You might have wondered which software services provided by Twilio are taxable and which are not. This guide is intended to help you understand how Twilio calculates VAT taxes for customers in the EU, Norway, Switzerland and Liechtenstein.
Starting July 2019, B2C customers in Norway, Switzerland, Liechtenstein, and the EU will be charged Value Added Tax by Twilio Inc, as per EU and specific country VAT laws. B2B customers in Switzerland and Liechtenstein will also be charged VAT per local regulations. Although Twilio Inc is a non-EU entity we have determined that the type of cloud services we sell falls within the definition of taxable electronically supplied services. As such, our services will be subject to VAT when selling to customers located within the EU and select European countries.
For more details, please see Does Twilio Charge VAT.
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
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)
I am Exempt from VAT - Why am I Being Charged?
As mentioned here, 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 self-assessment (reverse charge).
If you are tax exempt and have your VAT registration number, please make sure to add it to Console. For more details, please see Add or Update the Service Address or Tax ID on your Twilio Project.
How is VAT Shown on an Invoice?
VAT can be found on your invoice in the Usage Summary section under “Taxes”. This line item represents VAT charged in the EU.
Taxes are also visible in the Invoice Details section, where we specifically call out any VAT charged.
For more details, please see Reading your Twilio Invoice.