Skype Will No Longer Charge VAT For EU Residents When Buying Skype Credits

In an email sent to customers in the European Union, Microsoft announced that they will no longer charge customers with VAT tax during their purchase of Skype Credits. So, customers can only pay for the amount of credit they require at the point-of-purchase. Previously, the Luxembourg VAT rate of 15% generally applies if you are located in the EU and Skype products are purchased and used within the EU although products purchased in Switzerland attracts a local 8% VAT rate.

The changes below are effective from 28 July 2014:

Pay As You Go, Skype Credit, and Auto-recharge:

For Pay As You Go calls, VAT is charged when you make the call. Call rates will be exactly what you pay for your calls, inclusive of taxes.  This makes it easy for you to clearly see how much your calls made from Skype cost. More information on our PAYG rates can be found here.

Skype Credit:

VAT is not charged at the time of purchase. Example: if you buy €10 of Skype Credit, you will only be charged €10. The same applies if you top-up your Skype Credit from within your Skype client on desktop or mobile.

Auto-recharge:

Auto-recharge automatically tops up your Skype Credit when your balance falls below a certain amount (typically $2 / €2 / £2). VAT is not charged at purchase. Example: if you set your recharge value to €10 of Skype Credit, you will only be charged €10. To find out more about how Auto-recharge works, click here.

However, when you buy Skype subscriptions, you need to pay the VAT.

Skype subscriptions provide you with the best value way to reach mobiles and landlines worldwide. If you use your Skype Credit balance to purchase a subscription or have a subscription which uses Skype Credit as a recurring payment, you will be charged 15% VAT for EU residents (8% for Swiss residents) at the point of purchase. VAT is added at the time of the recurring payment.

Source: Skype