This publication prepared by PwC US takes the US view on the VAT treatment of eservices supplied through the Cloud (electronically) in Europe and takes a look at the global trends in the VAT treatment of cross-border eservices delivered via the cloud.
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First and the most important fact: These rules are mandatory for any kind of ebusiness, no matter where it is established or has a nexus: in EU, US, China, India, Australia, Switzerland. As soon as a company provides eservices to a non VAT registered EU customer (regardless whether the customer is a legal or a natural person) it is bound by these rules, regardless whether it has a “physical” presence, server or agent in the EU. The customer’s location is the only thing that matters.
As reported end of last year, EU Commission has on 18 December 2012 published a new proposal for amending the VAT Implementing Directive 282/2011, which provides additional rules and clarifications regarding the place of supply rules – i.e. defines in which country VAT should be levied.
For the purposes of this post I will limit myself only to those relevant for us telecom, broadcasting and e-services, even though the proposal deals also with some other issues (e.g. work on immovable property).
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Do you sell services to consumers? Are they electronically supplied, telecom or broadcasting services? Are your customers in the EU? Are you investing into the ebusiness, telecom or broadcasting sectors? Are you ready for the B2C EU VAT changes?
In 2015 the EU VAT place of supply rules are changing. B2C telecoms, broadcasting and electronically supplied services will be taxed where your customer is located or belongs. As a result, different VAT rates may apply compared to your current situation impacting your pricing or profit margin.
On 18 December 2012, the Commission adopted the proposal for a Council Regulation amending the VAT Implementing Regulation (EU) No 282/2011 as regards the place of supply of services. It is the final proposal in a package of measures in view of the implementation of the new VAT taxation rules for B2C telecommunications, broadcasting and electronic services that will become effective as of 1st January 2015.
The proposed implementing measures relate to the identification and evidence of customer location and are needed to ensure a uniform application within the EU. It also includes a proposed deemed provision in case of intermediated delivery of electronic services.
The Serbian tax administration has recently issued a new “rulebook” on electronically supplied services. It defines the scope and types of services that should be regarded as electronically supplied services for Serbian VAT purposes. These include for example the supply of software and related updates, supply and maintenance of websites, service in the field of distance learning etc
Even though the “rulebook” finally provides a definition of eservices, certain types of listed services could cause uncertainties in practice and might require further clarifications, e.g. the supply of pictures, text and information in electronic format; the supply of audio and video records etc.
Check here for some more details and contact information.
What does this mean for you?
It is a welcome movement that the Serbian legislation addresses the VAT implications of current issues, such as eservices. It would appear however, that the rules and definitions may differ from those in the EU. It is therefore highly recommended to analyze the nature of your business’s supplies in detail to see if they fall within the definitions of the “rulebook”.
To provide clarity on the Goods and Services Tax (“GST”) treatment for e-commerce transactions, the Inland Revenue Authority of Singapore (“IRAS”) has issued a new e-tax guide: “GST: Guide for e-Commerce”.
The e-tax guide clarifies that the medium through which a transaction occurs does not alter the taxability of the transaction. In other words, a supply of goods or services made via the Internet or other electronic media is no different from that made via traditional methods. As such, a GST-registered business is required to charge and account for GST on such transactions, as applicable. The e-tax guide also provides guidance on the GST treatment for the supply of physical goods, digitised goods and services made via the Internet and other electronic media.
What does this mean for you?
If you do business in Singapore and also have a GST registration, you should be aware that GST should be applied to all goods that are ordered or delivered on-line.
The Council Regulation (EU) No 967/2012 laying down rules on the application of the provisions of the VAT Directive concerning special schemes for taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons (i.e. B2C) has been published.
The Regulation amends Council Implementing Regulation (EU) No 282/2011 and introduces new measures covering both “mini one stop shop” special schemes for EU and non-EU ebusinesses to be applied as from 1 January 2015.
This article is again about one of the most frequently asked questions we are facing in our discussions with ebusinesses: What are “B2B” and what “B2C” clients?
The logical and expected explanation would be: B2B are all legal persons and B2C all natural persons / private individuals.
Unfortunately VAT follows its own logic – which is in most cases illogical when considered in everyday content. The above explanation therefore cannot be applied for VAT purposes.
The Implementing Regulation No 815/2012 defining the VAT reporting rules for the mini one stop shop scheme (“MOSS”) for B2C telecommunication, broadcasting and eservices in the EU has been made officially available.
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