites of EU based customers on its servers in Puerto Rico.  WebHosts does not have any offices in EuropeB2C:  WebHosts can either register for VAT under the Special Scheme (say in just the UK) and must account for the VAT of the countries its private customers are resident in; or WH must register for VAT in each separate EU member state.B2B: WH must take the VAT nos of its EU business customers and the customers are required to “reverse charge” the VAT.

Planning:  WebHosts could register for VAT in say Luxembourg (VAT rate 15{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d}) & it could then charge this rate B2C across  the EU.  This facility will not be available from 1.1.2015.   

(b)   Automated, online and distance maintenance of programsIndiaITConsultants provides remote online 24 x 7 software maintenance to UK banks with consultants occasionally travelling to UK for onsite de-bugging  This is not an electronically supplied service as it is not entirely dependent on the internet for delivery.  This is a B2B software consulting service and the UK banks are required to account for the VAT under the “reverse charge”.  Being partially exempt the banks cannot recover all the VAT & that portion becomes a cost to them.
(c)    Remote systems administration  
(d)   Online data warehousing where specific data is stored and retrieved electronically  
(e)   Online supply of on-demand disc space  
Item 2 of Annex L  
(a)    Accessing or downloading software (including procurement / accountancy programmes and anti-virus software) plus updates  
(b)   Bannerblocker software  
(c)    Download drivers  e.g software that interfaces computers with peripheral devices such as printers  
(d)   Online automated installation of filters on websites  
(e)   Online automated installation of firewalls  
Item 3 of Annex L  
(a)    Accessing or downloading of desktop themes  
(b)   Accessing or downloading photographic or pictorial images or screensavers  
(c)    The digitised content of books and other electronic publications  
(d)   Subscriptions to online newspapers and journals  
(e)   Weblogs and web statistics  
(f)     Online news, traffic information  and weather reports   
(g)    Online information generated automatically by software from specific data input by customer such as legal and financial data (in particular such data as continually updated stock market data in real time)ShareLiveFeeds Ltd, a UK based online supplier of live stock market data, provides cross-border services to both B2C and B2B customers.  Individuals and asset managers enter details of their share portfolios online and the vendor’s software automatically calculates the current valuation including charts and trends.UK VAT must be charged to private individuals (B2C) resident in other EU countries until 31.12.2014 after which the supplier will have to charge the VAT of the EU countries the individuals are resident in.For B2B supplies the business customers will self-account for VAT under the “reverse charge” mechanism and the supplier will have to maintain EC Sales Lists from 1.1.2010. 

If ShareLive Feeds provides offline financial services other than advisory then the VAT implications may be very different

(h)   The provision of advertising space including banner ads on a website / web page  
(i)      Use of search engines and internet directories  
Item 4 of Annex L  
(a)    Accessing of music on to computers and mobile phones  
(b)   Accessing or downloading of jingles, excerpts, ringtones or other sounds  
(c)    Accessing or downloading of films  
(d)   Downloading of music on to computers and mobile phones  
(e)   Accessing automated online games which are dependent on the Internet, or other similar electronic networks, where the players are geographically remote from one another  
Item 5 of Annex L  
(a)    Automated distant teaching dependent on the Internet or similar electronic network to function and the supply of which requires limited or no human intervention, including virtual classrooms, except where the internet or similar electronic network is used as a tool simply for communication between teacher and student  
(b)   Workbooks completed by students online and marked automatically without human intervention