VAT and the Place of Supply of Services
On 17 September 2003 the European Commission published the summary report on the outcome of the Commission’s Taxation and Customs Union Directorate-General consultation on "VAT - The Place of Supply of Services ".
The goal of the underlying consultation was to provide a report on the current status of the review of the place of supply of services rules and outline the framework in which the work has progressed. In response, the European Commission was seeking reactions and input on the proposed framework and related issues (IP/03/829).
The consultation was of particular interest to suppliers of services to taxable persons (i.e., B2B supplies) and their customers as it considered the idea of a shift in the underlying principle of the existing legislation; that is, a change from the origin principle to the destination principle with respect to the place of taxation of services supplied to taxable persons.
Such a change could result in increased use of a system whereby the customer becomes liable to pay the tax (self-assessment or reverse charge), decreased cross-border registration and additional administrative demands (e.g., the possible corresponding extension of the VAT Information Exchange System (VIES) to services).
The way forward
On the basis of consultation results the Taxation and Customs Union Directorate General proposed a directive relating to the place of supply of services rules outlined in Article 9 of the Sixth VAT Directive at the end of Decemver 2003:
For background information please consult press release IP/03/1808.
Text of the proposal COM(2003) 822 of 23/12/03. Follow the legislative process with PreLex.