The VAT compliance challenges for digital publishers
The digital publishing world has transformed over the past two decades; the rise in cross-border consumption means companies are no longer confined to national borders.
As content is distributed instantly through e-books, paywalled articles, online subscriptions and digital learning materials; the scalability creates significant commercial opportunity. However, it also results in direct VAT obligations in foreign jurisdictions.
Many publishers view VAT as administrative overhead rather than a commercial consideration. In reality though, it is a regulatory requirement that can materially impact operating models, margins and expansion timelines.
The failure to address VAT appropriately can result in non-compliance and operational disruption. For CEOs, CFOs and finance teams this means avoidable financial and governance risk. If you are selling outside of your country, then understanding VAT is essential to support your international growth.
Should VAT be based on customer location or company location?
For digital publishers, the VAT considerations for digital products normally follows the destination principle.
Destination principle:
In many countries, the tax must be applied where the customer consumes the product and not where the seller is established. This means sales to foreign consumers are subject to foreign VAT rates, regardless of the publisher’s domestic tax status.
For example:
- A digital book sold to a customer in Germany is taxed at the German VAT rate of 19%, not the publisher’s local VAT rate.
- A reader purchasing a digital learning module in the Philippines will be subject to the newly enforced 12% VAT on digital services that commenced on 1 June 2025.
Without a system capturing customer consumption data, publishers cannot correctly apply the tax mandate.
When is VAT registration triggered?
Digital publishers and service providers will have to create VAT registration. A single foreign B2C sale can create VAT registration and reporting obligations; while local companies are subject to minimum VAT registration threshold; this isn’t the case for foreign suppliers of digital services.
If the company provides:
- E-books and audiobooks (taxable digital services)
- Online course modules (minimal human involvement)
- Paywalled articles or premium databases
- Online magazine subscriptions
then foreign B2C sales requires a VAT registration. It is not only for high-volume trading environments. In practice, even small-scale cross-border digital distribution can generate reporting requirements.
Beware of misreporting
The most common types of misreporting experienced by digital publishers are:
Are reverse-charged digital purchases being captured in VAT submissions?
Digital publishers frequently subscribe to SaaS platforms, analytics tools, creative suites and digital infrastructure software. These purchases may show no VAT on the invoice, but still require reporting due to reverse charge rules applicable for cross-border B2B sales in most countries.
For example:
- A French publisher buys an enterprise software license from a German supplier. VAT is self-assessed under reverse charge, but must still be recorded and reported in the publisher’s French VAT return.
Beware: a VAT submission excluding reverse-charged transactions is incomplete by definition.
Assessing current VAT awareness level
Understanding the geographic reality of the customer base is essential. Having large groups such as Europe or APAC is not enough detail.
VAT authorities require country-level location evidence per transaction, including:
- Billing address
- IP location at time of purchase
- Payment method country identifier
Beware: without capturing this information, VAT cannot be applied correctly at the point of sales.
Within the EU, for VAT audits, publishers must store at least two non-contradictory evidence pieces of location for up to 10 years to justify the VAT treatment applied at checkout.
Segregating corporate and consumer transactions
Publishers must differentiate between the different types of sales:
- B2C sales: this needs VAT charged and remitted locally
- B2B sales: this is normally subject to reverse-charge, although exceptions may apply depending on jurisdiction
For B2B validation, teams must request, collect and validate either:
- VAT numbers;
- Other proofs of business establishment
Beware: without differentiation, businesses risk misreporting both sales and purchases.
Are you prepared for 2025 and 2026 VAT evolutions?
There are a number of global regulatory changes that specifically impact publishers. Keeping up to date with VAT legislation is essential.
Key changes include:
- 12% VAT on digital services in the Philippines effective from 1 June 2025
- 7% Retail Sales Tax in the Manitoba are effective from 2026
- EU Place of Supply clarification for virtual events and webinars under the VAT in the Digital Age (ViDA) initiative, confirms that VAT must be charged in the customer’s country, not where the event is organised.
Large regulatory packages may standardize VAT, but publishers must still map and adapt local rules at rollout speed; without attempting multi-vendor or isolated local tool implementations at each border.
Solution for the CFO
For the CFO having a unified compliance platform will allow multiple VAT registrations and returns to be managed simultaneously; reducing complexity for the team, being cost effective and avoid jurisdictional ambiguity.
Compliance checklist
If you are the CEO or CFO of a digital publisher then use our compliance checklist to ensure your international expansion is compliant.
| Key Requirement | Validation |
| Do you collect customer country and IP data at checkout? | Required |
| Are B2B and B2C sales segregated? | Mandatory |
| Are reverse-charge purchases reported despite showing 0 VAT on invoice? | Must be included |
| Is VAT charged based on VAT rates from customer countries? | Must be correct |
| Are 2+ valid pieces of customer location evidence stored 10 years? | Non-negotiable |
| Are OSS/IOSS identifiers included when applicable? | Must be referenced |
| Can your finance team retrieve all VAT data immediately if authorities inquire? | Critical capability |
Next steps
If you are operating across Europe without a centralised VAT compliance process then you have an unnecessary commercial and regulatory complexity. Using a unified platform, such as Tax Desk with their dedicated client team, gives you the confidence around compliance and allows you to scale globally while VAT obligations remain structurally simplified.