 | | | | | e-business and telecommunications |
According to EC directive 2002/38/EC, in effect as of July 1, 2003, non-EU suppliers of telecommunications and electronic services to end customers residing in member states of the European Union must:
- Be registered in an EU country for the purpose of VAT
- Charge VAT at the statutory rate in the country of consumption of the services.
EU legislation further establishes that EU suppliers in the same situation (as is the case of Madeira) must charge the VAT rate of the country of origin. This will remain in effect, at least until 2015.
Due to its VAT rate, which is one of lowest in the European Union (16%), large American and European telecommunications and electronic services companies have preferred Madeira´s jurisdiction for B2C (Business to consumer) operations within the Euro-zone.
These companies also make use of other advantages besides VAT, such as:
- Administrative simplification since only one VAT rate instead of 27 rates has to be handled;
- Access to Europe´s most competitive tax system, in terms of taxation on profit;
- The security and credibility of operating in a mature and well regulated EU jurisdiction, where all EC directives on e-commerce have been transposed to national legislation;
- Excellent bandwidth and connectivity; Madeira, due to its geographical location, is a hub in the Atlantic for underwater cables that connect a variety of continents;
- Modern and efficient telecommunications infrastructures.
Following is a list of e-services for which this framework is beneficial:
- Music
- Software
- Movies
- Web Hosting
- Call Centre
- E-learning
- Games
- Electronic Tickets
- Data
Tax system of IBC
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