This article has been written after the the substantial change in VAT regulation of July 2021.
Legal Requirements for Selling Digital Products and Online Services in the EU from Outside the EU: A Comprehensive Guide
When selling digital products and online services in the EU from outside the EU, there are several legal requirements and considerations to keep in mind. Here is a detailed overview of the key aspects:
- VAT Registration: As of the regulation on OSS 2021, businesses outside the EU are required to register for VAT using the Non-Union OSS scheme. This scheme allows businesses to register for VAT in one EU member state and report and remit VAT for their sales of digital goods and services to customers located within the EU through a single online portal. For any doubt regarding VAT, you can ask our Free Online Tax Consultant.
- Identify the Applicable VAT Rate: Each EU member state has its own VAT rates, ranging from standard rates to reduced rates or exemptions for certain types of goods and services. It is essential to correctly identify and apply the appropriate VAT rate based on the customer’s location within the EU.
- Collecting and Storing Customer Data: Selling digital products and online services require collecting and storing customer data. It is important to comply with relevant data protection and privacy laws, such as the General Data Protection Regulation (GDPR) (you can access our complete guide on GDPR in ecommerce), when handling customer information. Businesses should implement appropriate security measures and obtain necessary consent for data processing.
- Terms and Conditions: It is crucial to have clear and comprehensive terms and conditions for selling digital products and online services. These terms should outline the rights and obligations of both the business and the customer, including aspects such as payment terms, delivery of products/services, refunds, and dispute resolution mechanisms.
- Consumer Protection: The EU has consumer protection laws in place to safeguard the rights of customers. Businesses must ensure compliance with these laws, which may include providing accurate product descriptions, clear pricing information, accessible customer support, and honoring refund or cancellation rights as applicable. Another relevant issue in this area is Cookie policy and IP address tracking.
- Intellectual Property Rights: When selling digital products, it is important to respect intellectual property rights. Businesses should ensure that they have the necessary rights or licenses to sell the products or services they offer and take appropriate measures to prevent unauthorized use or infringement of copyrighted materials.
- Cross-Border Data Transfers: If customer data is transferred outside the EU, businesses must comply with data transfer restrictions and implement appropriate safeguards. The GDPR imposes requirements for the lawful transfer of personal data to countries outside the EU, such as using standard contractual clauses or relying on specific adequacy decisions by the European Commission.
Given the complexity and evolving nature of regulations, it is advisable to seek legal advice or consult with professionals who specialize in international e-commerce and EU law. They can provide guidance tailored to your specific business and ensure compliance with all relevant legal requirements. Start today and solve your doubts in real time with our Free Online Legal and GDPR consultant in EU.
