The EU place-of-supply VAT rules will change from 1 January 2015
These changes impact on business-to-customer (B2C) supplies including e-services.
From 1 January 2015, the place of taxation for certain supplies will be determined by the location of the customer.
There will be further changes to the agency legislation to reflect these rules for taxable persons acting in their own name on behalf of another when supplying telecommunication or e-services.
The place-of-supply rule changes could lead to a digital supplier having to register in each member state where they make supplies and suffer the administrative burden that comes with it; that’s a potential of 28 VAT registrations.
The VAT MOSS, which was implemented from 1 January 2015, gives the supplier an option of registering in just one member state and accounting for any VAT due to any member states through a single MOSS return.
This should remove the incentive for businesses to locate offshore and level the playing field for all BTE suppliers.
The aim is to reduce the administrative burden and associated costs of multiple VAT registrations.
There will be additional changes to the place-of-supply rules to align with other member states and to close minor loopholes used by certain anti-avoidance schemes.
See our guide to VAT MOSS for more information.