Good Morning! I wasn't sure if this had been posted, or whether people realized, but I'm not on here as often as I used to be.
I thought that people should know that these new rules begin in January, and apply to content also.
Those non EU based businesses who have EU traffic are going to have to take note, and get set up with systems to start charging appropriate VAT.
It's ugly, but true. Read for yourself:
(in trying to cut and paste, the page loses formatting, so I suggest you visit the link)
Telecommunications, broadcasting & electronic services - European commission
Current rules
Supplies into or from the EU
Type of service transaction
VAT payable in ("place of supply")
Telecoms/broadcast/electronic services from:
outside the EU to a customer in the EU or
inside the EU to a customer outside the EU
Country where customer belongs (has their main business or fixed premises, their permanent address or usually lives).
In some cases, subject to a 'use and enjoyment' override
The effects of this are as follows:
EU BUSINESSES supplying to:
Business or consumer outside the EU
Usually no EU VAT charged.
[Articles 44 and 59 VAT Directive]
But if the service is effectively used & enjoyed in an EU country, that country
can decide to levy VAT.
[Article 59a VAT Directive].
Example
A Hungarian company sells an anti-virus program to be downloaded through its website to businesses or private individuals in Australia.
There is no charge to Hungarian or other EU VAT on this service.
NON-EU BUSINESSES supplying to:
1. Business in the EU
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
[Article 44 VAT Directive]
2. Consumer in the EU - telecoms or broadcasting services
Must charge VAT in the EU country where the service is effectively used and enjoyed.
[Article 59b VAT Directive]
Example
A person living in Barcelona pays a US company for access to American TV channels. The US company must charge the customer Spanish VAT.
Example
A French customer of a Swiss telecoms operator using their mobile phone in France will be charged French VAT.
When using their phone while on holiday in Greece, the customer will be charged Greek VAT on the calls made from Greece.
3. Consumer in the EU - electronic services
Must charge VAT in the EU country where that consumer belongs (is registered, has their permanent address or usually lives)
[Article 58 VAT Directive]
Example
A private person living in Sweden uses a Japanese online library. The Japanese supplier must charge Swedish VAT.
One-time VAT registration ("mini one-stop shop" ? MOSS)
Non-EU firms supplying electronic services to consumers in the EU, can make use of a simplified procedure which allows them only to register for VAT in 1 EU country, regardless of how many other EU countries they are supplying.
That country collects and distributes the VAT on behalf of all the other countries ? charged at the applicable national rate depending where the customer belongs.
Rules for this scheme
The scheme does not currently apply to telecommunications or broadcasting services.
Supplies between EU countries
Type of service transaction
VAT payable in ("place of supply")
Telecoms/broadcast/electronic services supplied within the EU
B2B ? EU country where the customer belongs
B2C ? EU country where the supplier belongs
For an EU business, this means that:
when supplying a business in another EU country, they must not charge VAT; the customer must account for the tax under the reverse-charge mechanism
[Article 44 VAT Directive]
when supplying a consumer in the EU, they must charge VAT in the EU country where the business is based, no matter where the customer belongs
[Article 45 VAT Directive]
New rules from 2015
From 1 January 2015, telecommunications, broadcasting and electronic services will
always be taxed in the country where the customer belongs*
? regardless of whether the customer is a business or consumer
? regardless of whether the supplier based in the EU or outside
* For a business (taxable person) = either the country where it is registered or the country where it has fixed premises receiving the service.
* For a consumer (non-taxable person) = the country where they are registered, have their permanent address or usually live.
For the definition of ?electronic services? see the Explanatory Notes below, in particular under points 1.3; 2.3.3; and 2.4.3.
The effects of this are as follows:
EU BUSINESSES supplying:
1. Business in another EU country
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
2. Consumer in another EU country
Must charge VAT in the EU country where the customer belongs (not where the business is based).
3. Business or consumer outside the EU
No EU VAT charged.
But if the service is effectively used & enjoyed in an EU country, that country
can decide to levy VAT.
NON-EU BUSINESSES supplying:
1. Business in the EU
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
2. Consumer in the EU (telecoms, broadcasting or electronic services)
Must charge VAT in the EU country where the customer belongs.
Report on feasibility of new rules 2015
The European Commission published a reportpdf(301 kB) Choose translations of the previous link to the Council on the feasibility of applying the new VAT rules for telecom, broadcasting and electronic services as of January 2015. The report describes the action taken in the last six years to prepare the implementation of the new rules, ensure legal certainty and facilitate business compliance.
The Explanatory Notes for 2015
The Explanatory notespdf Choose translations of the previous link have been prepared in order to provide a better understanding of the EU legislation relating to the place of supply of telecommunications, broadcasting and electronic services.
These notes are not legally binding and only provide practical and informal guidance about how EU law should be understood and applied on the basis of the views of the Commission's Directorate General for Taxation and Customs Union.
It is the product of collaborative work between the Directorate General for Taxation and Customs Union, Member States and businesses.
These notes are a work in progress: it is not a final product, but it reflects the state of play at a certain point in time in accordance with the knowledge and experience available. Over time, it is expected that additional elements may be needed.
In 2015 the one-time registration scheme (mini one-stop shop) will be:
extended to telecommunications and broadcasting and
made available to EU businesses too
One Stop Shop guidelines for 2015
A practical guidepdf(171 kB) Choose translations of the previous link has been prepared in order to provide a better understanding of EU legislation relating to the mini One Stop Shop, as well as of the functional and technical specifications of the special schemes, as adopted by the Standing Committee on Administrative Cooperation (SCAC). This guide is complemented by additional guidelinespdf(46 kB) Choose translations of the previous link (available in all EU official languages, Russian, Chinese -and Japanese) on the audit of the mini One Stop Shop and IT-informationzip(349 kB) related to a suggested standard audit file for MOSS (mentioned in the additional guidelines under d)).
This guide and the additional guidelines on the audit of the mini One Stop Shop are not legally binding and only provide practical and informal guidance about how EU law and EU specifications are to be applied on the basis of the views of the Commission's Directorate General for Taxation and Customs Union.
These guidelines are the result of collaborative work between the Directorate General for Taxation and Customs Union and Member States.
These guides are work in progress: it is not a final product, but it reflects the state of play at a certain point in time in accordance with the knowledge and experience available. Over time, it is expected that additional elements may be needed.
Information on selected national VAT rules
A report has been prepared, which is complemented by instructions for usepdf(31 kB).
Comments on the information available in this document can be sent to [email protected]. Please be aware that they will also be forwarded to the Commission's contractor participating in the study on the Mini One-Stop Shop.
National contact points for 2015 EU VAT changes
See the list of contact pointspdf(381 kB) provided by Member States for the 2015 EU VAT changes.
Disclaimer:
Member States have designated contact points with a view to the 2015 changes. These points are set up only to facilitate the contact with national administrations on matters relating to the 2015 changes. Such contact will not automatically bring a solution for potential cases of double taxation.
The designated contact points should only be used for that purpose and other VAT questions will be disregarded by Member States.
I thought that people should know that these new rules begin in January, and apply to content also.
Those non EU based businesses who have EU traffic are going to have to take note, and get set up with systems to start charging appropriate VAT.
It's ugly, but true. Read for yourself:
(in trying to cut and paste, the page loses formatting, so I suggest you visit the link)
Telecommunications, broadcasting & electronic services - European commission
Current rules
Supplies into or from the EU
Type of service transaction
VAT payable in ("place of supply")
Telecoms/broadcast/electronic services from:
outside the EU to a customer in the EU or
inside the EU to a customer outside the EU
Country where customer belongs (has their main business or fixed premises, their permanent address or usually lives).
In some cases, subject to a 'use and enjoyment' override
The effects of this are as follows:
EU BUSINESSES supplying to:
Business or consumer outside the EU
Usually no EU VAT charged.
[Articles 44 and 59 VAT Directive]
But if the service is effectively used & enjoyed in an EU country, that country
can decide to levy VAT.
[Article 59a VAT Directive].
Example
A Hungarian company sells an anti-virus program to be downloaded through its website to businesses or private individuals in Australia.
There is no charge to Hungarian or other EU VAT on this service.
NON-EU BUSINESSES supplying to:
1. Business in the EU
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
[Article 44 VAT Directive]
2. Consumer in the EU - telecoms or broadcasting services
Must charge VAT in the EU country where the service is effectively used and enjoyed.
[Article 59b VAT Directive]
Example
A person living in Barcelona pays a US company for access to American TV channels. The US company must charge the customer Spanish VAT.
Example
A French customer of a Swiss telecoms operator using their mobile phone in France will be charged French VAT.
When using their phone while on holiday in Greece, the customer will be charged Greek VAT on the calls made from Greece.
3. Consumer in the EU - electronic services
Must charge VAT in the EU country where that consumer belongs (is registered, has their permanent address or usually lives)
[Article 58 VAT Directive]
Example
A private person living in Sweden uses a Japanese online library. The Japanese supplier must charge Swedish VAT.
One-time VAT registration ("mini one-stop shop" ? MOSS)
Non-EU firms supplying electronic services to consumers in the EU, can make use of a simplified procedure which allows them only to register for VAT in 1 EU country, regardless of how many other EU countries they are supplying.
That country collects and distributes the VAT on behalf of all the other countries ? charged at the applicable national rate depending where the customer belongs.
Rules for this scheme
The scheme does not currently apply to telecommunications or broadcasting services.
Supplies between EU countries
Type of service transaction
VAT payable in ("place of supply")
Telecoms/broadcast/electronic services supplied within the EU
B2B ? EU country where the customer belongs
B2C ? EU country where the supplier belongs
For an EU business, this means that:
when supplying a business in another EU country, they must not charge VAT; the customer must account for the tax under the reverse-charge mechanism
[Article 44 VAT Directive]
when supplying a consumer in the EU, they must charge VAT in the EU country where the business is based, no matter where the customer belongs
[Article 45 VAT Directive]
New rules from 2015
From 1 January 2015, telecommunications, broadcasting and electronic services will
always be taxed in the country where the customer belongs*
? regardless of whether the customer is a business or consumer
? regardless of whether the supplier based in the EU or outside
* For a business (taxable person) = either the country where it is registered or the country where it has fixed premises receiving the service.
* For a consumer (non-taxable person) = the country where they are registered, have their permanent address or usually live.
For the definition of ?electronic services? see the Explanatory Notes below, in particular under points 1.3; 2.3.3; and 2.4.3.
The effects of this are as follows:
EU BUSINESSES supplying:
1. Business in another EU country
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
2. Consumer in another EU country
Must charge VAT in the EU country where the customer belongs (not where the business is based).
3. Business or consumer outside the EU
No EU VAT charged.
But if the service is effectively used & enjoyed in an EU country, that country
can decide to levy VAT.
NON-EU BUSINESSES supplying:
1. Business in the EU
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).
2. Consumer in the EU (telecoms, broadcasting or electronic services)
Must charge VAT in the EU country where the customer belongs.
Report on feasibility of new rules 2015
The European Commission published a reportpdf(301 kB) Choose translations of the previous link to the Council on the feasibility of applying the new VAT rules for telecom, broadcasting and electronic services as of January 2015. The report describes the action taken in the last six years to prepare the implementation of the new rules, ensure legal certainty and facilitate business compliance.
The Explanatory Notes for 2015
The Explanatory notespdf Choose translations of the previous link have been prepared in order to provide a better understanding of the EU legislation relating to the place of supply of telecommunications, broadcasting and electronic services.
These notes are not legally binding and only provide practical and informal guidance about how EU law should be understood and applied on the basis of the views of the Commission's Directorate General for Taxation and Customs Union.
It is the product of collaborative work between the Directorate General for Taxation and Customs Union, Member States and businesses.
These notes are a work in progress: it is not a final product, but it reflects the state of play at a certain point in time in accordance with the knowledge and experience available. Over time, it is expected that additional elements may be needed.
In 2015 the one-time registration scheme (mini one-stop shop) will be:
extended to telecommunications and broadcasting and
made available to EU businesses too
One Stop Shop guidelines for 2015
A practical guidepdf(171 kB) Choose translations of the previous link has been prepared in order to provide a better understanding of EU legislation relating to the mini One Stop Shop, as well as of the functional and technical specifications of the special schemes, as adopted by the Standing Committee on Administrative Cooperation (SCAC). This guide is complemented by additional guidelinespdf(46 kB) Choose translations of the previous link (available in all EU official languages, Russian, Chinese -and Japanese) on the audit of the mini One Stop Shop and IT-informationzip(349 kB) related to a suggested standard audit file for MOSS (mentioned in the additional guidelines under d)).
This guide and the additional guidelines on the audit of the mini One Stop Shop are not legally binding and only provide practical and informal guidance about how EU law and EU specifications are to be applied on the basis of the views of the Commission's Directorate General for Taxation and Customs Union.
These guidelines are the result of collaborative work between the Directorate General for Taxation and Customs Union and Member States.
These guides are work in progress: it is not a final product, but it reflects the state of play at a certain point in time in accordance with the knowledge and experience available. Over time, it is expected that additional elements may be needed.
Information on selected national VAT rules
A report has been prepared, which is complemented by instructions for usepdf(31 kB).
Comments on the information available in this document can be sent to [email protected]. Please be aware that they will also be forwarded to the Commission's contractor participating in the study on the Mini One-Stop Shop.
National contact points for 2015 EU VAT changes
See the list of contact pointspdf(381 kB) provided by Member States for the 2015 EU VAT changes.
Disclaimer:
Member States have designated contact points with a view to the 2015 changes. These points are set up only to facilitate the contact with national administrations on matters relating to the 2015 changes. Such contact will not automatically bring a solution for potential cases of double taxation.
The designated contact points should only be used for that purpose and other VAT questions will be disregarded by Member States.
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