Tax in Focus

consumption of telecommunications, broadcasting and electronic services by private consumers takes place.

To simplify matters for suppliers, the regulation provides for presumptions for the location of the customer to identify the place of consumption:

1. Services provided at a location such as a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby where the physical location of the customer is required, the place of supply is at the specific location.

2. If the service is supplied on board transport travelling between different countries in the EU (for example by boat or train), the customer location is taken to be the place of departure for the journey.

3. Where the services are supplied via a fixed land line, the presumption is that the customer is located at the place of installation of the land line.

4. For services supplied through mobile networks, the presumption is that the customer is located in the country identified by the mobile country code of the SIM card used when receiving the services.

5. Where a decoder or viewing card is required and a fixed land line is not used, the presumption is that the customer is located where the decoder or similar device is located or where that place is. not known, the place where the viewing card is sent with a view to being used there

6. For circumstances not falling within the bullet points above, the customer’s location should be based on two non-contradictory items of evidence which are listed below.

It is possible for a supplier to rebut the place of supply as set out in points 1-5 above where the supplier has three items of non-contradictory evidence.

Items of evidence The items of evidence to be held by a supplier to determine the place of location of the customer are set out below: • The billing address of the customer • The internet Protocol (IP) address of the device used by the customer or any method of geolocation

• Bank details such as the location of the bank account used for payment or the billing address of the customer held by that bank

• The Mobile Country Code (MCC) of the International Mobile Subscriber Identity (IMSI) stored on the Subscriber Identity Module (SIM) card used by the customer

• The location of the customer’s fixed land line which is use to supply the service

• Other commercially relevant information

What businesses need to consider in advance of 2015 1. Does the business have sufficient information

determine where the consumption occurs?

2. Is it necessary to change the processes to enable the business to gather the required information?

3. The different standard VAT rates, which range from 15% in Luxembourg to 27% in Hungary, also need to be considered in terms of the impact on the business’s profit margins.

4. Where a business is currently treating the supply of its services as being VAT exempt, does this exemption apply in all of the 28 EU member states?

5. The contracts with customers should be reviewed in terms of pricing

Other recent changes The 2015 changes are part of a range of measures which have been introduced in the period 2010 to 2015. Collectively, these changes are known as “The VAT Package”. It’s very important that businesses operating across several countries are aware of these changes so that they can be incorporated into their business model.

For example, many businesses are still not aware that they can reclaim VAT incurred in other EU countries through their own Revenue authority website. In addition, several changes to the place of supply of services provided to businesses in the EU have been made in the past couple of years. If these changes impact on the sales or purchases you make, then it’s vital you are aware.

to enable it to

VAT management generally Businesses are becoming increasingly aware of the impact which VAT has on their bottom line. As VAT is a transactions-based tax, very large amounts can flow through a business’ accounts. In addition, a company can have a significant VAT liability even in periods where they are not profitable. When you add in the complexity of dealing with VAT in other countries, it is easy to see why more businesses are devoting more resources to ensuring they are compliant with VAT. This means ensuring that the right amount of VAT is paid in the right locations and that any VAT which can be reclaimed is correctly reclaimed, as early as possible.

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