Sweeping E.U. VAT Rule Change Takes Effect

LONDON — The European Union has dramatically altered rules for collecting value-added taxes on digital goods, placing the burden on companies to determine and report taxes based on where consumers are located.

The E.U. VAT rule change, which was effective Jan. 1, affects all sorts of digital goods, including streaming video content.

The change covers all “e-services which that are automatically delivered over the Internet … where there is minimal or no human intervention” and “content downloads onto the consumer’s device.”

Previously, E.U. companies reported VAT based on their physical addresses, and large global companies had the financial clout to shop around for the lowest tax rate, particularly in countries like Luxembourg and Ireland where the VAT rates are as low as three percent. Countries, such as the U.K., charge VAT taxes of 20 percent.

“You need to identify the place where your consumer is based, has their permanent address, or usually resides,” according to the U.K. government’s HM Revenue and Customs website. “This will be the member state where VAT on the digital services supply is due.”

“The changes will create a level playing field for U.K. businesses by removing the current competitive advantage of E.U. member states with lower rates of VAT.”

Payment processors, however, are exempt from the new VAT rules.

“If your only role in the supply is to provide for the processing of payments you are not regarded as a digital platform and you do not have to account for the VAT,”   HM Revenue and Customs stated.

Adult industry attorney Lawrence Walters said that he’s been warning clients since learning of the change. But because he is not licensed in the E.U. and not a tax attorney, he’s been referring them to contact tax consultants.

“On the face of it, this policy looks like it applies to anyone selling digital goods to consumers in the E.U., not just E.U. websites,” Walters told XBIZ over the weekend.

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

AEBN Publishes Report on DP Trends

AEBN has published a report on DP and extreme penetration categories from its straight and gay theaters.

Free Speech Coalition Appoints Megan Stokes to Board of Directors

The Free Speech Coalition (FSC) announced today that it has appointed Megan Stokes to its Board of Directors.

FansRevenue Acquires DivaTraffic

FansRevenue has acquired web traffic service DivaTraffic.

AEBN Announces Peter Green as Top Male Boy/Girl Performer for Summer 2025

AEBN has revealed its top 10 male Boy/Girl performers for summer 2025, with Peter Green landing atop the leaderboard.

Spicey AI Relaunches Site, Debuts $Spicey Tokens

Interactive voice chat platform Spicey AI has relaunched its website and introduced $Spicey tokens.

FSC: Missouri Age Verification Rule Will Not Take Effect August 30

The Free Speech Coalition (FSC) announced that Missouri's proposed age verification legislation will not take effect on August 30, as it had originally estimated.

Little Caprice, Marcello Bravo to Co-Host 2025 XMA Europa Awards

XBIZ is pleased to announce that husband-and-wife duo Little Caprice and Marcello Bravo will co-host adult’s biggest night in Europe: the 2025 XMA Europa Awards on Sept. 4, in the epic climax to XBIZ’s fall events series.

Germany Will Block Payments to AV-Noncompliant Adult Sites as of Dec. 1

Starting Dec. 1, Germany will implement new rules prohibiting financial institutions from providing payment services to adult sites deemed to have inadequate age verification systems and making it easier for the government to target websites mirroring the content of such sites.

Jerkmate Joins Pineapple Support as Partner-Level Sponsor

Jerkmate has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

FSC Launches Age Verification Toolkit for Adult Websites

The Free Speech Coalition (FSC) announced today that it has launched a comprehensive toolkit to help adult websites navigate age verification laws.

Show More