VAT 2015: how VAT will work on services provided electronically
Posted: Sun Dec 22, 2024 5:09 am
One of the fundamental changes that we have seen since 2015 is the change in the VAT taxation of services provided electronically . The change affects B2C electronic service transactions; that is, those transactions in which the final recipient is a consumer.
Until now, the VAT location rule placed the place where the taxable event occurred in the territory of the service provider's headquarters for B2C services. As of 01/01/2015, the location criteria will change so that the place where the service is provided will be where the final consumer is located. This change in location means that the company that provides the service electronically will have to pass on the VAT applicable in the country of destination and where the consumer is located, not the country of origin as was the case until now.
VAT on electronically provided services changes in 2015, find out all the news Tweet it!
Criteria for determining the place of performance for VAT purposes in a B2C electronic transaction
In order to ensure a uniform russia mobile number whatsapp application of the new rules across the EU, a regulation has been prepared specifying the criteria to be followed in order to correctly locate customers for VAT purposes. This regulation establishes the following presumptions of location:
If the services are provided in places such as a telephone booth, Wi-Fi zone, Internet café, restaurant or hotel lobby, where the physical presence of the client is required, it will be presumed that the client's location is in that place, so the services will be taxed there.
If the services are provided through a landline, the customer's location will be presumed to be the one where the line is installed.
In the event that services are provided via mobile networks, the customer's location will be presumed to be the country identified by the SIM card's telephone code.
For services that require the use of a decoder or television card (without using a landline), the customer's location will be assumed to be the location where the decoder is located, or if this is not known, the location to which the card was sent.
However, two of these non-contradictory locations will be used as criteria for locating the client:
This change in the VAT scenario forces us to change our computer processing systems to be able to demonstrate at all times where our B2C consumer is located.
Legal changes for companies providing electronic services
This new community scenario forces companies to make the following legal changes. Firstly, we will have to apply the VAT rate in force for that type of service in the country of destination, not in the country of origin, and simultaneously comply with the current VAT legislation of the country in which we are going to provide the service.
As a second most important point, we are obliged to comply with the billing regulations of each destination country , including for each country, the specific casuistry of its rules for issuing invoices. For example, there are countries in Europe where it is not possible to issue a simplified invoice for each service or, alternatively, it is required to inform about the company's share capital on the invoice itself.
We will have two options for depositing the VAT we collect into the public coffers. Either we register in each country in which we provide services, or we subscribe to the single VAT settlement window, which we will file in our territory directly using a series of forms and self-assessments that must be approved shortly.
We are less than two months away from the entry into force of this change, so we must initially analyze how we are providing services electronically and how we can improve them.
Until now, the VAT location rule placed the place where the taxable event occurred in the territory of the service provider's headquarters for B2C services. As of 01/01/2015, the location criteria will change so that the place where the service is provided will be where the final consumer is located. This change in location means that the company that provides the service electronically will have to pass on the VAT applicable in the country of destination and where the consumer is located, not the country of origin as was the case until now.
VAT on electronically provided services changes in 2015, find out all the news Tweet it!
Criteria for determining the place of performance for VAT purposes in a B2C electronic transaction
In order to ensure a uniform russia mobile number whatsapp application of the new rules across the EU, a regulation has been prepared specifying the criteria to be followed in order to correctly locate customers for VAT purposes. This regulation establishes the following presumptions of location:
If the services are provided in places such as a telephone booth, Wi-Fi zone, Internet café, restaurant or hotel lobby, where the physical presence of the client is required, it will be presumed that the client's location is in that place, so the services will be taxed there.
If the services are provided through a landline, the customer's location will be presumed to be the one where the line is installed.
In the event that services are provided via mobile networks, the customer's location will be presumed to be the country identified by the SIM card's telephone code.
For services that require the use of a decoder or television card (without using a landline), the customer's location will be assumed to be the location where the decoder is located, or if this is not known, the location to which the card was sent.
However, two of these non-contradictory locations will be used as criteria for locating the client:
This change in the VAT scenario forces us to change our computer processing systems to be able to demonstrate at all times where our B2C consumer is located.
Legal changes for companies providing electronic services
This new community scenario forces companies to make the following legal changes. Firstly, we will have to apply the VAT rate in force for that type of service in the country of destination, not in the country of origin, and simultaneously comply with the current VAT legislation of the country in which we are going to provide the service.
As a second most important point, we are obliged to comply with the billing regulations of each destination country , including for each country, the specific casuistry of its rules for issuing invoices. For example, there are countries in Europe where it is not possible to issue a simplified invoice for each service or, alternatively, it is required to inform about the company's share capital on the invoice itself.
We will have two options for depositing the VAT we collect into the public coffers. Either we register in each country in which we provide services, or we subscribe to the single VAT settlement window, which we will file in our territory directly using a series of forms and self-assessments that must be approved shortly.
We are less than two months away from the entry into force of this change, so we must initially analyze how we are providing services electronically and how we can improve them.