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Does Twilio Charge VAT?

Twilio Inc. and its subsidiaries ("Twilio") are now required by certain foreign taxing authorities to collect Value-Added Tax (VAT) on sales of its services to customers located in the below jurisdictions. This guide covers the countries in the EU and Europe where Twilio charges VAT, and what products are taxable.

Notice: Purchases of Twilio services may be subject to taxes in a number of jurisdictions. To see if Twilio collects taxes in your country, please see the Taxes section of our Support Help Center.

The following topics are discussed in this guide. Click a topic to skip directly to this information:

Value-Added Tax (VAT) Overview

On July 1st, 2019, Twilio began collecting VAT on the services sold to its international customers located in certain foreign jurisdictions.

Who is charged VAT?

Any international customer with a business/service address in the list of countries provided below:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malta
  • Monaco
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Romania
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • United Kingdom

Why am I charged VAT?

Your service address indicates you live in one of the countries where we are required to collect and remit VAT. You can find the full list of countries above. If your service address is not correct, you can update it in Twilio Console.

Twilio is not a resident of Europe, why are you charging VAT?

EU VAT laws, and similar laws of other European countries, now require companies that sell cloud communication platform services to customers located in the EU, Norway & Switzerland/Liechtenstein to collect and remit VAT. This applies to both non-resident entities like Twilio Inc., and resident entities like Twilio Ireland. In order to comply with the EU & other similar VAT laws, Twilio will be imposing VAT on any cloud communication services (i.e. Programmable Messaging, Programmable Voice, etc.) that are subject to VAT. All B2C (business to consumer) and B2B (business to business) customers that have not provided a valid VAT registration number will be subject to VAT on their purchases of any applicable Twilio services. The services will be subject to the local VAT rate in the jurisdiction where the customer is located.

How is VAT determined?

VAT is applied based on where the customer has a permanent place of establishment. For individual customers (B2C), the permanent place of establishment is usually the billing/residential address. For business customers (B2B), the permanent place of establishment is usually the business's registered address, or where the business is located. Twilio uses your service address for tax calculation purposes. If your service address is not where your permanent place of establishment is, you can update it in Twilio Console.

What rate is VAT charged?

Twilio's services will be subject to the local VAT rate in the jurisdiction where the customer is located.

For example, a customer in France would be charged the French VAT standard rate of 20% for all taxable sales. If this customer spends $100 with Twilio, they would be charged an additional $20 for VAT, for a total of $120. 

  Total taxable sales: $100
   + French VAT (20%):  $20
Total including taxes: $120

Examples of taxable Twilio products and services include the following:

  • Outbound or Inbound SMS (e.g. UNITED KINGDOM Outbound SMS - Orange)
  • Voice calls (e.g. Programmable Outbound Minute - Bulgaria)
  • Flex (e.g. Flex - Active User Hours)
  • Whatsapp (e.g. WhatsApp Outbound Template Message - Armenia)
  • Enterprise plan (e.g. Twilio Custom SaaS Monthly Fee)

Billing adjustments may also have tax implications:

  • Credits applied against specific usage will refund you taxes at the same rate as the respective product (e.g. Credit - Voice US Outbound)
  • Promotional balances are not taxable (e.g. Promo - Twilio.org)
  • Minimum spend adjustments are taxed at the same rate as the respective product (e.g. Quarterly Min Spend Adjustment - Voice)

How can I be tax exempt for VAT?

Twilio is only required to impose VAT on Business to Customer (“B2C”) transactions. Business to Business (“B2B”) customers are tax exempt with a valid VAT number. B2B transactions are subject to the reverse charge mechanism, meaning a B2B customer should self-assess and report VAT on their end.

Question: I am a business, but do not have a VAT number. I am not required to register for VAT since my business falls under the required sales threshold for registering.

Answer: The VAT laws for nonresidents are designed to capture VAT from B2C consumers, and from B2B consumers that fall under the sales threshold. Unless a B2B customer can provide a valid VAT number, they will be taxed as a B2C. Nonresidents are not required to tax B2B customers with valid VAT numbers, since B2B customers are supposed to self-assess the VAT on their end.

Question: Are nonprofit organizations exempt from VAT?

Answer: Nonresident entities like Twilio are required to collect and remit VAT for B2C customers. We are not required to impose VAT on B2B customers, if the B2B customer provides a valid VAT number. In general, sales to nonprofit organizations that are not VAT registered will be treated as a B2C supply, and subject to VAT. However, there are exemptions that are specific to each country’s local VAT laws. Please contact our Support team if you believe your entity is exempt from tax. The Tax Department can then confirm if your specific situation is exempt from VAT based on your country’s local VAT laws.

Educational organizations located specifically in the UK

  • The VAT treatment would be dependent on the customer’s activities, and whether the customer is treated as a ‘business’ or ‘non-business’ for UK VAT purposes.
  • Please contact our Support team and let us know if:
    • You are charging a fee for your services. If yes, then you would be considered a business and not taxable. The reverse charge mechanism would still apply.
    • Educational services are free or funded by grants. If yes, then you would be considered a non-business and subject to VAT.

Other nonprofits or charitable organizations in the UK

  • Some nonprofits, mainly charitable organizations are eligible to purchase goods at zero rate (i.e. without VAT) despite being treated as a ‘non-business’ for VAT purposes. Please contact our Support team and provide a certificate declaring that your purchase is eligible to be zero rated. 

Notice: For customers located in Switzerland, Lichtenstein, and Ireland customers contracted with Twilio Ireland, we are required to apply VAT for both B2B and B2C customers.

If you are a VAT registered B2B customer, please add your VAT number in Twilio Console to be issued a valid tax invoice, and for self-assessment (reverse charge) before the current month’s end to prevent taxation.

How do I enter my VAT number?

You can enter your service address and VAT number on the Billing Preferences page in Console. The specific field may be called Business Tax ID or VAT number, depending on the country selected. If you are unsure of your VAT format or validity, please validate the number at a site like vatlayer.com.

For more details, see How do I Update my Billing Settings.

I entered a VAT number in my Twilio Console. Why am I getting charged VAT?

Your VAT number may be invalid. Please validate the number at a site like vatlayer.com to double check and see if you have input the correct VAT registration number with the standard formatting for your country.

Notice: If Twilio's validation rules won't accept a VAT number you believe to be valid, please contact our Support team with documentation to prove your VAT registration.

Do I need to provide a resale certificate to be tax exempt?

No, you don't need to provide a resale certificate, but you will need to enter a valid VAT number in the Twilio console to be considered tax exempt. All EU and Norway customers that have not provided a valid VAT registration number will be subject to the VAT on their purchases of any applicable Twilio services.

I forgot to enter my VAT number, but should be tax exempt. Can I get a refund for this month’s VAT?

It may be possible to receive a refund if requested within 90 days, depending on your location:

  • If you are a B2B customer with a valid VAT registration number in the EU or Norway, please contact our Support team for a refund or credit for the VAT amount charged.
  • If you are a B2B customer in Switzerland, Twilio is unable to issue a refund or credit for VAT, as non-residents are obligated to collect VAT from ALL customers (B2B and B2C). That said, B2B Swiss customers are entitled to reclaim the VAT charged upon receipt of a valid Swiss VAT invoice from Twilio under the Swiss VAT recovery rules.

What is the Reverse Charge Mechanism?

The Reverse Charge Mechanism is the process in which B2B customers are required to self-assess and report VAT charges. For more details, see What is the "Reverse Charge mechanism".

Where do I see the VAT amount on my invoice?

VAT for the previous month is assessed on the first day of the following month. For example, you will be charged VAT for your July usage in August.

You can see the VAT amount charged in the Usage Summary or Usage Details sections of your invoice. Your invoice will continue to show usage and taxes in the same currency as before.

Example Usage Summary
VAT_01_500px.png 

Example Usage Details
VAT_02-B_500px.png 

For additional help understanding an invoice, please see Reading your Twilio Invoice.

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