2015 changes to the place of supply rules

© 2014 Grant Thornton UK LLP. All rights reserved.

2015 Changes to the Place of Supply Rules

Locating the Customer

Karen RobbVAT Partner

March 2014


Background

1 January 2015 – changes to the place of supply rules for

supply of Telecommunications, Broadcasting and Electronic

services

Supply is on a business to consumer (B2C) basis

Place of supply = where the customer "is established, has his permanent address or usually resides"

7 March 2014 = 300 days to go

Lots to do


Web hosting

Music and video

downloads

Internet access Downloaded

software

Suppliers of 'electronic'

services such as:

Suppliers of

telecoms services

Suppliers of broadcasting

services

Background continued

Affected businesses


Place of supply

Where does customer 'belong'? – implementing regulations stipulate different rules for different services

Can existing systems capture and retain information?

Determination of the correct place of supply for every transaction – very important if tax is to be paid to the correct Member State

Affected businesses need to take active steps now


Where does the customer belong? - 1

Presumptions

Supplies of TBES where physical presence of the

customer is required eg telephone boxes, WiFi hotspots, internet café etc

Article 24a

Customer is presumed to be established at the location of

the service (ie where the phone box / kiosk / hotspot is actually

located)



More presumptions

Place of installation of the line

Place identified by the country

code of the customer’s telephone number

Where decoder is located or where viewing card was

sent

Through a decoder eg satellite TV

Through a mobile network

Through a fixed phone

line

Supplies of TBES:

Article 24b



Even more presumptions

Supplies not covered by articles 24a or 24b:

determined by the supplier based on two items of non-

contradictory evidence

Article 24c

Billing address of the customer

Geolocation (IP address of the

customer’s device)

Payment details

Country code of the customer’s mobile phone

number

Location of the customer’s fixed

land line

Other commercially

relevant information


On the basis of three items of non-contradictory evidence indicating that the customer belongs elsewhere

Supplier 'may rebut' – but is not obliged to rebut

For services covered by Article 24b involving a fixed land line, mobile network or

a decoder

For services covered by Article 24a (place of

physical location) and

Where does the customer belong?

Rebuttal of presumptions

Supplier can rebut a

presumption:


where there are indications of misuse or abuse by the

supplier

Rebuttal of presumptions

Tax Authority

A Tax Authority may rebut

presumptions made by the

supplier

Customer has no say in the matter – cannot rebut any presumptions

made by either supplier or Tax Authority

Tax Authority cannot simply impose a preferred location – there has to

be an indication of abuse or misuse


Evidence for identification of customer's location

Supplies not covered by articles 24a or 24b:

determined by the supplier based on two items of non-

contradictory evidence

Article 24c


Bank details (location of branch used for payment or billing address held by bank)

Other commercially relevant information


Evidence for identification of customer's location and for rebuttal of presumptions


IP address of the device used by the customer (or

any method of geolocation)

Bank details (location of bank account used to

make payment)

Mobile Country code on SIM card used by the

customer

Location of fixed land line through which service

supplied and

Other commercially relevant information


Transitional arrangements

Place of supply is determined by reference to supplier's establishment - regardless of when the service completes

If the tax point for the supply

occurs prior to 1 January 2015

Place of supply is determined by reference to the customer's establishment -regardless of when the service commences

If the tax point for the supply occurs on or

after 1 January 2015


Suppliers must also comply with

obligations imposed in Member State of

supply

Compliance with local rules in Member States

For example – the UK does not require a tax invoice to be issued to

non-business customers but Italy

does

The 2015 place of supply changes for

B2C services require suppliers to

determine the place of supply


Urgent need to:

Lots to do

Affected businesses have lots to do and not a

lot of time to do it!

• establish systems for capturing and storing customer location

• establish local rules in Member State where supplies take place

• Grant Thornton can help with these projects. Offices and contacts in all Member States


Grant Thornton

Karen RobbPartner 020 7728 [email protected]


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2015 changes to the place of supply rules

Economy & Finance

commercially

fixed land

article 24b

customers

billing address

contradictory

mobile country

supply occurs