EU: VAT on supply of services

EU: VAT on supply of services

The European Commission today provided explanatory notes regarding the rules for the location where value added tax (VAT) would be imposed on the supply of services connected with immovable property, effective in 2017.

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According to the EC release, once the nature of the service and the status of the customer are known, the location where the services are supplied can be determined. Also, the supply of services between businesses (B2B services) in principle is taxed at the customer's place of establishment, while services supplied to private individuals (B2C services) are taxed at the supplier's place of establishment.

Summary

The EC release sets out these general rules and includes examples illustrating application of the rules. 

  • B2B and B2C passenger transport is taxed according to the distances covered.
  • B2C transport of goods, other than intra-EU transport, is taxed according to the distances covered.
  • B2C intra-EU transport of goods (goods departing from one EU Member State and arriving in another) is taxed at the place of departure.
  • B2C ancillary services to the transport of goods, such as the loading and unloading services, are taxed in the EU Member State where those services are physically conducted.
  • B2B services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment and similar events will be taxed at the place where those events actually take place.
  • B2C services relating to cultural, artistic, sporting, scientific, educational, entertainment, and similar activities will be taxed at the place where those activities actually take place.
  • B2B and B2C restaurant and catering services, other than those supplied on board ships, aircraft or trains during the section of a passenger transport effected within the EU, are taxed at the place where the services are physically conducted.
  • When B2B and B2C restaurant and catering services are supplied on board ships, aircraft or trains during the section of a passenger transport effected within the EU, tax is paid at the place of departure of the transport. 
  • B2B and B2C short-term hiring of means of transport is taxed at the place where the means of transport is actually put at the disposal of the customer. 
  • Electronically supplied services provided by suppliers established in a third country to non-taxable persons (B2C) established in the EU, are taxed at the place where the customer resides or has a permanent address.
  • Radio and television broadcasting services and telecommunication services supplied by suppliers established in a third country to non-taxable customers (B2C) in the EU, are taxable at the place where the private customer effectively uses and enjoys the service
  • B2C services like advertising services, services of consultants and lawyers, financial services, telecommunication services, broadcasting services, and electronically supplied services are taxed at the place where the customer is established (provided the customer is established in a non-EU country).

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