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The Tax Office has released a ruling confirming that the VAT exemption for cloud computing services applies exclusively to the cloud provider. This position is consistent with Tax Ruling 017056 of 2017 but it contradicts the Ruling No. 34951 of 2017, also issued by the Tax Office, and which is currently in force. The latter asserts that the VAT exemption, applies in consideration of the service itself and not just its providers, aligning with the indirect nature of VAT.
These conflicting viewpoints fail to accurately reflect the nature of VAT in the cloud services market and creates legal uncertainty for the marketer.
This information is valuable for market players who offer cloud services, but do not directly act as providers. It is particularly relevant for cloud brokers or agents who, in practice, market programs, interfaces, platforms or cloud services. It is also relevant for purchasers of cloud services provided by foreign suppliers and that are required to self-assess VAT.
Based on your business model, we can help you conduct the necessary analysis diagnostics to evaluate your position as player or consumer in the digital market for such services.
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