This post focuses on some basics: what is the difference between B2B clients and B2C clients and how are they dealt with within EU VAT B2C law?
Simply put: B2B (business-to-business: commercial transactions between businesses) are all legal persons and B2C (business-to-consumer: the sale of finished product) are all natural persons/private individuals.
As with all things VAT, unfortunately, it isn’t that simplistic.
The EU, in its efforts to explain where to tax, produced this definition:
“The place of taxation is determined by where the services are supplied. This depends not only on the nature of the service supplied but also on the status of the customer receiving the service. A distinction must be made between a taxable person acting as such (a business acting in its business capacity) and a non-taxable person (a private individual who is the final consumer).
The rules for electronically supplied services varies from B2B; to B2C for a EU-based company, and to B2C for a company providing the service from outside the EU.
The VAT system operates as follows:
Suppliers of these services are liable to register and account for VAT in every EU member state where they have private customers. However, an optional special scheme is available whereby non-EU businesses can register in one EU member state only.
The information contained in this publication (“Information”) has been provided to you for general information purposes only and we recommend that you obtain professional advice before acting or refraining from action as a result of the Information. Taxamo accepts no liability for any loss occasioned to any person acting or refraining from action as a result of the Information.
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