Skype will no longer charge EU residents VAT for credit at the point-of-purchase

Live in the European Union (EU)? Use Skype to call landlines or mobiles? Here’s some interesting payment news for you. In an email circulated to users earlier today, the Microsoft-owned company revealed that it’s bringing about some changes to the way it charges you VAT.

Thus far, Skype has always charged those living in the EU and Switzerland 15 percent or 8 percent respectively, on top of the amount of credit they required. So, for example, a Brit wanting £10 worth of credit would actually pay £11.50.

Starting from later this month, you’ll only pay for the amount of credit you require at the point-of-purchase – so if you want to add €20 to your account, all you pay is €20.

Instead, VAT is being charged at the time you actually use it – when you call a landline or mobile phone from your Skype account. The advertised Pay As You Go call rates will be all that you pay, and will include all taxes. This should go some way towards simplifying things, given that as things stand, rates are advertised as something like ‘0.7p/min or 0.8p incl. VAT‘.

However, if you use your Skype Credit balance to then purchase a subscription, you will now be charged the applicable VAT rate at the point-of-sale. For example, an ‘Unlimited Europe’ plan costs UK residents £4.99/month, but this will be charged at £5.74 including VAT, and it’s the latter figure that will be subtracted from your credit.

A gradual rollout of these changes will kick-off from July 28 2014, and may take a few weeks to be go live depending on the country. You can read more about Skype’s VAT changes here.