Beginning February 1, 2019, Zoom will begin collecting Value Added Tax (VAT) for countries in the European Union.
Frequently Asked Questions
What is VAT?
VAT is the abbreviation of Value Added Tax and is in general due when goods and/or services are sold. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. It is a consumption tax because it is borne ultimately by the final consumer.
Who has to pay VAT?
Generally, VAT is payable by the supplier who is selling goods or services to its customers, where the VAT is invoiced by the supplier and collected from the customer, and subsequently, the supplier remits the collected VAT to the government. (Note: in case of cross border transactions with goods and services, business customers (B2B) might be required to self-account for local VAT under a so-called "reverse charge rule" (i.e. the recipient reports local VAT in its local return). Depending on the business customer's activities/recovery ratio, the reported VAT can be reclaimed as input VAT. In other words, the liability to report local VAT is in that case being shifted from the supplier to the business customer.)
Where does EU VAT apply?
EU VAT applies to EU member states through the VAT Directive, which is individually applied through national legislation by each EU member. Non-EU member states may have their own, separate, VAT system.
What is a VAT ID number?
A VAT identification number, or VAT registration number, is a unique number that identifies the person or business as registered for VAT. Zoom will not charge VAT to customers who have a valid VAT ID number. Zoom will use the VIES database (an official database for checking the validity of VAT numbers issued by EU Member States) to validate VAT numbers supplied through the Zoom billing portal.
Does Zoom have a VAT ID number?
Zoom is registered for the mini One Stop Shop (‘MOSS’) in the EU. The MOSS covers taxable persons supplying telecommunications and/or electronically supplied services to non-taxable persons in EU Members States (in which they do not have an establishment to account for the VAT due on those supplies) via a web-portal in the EU Member State in which they are identified. This scheme allows these taxable persons to avoid registering in each EU Member State where the non-business customers are located. Under the non-EU MOSS scheme, the Member State of identification will allocate the taxable person with an individual VAT identification number (using the format EUxxxyyyyyz), so it can be identified by local tax authorities.
Being established in the US, Zoom is registered under the non-EU MOSS scheme. The individual VAT identification number allocated to Zoom is EU528003555.
How do I enter my VAT ID?
To enter the VAT ID number, please follow these steps:
- Log in to the Zoom Portal
- Under Account Management, choose the Billing page
- Under Billing Contact, choose to edit the VAT Number (which appears after the Billing Contact Address field)
- Enter your VAT ID number and save
What happens if I don’t have a VAT ID?
If a customer is unable to supply a valid VAT ID, Zoom will charge and collect VAT starting on February 1, as reflected on invoices generated on or after that date.
Do I need to have Zoom’s VAT ID?
If you have provided Zoom with your VAT identification number:
Zoom's service is regarded for EU VAT purposes as being rendered to you from outside the EU (in this case the US) and therefore there is no need for a VAT number of Zoom in your administration of the account.
If you have provided your VAT number, you will not be charged by Zoom with local VAT. In this case, the service qualifies as a B2B service which you should report in your periodic VAT return under the reverse charge mechanism as a service purchased from outside the EU. This VAT is recoverable in the same VAT return insofar your activities entitle you to recovery of input VAT.
If you are not in the possession of a VAT identification number:
Zoom's service is regarded for EU VAT purposes as liable to VAT in your country. Through the so-called Mini One Stop Shop ('MOSS') regime Zoom charges local VAT to you and pays this VAT to your authorities. The specific VAT number granted under the MOSS regime is not a local VAT identification number, but has a different format: EU528003555. This number is an indication for local tax authorities that the VAT is paid through the MOSS regime (this number cannot be found in the European Commission's VIES data due to this specific regime).
How is Zoom determining which customers EU VAT applies to?
Zoom will apply VAT based on the location of the “Sold To” contact entered by the Customer. If located in an EU member state, Zoom will charge and collect VAT (this only if no valid VAT number is provided).
Are Norway and Switzerland included?
For purposes of collecting EU VAT ID numbers, and assessing EU VAT on or after February 1, Norway and Switzerland are not included at this time, as they are not EU member states. These and other non-member states may be considered at an appropriate time in the future.
Will VAT apply if an EU company purchase Zoom for a US location?
If the “Sold To” address is in the US, even if the parent company or billing address is in the EU, VAT will not be assessed. VAT will generally only be applicable based on the Sold To location.
Why does my VAT number appear under Billing Contact if application of VAT is based on Sold To location?
Usually, the Billing Contact and Sold To location are the same. Customers are first asked to enter a Billing Contact location, which serves as the Sold To location, as well (unless specifically noted as different). VAT number is requested if this location is in the EU.
The locations are only different if the Customer specifically indicates that the Sold to location is different, and then enters a second location address. If the Billing Contact and Sold To contact are in different locations, VAT applicability will be based on Sold To location only.
Why did I get a notification email if I am not located in the EU?
In order to ensure complete and thorough notification to any of our customers who may be impacted, we sent the notification communication to all customers who had a Bill To OR Sold To address in EU. If you are not responsible for a “Sold To” address in the EU, you may disregard the communication. Assessment and collection will be based on Sold To contact address only.
Why is Zoom assessing EU VAT as of February 1?
Zoom has undertaken an assessment of its services and determined that some are subject to EU VAT. Additionally, as Zoom grows its international presence, it has implemented the systems necessary to identify customers who are subject to VAT, accept VAT numbers, and properly reflect charges on invoices. Zoom will begin assessing EU VAT on February 1 on invoices and transactions going forward. No invoices issued prior to that date will be impacted.
Which VAT rate applies, the one where the customer is located, or the one where Zoom’s VAT ID is located?
Zoom will generally charge the VAT rate applicable to the “Sold To” address location.
Is there a minimum threshold purchase amount before VAT is applied?
No. VAT applies to sale of Zoom’s services in case no valid VAT ID number can be provided.
What exemptions are available and how does a customer notify Zoom?
Customers who provide a valid VAT number will not be charged VAT by Zoom. Due to the structure of the VAT system, no other exemptions are available.
Is there a form that a charity can submit showing that it is tax exempt, rather than entering a VAT ID number?
Charities that are exempt from paying VAT on their sales will not, in most cases, have a valid VAT ID number that exempts them from paying VAT on their purchases. Because charities usually do not carry out economic activities (i.e. sales of goods/services against remuneration), they are mostly not in the possession of a VAT number. Otherwise, while they may be exempt from charging VAT on their sales (if any), they may still be charged with VAT on purchases if they do not have an ID Number.
Are there any VAT obligations for me as a customer?
If you have provided a valid VAT number, no VAT will be charged to you. If this is the case, you should report the purchased services in your VAT return and self-assess VAT through the so-called “reverse charge rule”. Depending on your activities/recovery ratio, the reported VAT can be reclaimed as input VAT in the same VAT return.
What if I have a VAT ID and forget to enter it?
The VAT number can be entered at any time. If entered before the next invoice, Zoom will not charge VAT. If no VAT number is entered at the time of the next invoice, VAT will be charged. A customer can contact their local taxing authority or Zoom directly to claim back VAT or request an updated invoice.