Why is Dropbox charging Irish VAT to UK customers?
The UK left the EU to all intents and purposes on 1 January 2021. Businesses providing digital services to Britain from outside Britain are obliged to register for British VAT from that date and ...
Dropbox is providing digital services. The rules are simple both in the EU and in the UK. If you supply from outside the country to another country, and you are within the rules for VAT registration (threshold limits apply), then you should be charging the VAT rate and account for it within the country receiving the digital services. Irish VAT should not be charged. British VAT should (providing that Dropbox have hit the registration threshold and have therefore registered for British VAT).
When you say e-commerce is catching up, do you mean we are right that EU VAT should not be charged on services to end users outside the EU
I run a business where we export and import goods - Before Brexit my French End Users would pay UK VAT on our products, but French BUSINESSES would give me their French VAT Number which allowed us to Zero VAT (Intra EU VAT Rate 0%) - They would of course charge French VAT to their end users.
Since Brexit their is no VAT on any of our exports - The 'Z' Zero Rate is applied
I suspect Dropbox are collecting VAT from us, then their internal accounting system is applying Zero export VAT therefore not handing it over to the Irish VAT authorities - I could be wrong of course 🙂
I 'X'ed (Twittered) Dropbox yesterday, and they referred me to the email chain - I'll post back here if I get anywhere - Probably won't
I have the same issue, and twice I have queried why Dublin (EU) VAT was being charged to me in UK. This year I got an obscure reply, which included:
'Certain non-profit or educational institutions can receive tax exemptions on rgw Dropbox team and Professional subscriptions. However, we're unable to offer tax exemptions for Dropbox Plus subscriptions at this time. Please note that our Plus subscription is a product for personal use rather than a business product, we are obliged to charge tax on it in certain jurisdictions. We are also unable to exclude this from your payment. You may be able to use the invoice found in your account to claim tax back from your tax authority but unfortunately we can’t exempt your account from tax or refund the tax paid. Dropbox Plus invoices are created in such a way that we cannot adjust the billing information displayed.'
Our accounts team flagged this when it first happened, and because the VAT amount is £16.53 it does not warrant hours of our time dealing with Dropbox 'support', which seems impenetrable. Other US Dublin-based software and IT companies, for example Adobe, issue correct 'tax exempt' invoices to UK clients. If there is a loophole we are missing, and their invoicing is correct, then I would be grateful if this can be explained to those of us in UK who are staring at our screens, unable to locate their GB VAT number.
I regret that you are incorrect. The VAT you are being charged by other companies is British VAT as that complies with UK laws on this. It is not VAT charged for the country of supply, but where it is supplied. These companies are supposed to account for VAT to the British authorities.
Dropbox is the same. They should not be charging Irish VAT to customers outside the EU, as it is considered an export from the EU country's perspective, and they should (subject to thresholds and correct VAT registration) be charging UK VAT and including a UK VAT number on their invoices.
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Businesses providing digital services to Britain from outside Britain are obliged to register for British VAT from that date and ...","body@stringLength":"1616","rawBody":"
The UK left the EU to all intents and purposes on 1 January 2021.
A search shows that Irish VAT is not applicable to supplies such as these outside the EU, because the place of supply is considered to be where the service is used (not supplied). British VAT is probably applicable, in which cases a British VAT number should be quoted on Dropbox invoices.
Dropbox should supply a VAT invoice with a British VAT number on it. The Irish VAT invoice is incorrect. This would mean that the VAT is payable to the British government (and reclaimable if the customer is VAT registered in Britain).
Please can anyone explain why Dropbox invoices charge Irish VAT?
Many thanks.
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Was there ever an answer to this question - did it ever get resolved?
I notice they are still charging VAT on exported services to the UK
Or is it because the service is deemed to take place in Ireland ?
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Was there ever an answer to this question - did it ever get resolved?
I notice they are still charging VAT on exported services to the UK
Or is it because the service is deemed to take place in Ireland ?
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Dropbox is providing digital services. The rules are simple both in the EU and in the UK. If you supply from outside the country to another country, and you are within the rules for VAT registration (threshold limits apply), then you should be charging the VAT rate and account for it within the country receiving the digital services. Irish VAT should not be charged. British VAT should (providing that Dropbox have hit the registration threshold and have therefore registered for British VAT).
Dropbox don't seem to be doing this. Why?
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Dropbox is providing digital services. The rules are simple both in the EU and in the UK. If you supply from outside the country to another country, and you are within the rules for VAT registration (threshold limits apply), then you should be charging the VAT rate and account for it within the country receiving the digital services. Irish VAT should not be charged. British VAT should (providing that Dropbox have hit the registration threshold and have therefore registered for British VAT).
Dropbox don't seem to be doing this. Why?
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Why is Dropbox charging Irish VAT to UK customers?","moderationData":{"__ref":"ModerationData:moderation_data:720944"},"body":"
Or is it because the service is deemed to take place in Ireland ?
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Pretty much yes 🙂
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I'm charged VAT now for most services and products I buy online regardless of where they are based. VAT laws have started catching up with e-commerce.
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Hi Mark thanks for reply
When you say e-commerce is catching up, do you mean we are right that EU VAT should not be charged on services to end users outside the EU
I run a business where we export and import goods - Before Brexit my French End Users would pay UK VAT on our products, but French BUSINESSES would give me their French VAT Number which allowed us to Zero VAT (Intra EU VAT Rate 0%) - They would of course charge French VAT to their end users.
Since Brexit their is no VAT on any of our exports - The 'Z' Zero Rate is applied
I suspect Dropbox are collecting VAT from us, then their internal accounting system is applying Zero export VAT therefore not handing it over to the Irish VAT authorities - I could be wrong of course 🙂
I 'X'ed (Twittered) Dropbox yesterday, and they referred me to the email chain - I'll post back here if I get anywhere - Probably won't
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I have the same issue, and twice I have queried why Dublin (EU) VAT was being charged to me in UK. This year I got an obscure reply, which included:
'Certain non-profit or educational institutions can receive tax exemptions on rgw Dropbox team and Professional subscriptions. However, we're unable to offer tax exemptions for Dropbox Plus subscriptions at this time. Please note that our Plus subscription is a product for personal use rather than a business product, we are obliged to charge tax on it in certain jurisdictions. We are also unable to exclude this from your payment. You may be able to use the invoice found in your account to claim tax back from your tax authority but unfortunately we can’t exempt your account from tax or refund the tax paid. Dropbox Plus invoices are created in such a way that we cannot adjust the billing information displayed.'
Our accounts team flagged this when it first happened, and because the VAT amount is £16.53 it does not warrant hours of our time dealing with Dropbox 'support', which seems impenetrable. Other US Dublin-based software and IT companies, for example Adobe, issue correct 'tax exempt' invoices to UK clients. If there is a loophole we are missing, and their invoicing is correct, then I would be grateful if this can be explained to those of us in UK who are staring at our screens, unable to locate their GB VAT number.
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I regret that you are incorrect. The VAT you are being charged by other companies is British VAT as that complies with UK laws on this. It is not VAT charged for the country of supply, but where it is supplied. These companies are supposed to account for VAT to the British authorities.
Dropbox is the same. They should not be charging Irish VAT to customers outside the EU, as it is considered an export from the EU country's perspective, and they should (subject to thresholds and correct VAT registration) be charging UK VAT and including a UK VAT number on their invoices.
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Super User II
