PricewaterhouseCoopers has published its latest, extended edition of the EU VAT Guide. The improved and updated version of “A Guide to VAT in the 27 EU Member States, Norway and Switzerland” is a guide for tax, accounting and finance professionals. It answers 185 common questions about VAT implications for all the 29 countries covered, explains the implementation of the rules in each of the 27 EU member states and includes an analysis of the EU VAT rules, following the structure of the EC VAT Directive and the EC VAT Directive legislation.
On February 12, 2008 the European Council formally adopted a package of measures on VAT which includes new rules on the place of supply of services and on VAT refunds. The new rules seek to ensure that VAT on services will accrue to the country of consumption and also aim to implement a procedure for claiming VAT refunds that ensures less bureaucracy and quicker processing.
The VAT package provides that, with effect from January 1, 2010, the general rule for the place of supply of services will be divided into two:
a) Business-to-business (B2B) supplies of services will be deemed to take place (and therefore subject to VAT) in the country where the customer is situated rather than where the supplier is established.
b) Business-to-consumer (B2C) services will continue to be deemed to take place where the supplier is established so as to avoid imposing unnecessary administrative obligations on the supplier.
The rules applicable to supplies falling outside the scope of the general rule have either not been affected at all by the amending directive (particularly services the supply of which already takes place in the country of the customer) or else have been re-worded to account for the change in the general rule.
Certain services (typically advertising, consultancy and financial services) which were already deemed to take place where the customer is established when supplied to non-EU persons or to EU businesses not established in the same country as the supplier, have not been affected by the amending directive.
New specific rules have also been introduced in respect of restaurant and catering services, the short-term hiring of means of transport as well as telecom, broadcasting and electronic services supplied to final consumers.
The scope of the amendments to the place of supply rules for services is to ensure a more level playing field for businesses supplying cross-border services throughout the Community. Businesses should no longer be motivated to locate in member states with lower VAT rates.
The amendments include new disclosure obligations in the quarterly Recapitulative Statements. As from January 1, 2010, such statements must, besides details of exempt intra-Community supplies of goods also include details of supplies of services deemed to be provided outside the member state of the supplier and in another member state.