(Jan. 29, 2016) The Public Revenue Authority of Greece issued a document on January 14, 2016, addressing the issue of how to apply value-added tax (VAT) to reward-based crowdfunding projects. In such funding campaigns, people contribute to a project before receiving any goods or services in exchange for their contributions. The crowdfunding is considered a taxable transaction, and the contribution is considered a payment on account for the future provision of the goods or services. VAT is therefore chargeable at the time the payment is received by whoever is running the crowdfunding campaign. (Vassilis Dafnomilis, Greece: Document VAT Treatment of Crowdfunding Issued, TAX NEWS SERVICE (Jan. 22, 2016), International Bureau of Fiscal Documentation online subscription database; Text in Greek, FORIN.GR (Jan. 14, 2016).)
The document also said that crowdfunding transactions are still subject to VAT even if the contribution was of higher value than the goods or services later received in return. There should, however, be a direct link between the crowdfunding and the goods or services supplied, and the one requesting the funds should be a taxable person, acting as such. Any fee paid to a facilitating website is not included in the taxable amount. (Dafnomilis, supra.)
Definition of Crowdfunding
The Greek government document refers to the European Commission Guidelines resulting from a March 30, 2015, meeting on VAT. Part of the documentation for that meeting includes this definition of crowdfunding:
Crowdfunding generally refers to the process of raising funds for a specific project via an open call on the Internet, by way of specifically designed platforms which allow the peer-to-peer interaction between entrepreneurs and contributors, i.e., those that create a project and those that provide with [sic] financial support to that project, respectively. (Value Added Tax Committee (Article 398 of Directive 2006/112/EC), Question Concerning the Application of EU VAT Provisions, Working Paper No. 836 (Feb. 6, 2015), EUROPA.)