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EU: 2015 Place of Supply Changes - How can an organization prepare?
From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private individuals and non-business customers will be taxable in the Member State of the customer.
This change is the final phase of the EU VAT Package, which introduced new place of supply of services rules for VAT in the EU and new intra-EU VAT refund processes. The first phase of the VAT Package came into force on 1 January 2010.
The one-stop shop or VAT on e-services (VoES) scheme will also be adjusted to align to the new rules with effect from 1 January 2015.
To prepare for the changes coming into effect, businesses will need to consider:
- Whether they make cross border supplies of telecommunications, broadcasting and other electronically supplied services;
- Whether such supplies are made on a B2C basis, including how to decide if a customer is a non-taxable person;
- How to determine where B2C customers are located and any additional contractual provisions and systems changes that may be required to capture this information;
- Changes that may be necessary to invoicing procedures, such as meeting the invoicing rules of other Member States;
- How they will charge and account for VAT at the correct rate;
- Whether they are eligible to use the MOSS scheme across all Member States or whether local registrations will be required in some instances;
- Any additional VAT compliance obligations that may arise in other Member States as a result of the new rules and how to effectively manage these obligations;
- How to determine who is the supplier of B2C content when this is delivered over mobile devices or through the use of multiple aggregators;
- The impact of different VAT rates across the EU on profit margins and any changes that may be required to pricing structures;
- The impact of any changes to pricing structures on customer behaviour; and
- The impact of supplying packages of goods and services to consumers (i.e. hard copy periodicals supplied with online access).