EU VAT electronic services One-Stop-Shop on track for 2015
Council Implementing Regulation (EU) No 815/2012, issued on 13 September 2012, details the rules to be adopted on 1 January 2015 for the special EU VAT schemes applicable to B2C supplies of telecommunications, broadcasting and electronic services.
Non-EU providers of e-services
Since 2003, non-EU e-service suppliers, with no EU establishment, have to account for local VAT on their supplies to private consumers in each of the 27 EU Member States. Non-EU providers therefore have to declare their sales and VAT in each EU country. At the outset, in recognition of the practical difficulties and administrative burdens, a simpler EU VAT solution was adopted. Instead of having to VAT register and report in 27 different countries, the non-EU business only has to VAT register in a single EU jurisdiction. Over each reporting period, an electronic VAT return is filed in one Member State. Within the declaration net sales and applicable VAT are listed by EU country, with the VAT being summed, and a single payment being made. This arrangement, commonly known as the One-Stop-Shop, is referred to as the “non-Union scheme” in the implementing regulation.
EU providers of digital services
By contrast, EU suppliers of e-services have been and are currently subject to different rules. While the place of supply of B2C e-services supplied by non-EU businesses is where the customer resides, the place of supply of these services supplied by an EU established company is defined as being in the EU state where it is based.
The differences in rules resulted in global e-service suppliers taking up European residence in Luxembourg, where the applicable VAT rate is 15%.
From 2015, the place of supply for VAT purposes applicable to EU businesses will change from the place where they reside to the place where their non-taxable customer is based. This will bring it into line with the rules pertaining to non-EU suppliers. Suppliers will report in the same way and this scheme, commonly known as the Mini One-Stop-Shop, is referred to as the “Union scheme”.
These “special schemes” will now additionally encompass telecommunications and broadcasting services.
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