|
Place
of supply of services
From
1 January 2010, the new rules on the place of supply of
services will mean that business-to-business supplies of
services will be taxed where the customer is situated,
rather than where the supplier is located. For
business-to-consumer supplies of services, the place of
taxation will continue to be where the supplier is
established.
However,
in certain circumstances, the general rules for supplies
both to businesses and to consumers will not be applicable
and specific rules will apply to reflect the principle of
taxation at the place of consumption. These exceptions
concern services such as restaurant and catering services,
the hiring of means of transport, cultural, sporting,
scientific and educational services, and
telecommunications, broadcasting and electronic services
supplied to consumers.
Refund
procedure
Also
from 1 January 2010, the current procedure for
reimbursement of VAT incurred by EU businesses in Member
States where they are not established will be replaced by
a new fully electronic procedure, thereby ensuring a
quicker refund to claimants. The current paper-based
procedure is slow, cumbersome, and costly. It also lacks
in legal certainty. The new procedure will better
facilitate businesses and improve the functioning of the
internal market. A new feature is that businesses will be
paid interest if Member States are late making refunds.
Supplies
of telecoms, broadcasting and electronic services to
consumers
With
regard to telecoms, broadcasting and electronic services,
the introduction of the new rules on the place of business
to consumer supplies will be delayed until 1 January 2015.
From
that date, these services will be taxed in the country
where the consumer is established. Suppliers will be
permitted to discharge their VAT obligations using a
“one stop” scheme which will enable them to fulfil
their VAT obligations in their home Member State,
including for services provided in other Member States
where they are not established. These obligations are
registration, declaration and payment.
The
VAT revenue from these services will be transferred from
the country where the supplier is located to that where
the customer is situated. It will be the country of the
customer’s VAT rates which will be applicable. In order
to ensure a smooth transition, the Member State of
establishment will retain a proportion of the VAT
collected until 31st December 2018. This proportion will
amount to 30% from 1 January 2015 until 31 December 2016,
15% from 1 January 2017 until 31 December 2018 and 0% from
1 January 2019 onwards.
Background
On
4 December 2007, the Council reached political agreement
on two draft Directives and a draft Regulation aimed at
changing the rules on VAT so as to ensure that VAT on
services accrues to the country where consumption occurs,
and to prevent distortions of competition between Member
States operating different VAT rates.
At
the ECOFIN Council today, ministers agreed the legal texts
relating to this political agreement on the so-called VAT
package.
The
"VAT package" contains:
-
a
Directive on the place of supply of services;
-
a
mini one stop shop for telecom, broadcasting and
e-commerce services;
-
a
Directive on procedures for VAT refunds to
non-established businesses;
-
a
Regulation on the exchange of information between
Member States which is necessary to underpin the new
arrangements
The
legislative texts, as adopted by the Council, but not yet
published in the Official Journal of the European Union
can be seen at:
http://ec.europa.eu/taxation_customs/taxation/vat/
key_documents/legislation_recently_adopted/index_en.htm
Source
: Europe Press Release, dated 12/02/2008
|
