Verified for 2026 Tax Year

GST on Digital Services

Master the B2B rules for overseas software subscriptions. Stop paying 15% GST on your digital business tools tonight.

The "Netflix Tax" isn't just for streaming movies on your couch. It applies to all remote services provided by overseas companies—including the Software-as-a-Service (SaaS) products you use to run your business every day.

The B2B Advantage

If you are a GST-registered business in NZ, you are legally entitled to 0% GST on overseas digital services. Most business owners are overpaying by 15% simply because they haven't provided their GST number to their software suppliers.

How Digital GST Works in NZ

New Zealand law requires any overseas company earning more than $60,000 from NZ customers to register and collect GST. However, the system is explicitly designed to avoid "Tax on Tax" for B2B transactions:

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Individual (B2C)

The supplier adds 15% GST to the final bill, just like a local shop.

Example: Personal Netflix Sub

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Business (B2B)

The supplier applies a 0% GST rate (Zero-rated) upon verifying your GST number.

Example: Zoom Pro Sub

Immediate Savings Checklist

Go through your monthly software subscriptions right now and ensure each profile has your 9-digit NZ GST number saved in the billing section:

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Communication: Slack, Zoom, LinkedIn Premium, Teams.
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Creativity: Canva, Adobe Creative Cloud, Figma, Midjourney.
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Infrastructure: AWS, Google Workspace, Microsoft 365, Dropbox.

Tip: If you've already been charged 15% GST by mistake, you can usually claim it back in Box 13 of your return, but it's much cleaner for your cashflow and audit trail to stop it at the source.

What is a "Reverse Charge"?

Under Section 8(5B) of the GST Act, when a business buys services from an overseas supplier at 0% tax, they must "self-assess" the GST if they use the service for less than 95% taxable use (i.e., lots of personal use or exempt supplies). For most standard NZ businesses (100% taxable), this reverse charge is a neutral entry:

Box 9 (Output Tax): You record the 15% GST as if you charged it.
Box 13 (Input Tax): You claim the exact same 15% GST as a business expense.

The result is $0 net tax to pay, but your accounting records remain compliant with IRD international tax requirements.

Warning: Don't Double-Claim

If you successfully provide your GST number and the invoice says "$0 GST", you cannot manually calculate 15% and claim it back in your return (because you didn't actually pay any tax!). This is a common error that triggers audits.

Frequently Asked Questions

Should Google charge me GST for my business account?

If you are GST-registered and provide your GST number to Google, they should generally not charge you GST on B2B services like Google Workspace. They will zero-rate the supply.

What happens if I forget to provide my GST number?

The overseas supplier will charge you 15% GST as if you were a private consumer. While you can sometimes claim this back, it is much easier and cleaner to provide the number upfront.

Does the Netflix Tax apply to physical goods?

No. The 'Netflix Tax' specifically targets remote digital services. Physical goods imported into NZ are covered under the Low-Value Imported Goods rules ($1,000 threshold).

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