The measures by which Directive 2006/112/EC (the Principal VAT Directive) was to be implemented were set out in Regulation 1777/2005 until that legislation was replaced by Regulation 282/2011, to take account of changes with regard to the place of taxation for services. Paul Clarke reports.
Place of supply
Regulation 282/2011 notes that the correct application of the place-of-supply rules with regard to services relies mainly on the status of customers as taxable or non-taxable persons, and on the capacity in which they are acting. It sets out in detail how the service provider has to determine whether or not customers are VAT-taxable persons and when customers should be treated as non-VAT taxpayers. Specifically, if EU customers provide a VAT number (validated by the supplier), they may be considered to be a business. For customers established outside the EU, the service provider should have a declaration issued by the tax authorities of the country where the customer is established, confirming that he or she performs an economic activity and is thus to be considered as a taxable person.
Alternatively, customers may also provide their VAT or tax registration number or other proof demonstrating that they are taxable persons. The regulation also covers the situation where the customer is established in more than one country and aims to provide a simplification with respect to the measures to be taken by a supplier in order to determine the establishment to which the invoice has to be issued.
Default and specific place-of-supply services rules
Regulation 282/2011 explicitly provides that the default place of supply rules apply to services such as the assignment of television broadcasting rights for football matches. For other services (including admission to events, restaurant and catering services), specific rules apply. HM Revenue and Customs (HMRC) has issued a note concerning supplies of admission. It explains Article 32 of Regulation 282/2011 with regard to services in respect of admission to cultural, artistic, sporting or similar events. The effect is to make the place of supply the location where the event takes place.
Exceptions and examples
The European Commission has also issued guidance on the taxation of goods and services. The guidance explains that, in order to ensure that VAT receipts accrue to the Member State of consumption, a number of exceptions have been introduced and gives examples of where these apply. It should also be noted that Regulation 282/2011 includes a warning to the effect that its rules are designed to bring uniform treatment throughout the EU to specific circumstances only. They are therefore "not conclusive for other cases and are to be applied restrictively".
Coming into effect
Much of Regulation 282/2011 came into effect on 1 July 2011. However, certain rules concerning the place of supply will apply from 1 January 2013, including:
where the supplier of a service and the customer communicate via e-mail, that shall not of itself mean that the service supplied is an electronically supplied service
where a supply of services is taxable at the place where customers are established, or, in the absence of an establishment, where they have their permanent address or usually reside, the supplier shall establish that place based on factual information provided by the customer, and verify that information by normal commercial security measures such as those relating to identity or payment checks
where services are supplied to non-taxable persons who are established in more than one country or have their permanent address in one country and their usual residence in another, priority shall be given to the place that best ensures taxation at the place of actual consumption when determining the place of supply of those services.
Last reviewed 20 December 2012