December 7, 2009

Google to charge VAT on Adwords

by Brian Turner

Google

Email came through this morning stating that Google will be charging VAT on Adwords where they do not already have a VAT registration number from the company.

This is going to be pretty bad news for sole traders, who are in danger of finding their PPC campaigns become a lot more expensive over night.

Here’s the email:

Dear AdWords Advertiser,

Upcoming EU tax regulations require us to have your VAT identification number in order to continue not charging you VAT. Please take a moment to submit your information:

https://spreadsheets.google.com/viewform?formkey=dGdaTnJZTlB5NWRMQm1memlxdXdjY2c6MQ

We’ve listed some common questions about this process below:

– Why is Google asking me for this information?
Our records show that you haven’t provided us with your VAT ID, even though you’ve been classified as using AdWords for business purposes. You’re currently not being charging VAT on your AdWords account, because you’re eligible to report VAT to your own local authority.

However, EU tax regulations are changing on 1 January 2010. With this change, Google is required to collect your VAT ID in order to continue not charging you VAT.

– What will happen if I don’t provide you with this information?
If you don’t provide us with your VAT ID, we will be legally obliged to charge VAT on your AdWords account at the local Irish rate of 21.5%, beginning on 1 January 2010.

– What is a VAT identification number?
A VAT registration number is alphanumeric and consists of a maximum of 15 characters. The first two letters indicate the respective member state, for example, “DE” for Germany.

All vendors who are entitled to deduct input VAT can receive a VAT registration number from their local tax authority.

– What should you do if you don’t have a VAT identification number?
Please contact your local tax authority to register for more information on how to obtain a European VAT ID number.

If you have further questions about this issue, please contact AdWords support at http://adwords.google.com/support/aw/bin/request.py?contact_type=vat_other1&hl=en_GB.

Yours sincerely,

The Google AdWords Team

Looks like Google’s recent move to process UK PPC through the Republic of Ireland office, instead of Google USA, is in very real danger of causing further VAT problems which is going to leave Adwords increasingly uncompetitive.

How tragic that MSN and Yahoo still haven’t got their act together on search and PPC to serve as real alternatives to Google.

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Story link: Google to charge VAT on Adwords

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