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has banned whether the output is intended for private or company use (if
the recipient is a business owner).
To answer these questions, Cloud services need to be classified within the
system of purchase tax law.
A service which is provided over the Internet or an electronic network,
including networks for transferring digital content, the providing of which
relies to a large extent on information technology due to the characteristics
of the miscellaneous service. That is, where the service is automated to a
great extent, which only involves minimum human intervention and would
be impossible without IT, is a miscellaneous service provided by electronic
means. Examples of this include data storage and access as well as online
providing of storage space or software.
Besides the classification of the service, the status of the provider and the
customer must also be determined. Is this a business owner or a private
person? And if the purchaser is a business owner, are they really procuring
the service for their enterprise?
If the customer is a business owner and is procuring the service for their
business purposes, value‐added tax occurs where the customer operates
their business or where the permanent establishment for which the service
is destined is located.
The important thing here is that the business owner pays attention to
reporting this value‐added tax to the responsible fiscal authority. On the
other side of the equation, the business owner can claim input tax of the
same amount, providing it is eligible to deduct tax. In other words, value‐
added tax and input tax in the same amount exist on both sides of the
equation.
Even if one business owner operates a small business that is not liable for
VAT, or if a person generates only tax‐free turnover (e.g. a doctor), they still
owe the VAT. However, they will not be able to claim input tax deductions.
In case of doubt, it is always advisable to ask your tax consultant.
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An expanded version of this chapter can be found under
