e-business and telecommunications
| According to EC directive 2002/38/EC, non-EU suppliers of telecommunications and electronic services that sell these types of services to end customers residing in member states of the European Union must:
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be registered in an EU country for the purpose of VAT, and
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charge VAT at the statutory rate in the country of consumption of the services.
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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.
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Large American and European telecommunications and electronic services companies have preferred Madeira's jurisdiction for B2C operations inside the EU, due to its VAT rate (which can reach 10%), which is one of the lowest of the European Union (14%). These companies also make use of other advantages besides VAT, such as:
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administrative simplification since only one VAT rate instead of 27 rates has to be handled;
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access to Europe's most competitive tax system, in terms of taxation on profit;
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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;
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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;
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modern and efficient telecommunications infrastructures.
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