2015 EU VAT changes to cross-border B2C digital services - impacts on Finnish video game companies
Chen, Cuiwen (2017)
Haaga-Helia ammattikorkeakoulu
2017
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201705168405
https://urn.fi/URN:NBN:fi:amk-201705168405
Tiivistelmä
This Bachelor’s thesis looks at the 2015 European Union (EU) Value Added Tax (VAT) changes to cross-border B2C digital services. The overall purpose of the thesis is to reveal the impacts of the new VAT rules on Finnish video game companies.
The thesis consists of a theoretical part and an empirical part. The theoretical part introduces the definition of VAT, VAT mechanise, and VAT in the EU and Finland, especially the differences before and after the 2015 changes to cross-border B2C digital services. Moreover, the theoretical part includes an introduction to the development of the video game industry, its value chain and revenue streams. The end of the theoretical part illustrates, with real examples, the effects of the 2015 EU VAT changes on video game companies. The empirical section is based on interviews with relevant companies and focuses on the impacts of the new rules. Emphasis is put on the challenges that the interviewed companies were confronted with.
The study is based on quantitative and qualitative methods. First, a link to a questionnaire was published in the Play Finland Facebook group, organised by Neogames Finland ry. and followed by most Finnish video game companies. The survey was valid for a month, but only one company filled in the questionnaire. Second, two half-structured interviews with the Financial Manager and with the external accountant of a Finnish video game company were conducted to obtain detailed information of the impacts of the new VAT rules.
All the findings show that most Finnish video game companies are not subject to EU cross-border B2C VAT on digital services. The ones that are obligated to handle cross-border B2C VAT encountered manageable challenges caused by the implementation of the new rules. No significant changes on pricing strategy and business models were made due to the new rules.
In brief, the implementation of 2015 EU VAT changes to cross-border B2C digital services relieves the tax burden of most Finnish video game companies. This implementation does not hamper companies wishing to distribute their games directly in the B2C market.
The thesis consists of a theoretical part and an empirical part. The theoretical part introduces the definition of VAT, VAT mechanise, and VAT in the EU and Finland, especially the differences before and after the 2015 changes to cross-border B2C digital services. Moreover, the theoretical part includes an introduction to the development of the video game industry, its value chain and revenue streams. The end of the theoretical part illustrates, with real examples, the effects of the 2015 EU VAT changes on video game companies. The empirical section is based on interviews with relevant companies and focuses on the impacts of the new rules. Emphasis is put on the challenges that the interviewed companies were confronted with.
The study is based on quantitative and qualitative methods. First, a link to a questionnaire was published in the Play Finland Facebook group, organised by Neogames Finland ry. and followed by most Finnish video game companies. The survey was valid for a month, but only one company filled in the questionnaire. Second, two half-structured interviews with the Financial Manager and with the external accountant of a Finnish video game company were conducted to obtain detailed information of the impacts of the new VAT rules.
All the findings show that most Finnish video game companies are not subject to EU cross-border B2C VAT on digital services. The ones that are obligated to handle cross-border B2C VAT encountered manageable challenges caused by the implementation of the new rules. No significant changes on pricing strategy and business models were made due to the new rules.
In brief, the implementation of 2015 EU VAT changes to cross-border B2C digital services relieves the tax burden of most Finnish video game companies. This implementation does not hamper companies wishing to distribute their games directly in the B2C market.