The European Commission (EC) has published guidelines to help businesses prepare for the new VAT rules for telecommunications, broadcasting and electronic services effective from 2015.
From 1 January 2015, VAT on telecommunications, broadcasting and electronic services will be charged where the customer is located, rather than where the seller is. If the customer is a business, its place of belonging is either the country where it is registered or the country where it has fixed premises receiving the service; and if the customer is a consumer, then the consumer’s place of belonging is the country where they are registered, have their permanent address or usually live.
The new rules mean that where an EU business supplies a customer in another EU country, the customer, if it is a business, must account for VAT under the reverse charge mechanism. If the customer is a consumer, then the supplier must charge VAT in the EU country where the consumer belongs. No VAT will be charged if the customer belongs outside the EU.
Where a non-EU business supplies a customer in the EU, the customer, if it is a business, must account for VAT under the reverse charge mechanism. If the customer is a consumer, the non-EU supplier must charge VAT in the EU country where the consumer belongs.
A mini One Stop Shop comes into force on 1 January 2015 and will allow businesses supplying telecomm services, television and radio broadcasting services, and electronically supplied services to consumers in member states in which they do not have an establishment to account for the VAT due on those supplies via a web-portal in the member state in which they are VAT-registered. This scheme is optional and is a simplification measure following the change to the VAT place of supply rules as it allows these businesses to avoid registering in each member state of consumption.