CHANGE OF THE PLACE OF SUPPLY FOR TBE SERVICES (from 1 January 2015 – obligations for EU businesses & from 1 January 2019 – addition of a threshold)
Summary: New rules to determine the place of supply of B2C TBE services supplied by EU-businesses and new collection mechanism (Mini One Stop Shop – MOSS)
From 1 January 2015, any supply of telecommunications, broadcasting or electronic services to final customers in the European Union, are taxed in the country where the customer is established, has his permanent address or usually resides. With this change the EU VAT system achieves to tax these service in the Member States in which are consumed providing a level playing field since it does not matter any longer where the supplier is established but what it is important is where consumption takes place.
CHANGES IN THE PLACE OF SUPPLY AS OF 1 JANUARY 2019 (inclusion of a threshold)
Summary: The fact that the supplier had to charge VAT at destination (where the customer is established) independently of the value of the transactions was very burdensome for the start-up & micro-business community. Therefore an EU-wide threshold was introduced.
As from 1 January 2019, the place of supply for B2C TBE services is, exceptionally, in the Member State of the supplier where:
- the supplier is established or, in the absence of the establishment, has his permanent address or usually resides in only one Member State; and
- he supplies telecommunications, broadcasting and electronically supplied services to non-taxable persons located in another Member State; and
- these supplies do not exceed EUR 10,000 (without VAT) in the current and the preceding calendar year.
Nevertheless, the supplier can opt to apply the Member State of the customer rule and will in this case be bound by this decision for two calendar years. As soon as the threshold is exceeded, the place of supply is in the Member State of the customer which will bring the option to opt for MOSS.
Relevant documents and links:
Council Directive (EU) 2017/2455 (introducing the 10,000 EUR threshold)