VAT - Recent Community Amendments
Several legislative instruments on VAT issues were published in the Official Journal of the European Union on 20 February, amending the rules for determining the place where services are supplied for the purposes of VAT: - the general rule will be reversed and services will now be taxed in the place of consumption as opposed to where the supplier has its establishment . and addressing the procedure for refunding VAT paid in a
These amendments will only come into force in 2010. Indeed, given the significance that amending the rule for determining the place where services are supplied will have on the intra- community VAT system, it is only to be expected that the process of adapting business structures and models to the new rules will require a considerable length of time, which the stipulated time limit provides.
i) The place where services are supplied for VAT purposes
Council Directive 2008/8/EC comes about in the wake of recent guidelines set down by the European commission regarding the modernisation and simplification of the way the common VAT regime operates, providing that as a rule the place of taxation of the services supplied to VAT taxable persons will be the place where the services were actually consumed, to wit, the place where the recipient is established rather than where the supplier is located. It thus extends the rule of taxation in the place of consumption, which already applies to the transfer of goods and supplies of services between taxable persons, adopting the general rule for assessing tax which, in such cases, is the self assessment (.reverse charge.) mechanism, which at present applies only to the supplies of certain services. There is an exception for services supplied to persons who are not considered VAT taxable persons, who will continue to be governed by the rule under which the place of the supply of services is that where the activity of the actual supplier is based (taxation in the place of establishment of the supplier) unless such services have been supplied from a fixed establishment situated elsewhere.
It also provides the following specific amendments for certain types of services such as the supply of electronic services to non-taxable persons in a Member State by a taxable person based outside the Community or supplying the service via a fixed establishment located outside the Community, in which case the services will be deemed to have been supplied at the place of domicile or permanent address of the acquirer/beneficiary of the services, or such as the supply of telecommunication, radio and television broadcasting services, or electronic services, among others, to non-VAT taxable persons where the actual place of taxation will be the country where those acquiring the services are established, as is the case at present in respect of acquirers of such services when these are VAT taxable persons.
The Directive will come into force gradually and progressively between 1 January 2010 and 1 January 2015, and the Member States will need to adjust their internal legislation in line with the above-mentioned amendments.
ii) The refund of VAT to taxable persons not established in the refunding
Council Directive 2008/9/EC will amend the regime for refunding VAT to taxable persons who are established in a
iii) New types of administrative cooperation and exchange of information
Finally, EC Regulation 1798/2003 of 12 February was also published. It introduces new types of administrative cooperation and exchanges of information regarding the rules for determining the place of supply of services, special regimes and the VAT refund procedure.
The Regulation will come into force on 1 January 2010 and provides that each