Twilio Inc. dba Sendgrid & its affiliates (hereinafter, “Twilio Sendgrid”) are required by certain foreign taxing authorities to collect Value-Added Tax (“VAT”) on sales of its services to customers located in the EEA (European Economic Area).
Notice: Twilio services may be subject to tax in various countries, states and/or localities. To see if Twilio collects taxes in your country, please see the Billing section of our Support Help Center.
The following topics are discussed in this guide. Click a topic to skip directly to this information:
- Value Added Tax overview
- When will Twilio start charging VAT in EEA?
- Twilio is not a resident of Europe, why are you charging VAT?
- How is VAT determined?
- What rate is VAT charged?
- How can I be tax exempt for VAT?
- Do I need to provide a resale certificate to be tax exempt?
- I forgot to enter my VAT number, but should be tax exempt. Can I get a refund for this month’s VAT?
- Where do I see the VAT amount on my invoice?
- How Does Twilio Sendgrid Validate my Tax ID?
- What is the Reverse Charge Mechanism?
Value-Added Tax Overview
Twilio Sendgrid collects VAT on the services sold to its international customers located in certain foreign jurisdictions.
Any international customer with a business/services address ("Ship To" on invoice) in the list of countries provided below:
- Czech Republic
- United Kingdom
When will Twilio start charging VAT in EEA?
Twilio Sendgrid will begin collecting VAT on services sold to customers located in EEA in March 2024.
VAT is assessed and applied to your account at the start of the month for the previous month’s usage. For example, you will be charged GST for your March usage in April.
Twilio is not a resident of Europe, why are you charging VAT?
EU VAT laws, and similar laws of other European countries, now require companies that sell cloud communication platform services to customers located in the EU,United Kingdom, Norway & Switzerland/Liechtenstein to collect and remit VAT. This applies to both non-resident entities like Twilio Sendgrid ., and resident entities like Twilio Sendgrid Ireland. In order to comply with the EU & other similar VAT laws, Twilio Sendgrid will be imposing VAT on any Software as a Service (SaaS) that is subject to VAT. All B2C (business to consumer) and B2B (business to business) customers that have not provided a valid VAT registration number will be subject to VAT on their purchases of any applicable Twilio services.
If your service address ("Ship To" on invoice) is not correct, you can update it by contacting the Support team.
How is VAT determined?
VAT is applied based on where the customer has a permanent place of establishment. For individual customers (B2C), the permanent place of establishment is usually the billing/residential address. For business customers (B2B), the permanent place of establishment is usually the business's registered address, or where the business is located. Twilio Sendgrid uses your service address ("Ship To" on invoice) for tax calculation purposes.
What rate is VAT charged?
Twilio Sendgrid's services will be subject to the local VAT rate in the jurisdiction where the customer is located.
For example, a customer in France would be charged the French VAT standard rate of 20% for all taxable sales. If this customer spends $100 with Twilio Sendgrid, they would be charged an additional $20 for VAT, for a total of $120.
Total taxable sales: $100 + French VAT (20%): $20 Total including taxes: $120
Billing adjustments may also have tax implications:
- Credits applied will refund you taxes at the same rate as the original charge.
How can I be tax exempt for VAT?
In general, Twilio Sendgrid is only required to impose VAT on Business to Customer (“B2C”) transactions. Business to Business (“B2B”) customers are tax exempt with a valid VAT number.
Question: I am a business, but do not have a VAT number. I am not required to register for VAT since my business falls under the required sales threshold for registering.
Answer: The VAT laws for nonresidents are designed to capture VAT from B2C consumers, and from B2B consumers that fall under the sales threshold. Unless a B2B customer can provide a valid VAT number, they will be taxed as a B2C. Nonresidents are not required to tax B2B customers with valid VAT numbers, since B2B customers are supposed to self-assess the VAT on their end.
Question: Are nonprofit organizations exempt from VAT?
Answer: Nonresident entities like Twilio Sendgrid are required to collect and remit VAT for B2C customers. We are not required to impose VAT on B2B customers, if the B2B customer provides a valid VAT number. In general, sales to nonprofit organizations that are not VAT registered will be treated as a B2C supply, and subject to VAT. However, there are exemptions that are specific to each country’s local VAT laws. Please contact email@example.com if you believe your entity is exempt from tax. The Tax Department can then confirm if your specific situation is exempt from VAT based on your country’s local VAT laws.
Educational organizations located specifically in the UK
- The VAT treatment would be dependent on the customer’s activities, and whether the customer is treated as a ‘business’ or ‘non-business’ for UK VAT purposes.
Please contact firstname.lastname@example.org and let us know if:
- You are charging a fee for your services. If yes, then you would be considered a business and not taxable. The reverse charge mechanism would still apply.
- Educational services are free or funded by grants. If yes, then you would be considered a non-business and subject to VAT.
Other nonprofits or charitable organizations in the UK
- Some nonprofits, mainly charitable organizations, are eligible to purchase goods at zero rate (i.e. without VAT) despite being treated as a ‘non-business’ for VAT purposes. Please contact email@example.com and provide a certificate declaring that your purchase is eligible to be zero rated.
- If you are a VAT registered B2B customer, please update your VAT number with your Sendgrid account representative to be issued a valid tax invoice, and for self-assessment (reverse charge) before the current month’s end to prevent taxation.
Do I need to provide a resale certificate to be tax exempt?
No, you don't need to provide a resale certificate, but you will need to provide a valid VAT number to be considered tax exempt. All EU and UK customers that have not provided a valid VAT registration number will be subject to VAT on their purchases of any taxable Twilio Sendgrid services.
Notice: For customers located in Switzerland, Lichtenstein, and Ireland customers contracted with Twilio Sendgrid Ireland, we are required to apply VAT for both B2B and B2C customers.
For customers located in Norway, customers contracted with Twilio Sendgrid Norwegian Branch, we are required to apply VAT for both B2B and B2C customers.
I forgot to enter my VAT number, but should be tax exempt. Can I get a refund for this month’s VAT?
If you are a B2B customer with a valid VAT number, please contact our Support team for a credit of the VAT amount charged within 90 days of the initial charge. For invoices issued in closed periods, we will credit the GST charged in the following month’s invoice.
If you are a B2B customer in Switzerland/Liechtenstein, Ireland or Norway, Twilio Sendgrid is unable to issue a refund or credit for VAT, as entities are obligated to collect VAT from ALL customers (B2B and B2C). That said, B2B customers are entitled to reclaim the VAT charged upon receipt of a valid VAT invoice from Twilio Sendgrid under the VAT recovery rules.
Where do I see the VAT amount on my invoice?
You can see the VAT amount charged in the Tax Summary section of your invoice. Your invoice will continue to show subscription charges, usage and taxes in the same currency as before.
How Does Twilio Sendgrid Validate my Tax ID?
Once your Tax ID is updated in the Account Detail Page, we will validate the ID via a tax ID validation service.
What is the Reverse Charge Mechanism?
The Reverse Charge Mechanism is the process in which B2B customers are required to self-assess and report VAT charges.
A non-resident entity like Twilio Sendgrid in the US is not required to impose Value-Added Taxes (VAT) on Business-to-Business (B2B) consumers that are VAT registered. That said, the B2B consumer is still responsible for reporting VAT. This is done through the reverse charge mechanism.
The reverse charge mechanism shifts the responsibility of accounting for VAT on these purchases to the B2B consumer. In other words, these customers must report the applicable VAT on their own VAT return.