EU: B2C 2015 VAT Changes – Implementing Regulation adopted in Ecofin last Friday

We are happy to announce that the EU Ecofin Council reached political agreement on the proposal for VAT implementing Regulation on B2C 2015 place of supply issues, in a meeting in Luxembourg last Friday 21 June.

It will apply as from 1 January 2015. It will be officially released in the next weeks after clean up and translation to the EU official languages.

Important to note is that this Implementing Regulation has direct effect and does not need to be implemented/transposed by the EU Member States in their national VAT legislation (primary, secondary or administrative guidance).

The provisions relating to the B2C 2015 VAT changes provides for binding new measures and further clarifications to ensure that the new VAT rules governing the place of supply of B2C telecommunications, broadcasting and electronic services, as applicable as from 1 January 2015, are applied uniformly within the EU, in particular as regards:

  • The definition of telecommunications, broadcasting and electronic services and the concepts of “permanent address” and “usual residence”;
  • Identification of customer status;
  • Identification of the supplier in case of intermediated delivery of electronic services and telephone services supplied through the Internet;
  • Identification and evidencing of customer location;
  • The cut-off in the event of continuous services starting before 1 January 2015 and ending after 1 January 2015.

With this final piece of EU implementing legislation now being adopted, businesses that will be affected by the 2015 VAT changes should now urgently start their scoping and implementation project.

Also relevant: anti-VAT-fraud measures adopted

Besides and also relevant for your industry, a package of two anti-VAT-fraud measures were adopted without discussion:

  • A Quick Reaction Mechanism (QRM) which will make it possible for Member States to take immediate measures in cases of sudden and massive VAT fraud;
  • A Reverse Charge Mechanism (RCM) allowing Member States to apply, on a temporary basis, a reversal of the liability of VAT payment to predetermined categories of goods and services, including mobile phones and tablet computers.

The adopted Directives will also be released in the next few weeks. For more information see the Ecofin press release and background note.

See you in Brussels

During our meeting of the B2C 2015 Working Group, that will take place this Wednesday 26 June 2013, in Brussels, we will therefore focus on some of the critical questions that need to be addressed in the run-up to 2015, including:

  • What evidence will you use for determining customer location and hence the applicable VAT rate?
  • How will you identify and evidence the VAT debtor in case of intermediated delivery of electronic content?
  • How will national VAT authorities audit the correct allocation of your VAT receipts?
  • When should you account for VAT on vouchers issued or redeemed as from 2015?

We look forward to meeting and speaking to many of you this Wednesday in Brussels!

About Sophie Claessens

Senior Tax Manager PricewaterhouseCoopers Tax Consultants Belgium email: Mobile: +32 473 91 05 67 Office: +32 3 259 3169

Sophie Claessens is an international VAT advisor, based in Antwerp, Belgium, with a particular focus on business-to-consumer industries, including telecommunications, media, internet and e-commerce. She supports major industry players on sector-specific issues, including VAT compliance at both an operations and strategic level, and is directly involved in policy work for businesses in these industries, both at the Belgian level and at the level of the European Commission. She is responsible for indirect taxes in the communications sector at PwC Belgium and is a driver of PwC's Business Working Group on the EU 2015 VAT changes. She has authored articles for publication in Belgian and international tax journals.