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Avangate Clients Automatically Compliant to Major EU VAT Regulation Change

Digital Commerce Provider Ensures All Clients Selling Digital Products or Services Remain VAT Compliant Starting Jan 1st 2015

Redwood City, CA - December 9, 2014 - Avangate, the leading Digital Commerce solution provider trusted by thousands of Software, Cloud and Online Services companies to grow their business worldwide, today announced that it is ready to accommodate the forthcoming European Union Value Added Tax regulation changes and ensure all Avangate clients will automatically remain VAT compliant. The new EU set of regulations, which will come into effect January 1, 2015, directly impact suppliers and customers of telecommunications, broadcasting and electronic services - including software, Software as a Service, eBooks, eLearning or any other electronically supplied services or digital products - located in the EU.

Currently, when telecommunications, broadcasting, or electronic services are supplied to non-taxable persons, VAT is accounted for by the supplier based on the supplier's location. Per the new regulations, any telecommunications, broadcasting or electronically delivered services sold by suppliers located in the EU will be taxable in the member state where the private individual or non-business customer is established, has a permanent address or normally resides. Added to this is the intricacy derived from subscription based business models with recurring payments, which have to transition between two different taxation rules within the same subscription contract.

"As a provider of electronic commerce services, Avangate is fully responsible for fiscal and legal compliance in 28 EU member states on behalf of its customers," mentioned Jeff Hodges, Avangate's Chief Financial Officer. "Avangate is already prepared to comply with the new EU regulations starting January 1st 2015, meaning all clients will continue to benefit from a seamless and fully compliant selling experience."

"Implementation of the new legislation brings massive complexity for businesses selling across Europe, since there are several tax rates, a new VAT registration process, plus it is not always straightforward to identify in which country customers should be taxed," said Danvers Baillieu, Chief Operating Officer of Privax. "It's a huge relief having all these issues taken care of by a commerce provider such as Avangate so we can focus on our core business instead of sales tax compliance."

In addition to these EU VAT adjustments, sales made by Avangate to customers established in Iceland, Norway and Switzerland (outside of the European Union) are subject to each country's VAT rate (Iceland: 25.5%, Norway: 25%, Switzerland: 8%). These three countries are not part of the EU and the regulations regarding VAT rates for these countries will not change after January 1, 2015. For more information on the new VAT rules, please consult the European Commission website regarding changes for telecommunications, broadcasting & electronic services.