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New regime on QST for non-residents - "NETFLIX" Tax

November 26, 2019
Category :  Articles

What is the “Netflix” tax?

Before January 1, 2019, businesses residing outside of Canada and not operating a business there did not have the obligation to collect the Quebec Sales Tax (“QST”) on the sales they made in Quebec.

Since January 1, 2019, non-resident businesses in Canada that are not registered in the GST / HST and digital platform operators [1] have the obligation to collect the QST on sales of intangible personal property (patents, applications, downloaded software, etc.) and the services they provide to Quebec consumers. A new simplified registration system has been put in place by Revenu Québec for these businesses.

For example, Netflix must now collect from Quebec consumers the QST on the sales of streaming services they offer and remit it to Revenu Québec. Several other businesses are targeted by this new QST system, including Amazon, Expedia, Google, Linkedin, Skype, and Spotify.

It goes without saying that these measures can affect smaller businesses. For example, a non-resident European company in Canada that makes online sales of fitness video to Quebec consumers may now be required to collect the QST on these sales[2].

New obligations starting September 1, 2019

Since last September 1, businesses that are located outside of Quebec and that are registered in the GST / HST and non-resident businesses in Canada that are registered in the GST / HST must be entered in the QST file under the same new simplified registration regime. These suppliers will have to collect the QST on sales of personal property[3] and the services they provide to Quebec consumers and remit it to Revenu Québec.

The following table summarizes these new obligations:

Who?What?When?
Non-resident businesses in Canada not registered in the GST / HSTSales of intangible personal property and servicesJanuary 1, 2019
Non-resident businesses in Canada registered in the GST / HSTSales of intangible personal property and servicesSeptember 1, 2019
Non-resident businesses in Quebec registered in the GST / HSTSales of intangible personal property and servicesSeptember 1, 2019

To make sure you meet your QST obligations, or to find out more, communicate with your FBL representative.

 

[1] The operator of a digital platform is required to register with the QST if it allows suppliers located outside Quebec to make supplies of intangible personal property or services to Quebec consumers via a designated digital platform.

[2] The determined threshold exceeds $ 30,000.

[3] Tangible and intangible.

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