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Backblaze is a company based in USA which provides Internet services. For its services EU customers are charged VAT based on their place of residence which is assumed to be the same as the one on credit cards used for payment: https://help.backblaze.com/hc/en-us/articles/115004487993-VAT-for-EU-Customers.

I'm citizen of EU member state and I've used several US based Internet services paid by credit card. In most cases I wasn't being charged EU member state VAT.

According to Wikipedia, place of supply of services provided by Backblaze is outside EU (it's not in exceptions) and therefore no VAT should be charged.

  • Why do some US based companies charge VAT from EU customers for Internet services and why others don't?

  • Where do these VAT charges end up? Does Backblaze (or Amazon) give them to individual EU members states?

2 Answers 2

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According to the Wikipedia page you linked it is in fact in the exceptions:

Miscellaneous services include:

legal services

banking and financial services

telecommunications

broadcasting

electronically supplied services

services from engineers and accountants

advertising services

intellectual property services

See this FAQ from Amazon. This specifically is for EU-based sellers on Amazon, but the concept is the same. The company you pay for services knows what EU country you're from and will report and remit the VAT you paid accordingly.

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Companies with sales above 100.000EUR have different VAT rules.

More information here https://europa.eu/youreurope/business/selling-in-eu/selling-goods-services/selling-products-eu/index_en.htm

Carlos

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