Place of service changing
In B2C situations, the consumers are either non-taxable parties or legal entities that are not liable for VAT and are therefore not registered for VAT purposes (e.g. government bodies, municipalities, etc.).
For these consumers, the current localisation rules stipulate that, if they are resident (or habitually based) in the European Union, or are established and are supplied by taxpaying EU entrepreneurs with electronic services, telecommunications services or radio and television broadcasting services, then these services are provided where the entrepreneur is established for VAT purposes. Today, for the provision of the aforementioned services, an entrepreneur must charge VAT from within and pay VAT to the Member State where he is established, regardless of the Member State where the consumer is located.
From 1 January 2015, all electronic services, telecommunications services and radio and television broadcasting services will take place where the consumer is established (or resident or based) for VAT purposes, regardless of whether this consumer is liable for tax. From then on, in B2C situations, as is now the case if the service provider or customer is established outside the EU, EU entrepreneurs will always have to charge VAT in the Member State where the consumer is established or based.
Practice based on presumptions
In practice, this means that the purchase of e.g. downloads, e-software, internet access, online subscriptions to newspapers, journals, databases, etc. will mostly take place where this service is purchased. European guidelines allow a presumption to be incorporated when determining the place of the service, to avoid burdening entrepreneurs with complex control mechanisms to establish the correct place for VAT purposes. According to these European guidelines, a telecoms or e-service provider, for example, may assume that its EU customer has the status of “non-taxpayer” if this customer does not notify it of its EU VAT identification number.
Despite the presumptions an entrepreneur may make, he is still required to keep supporting documents. In discussions with the tax administration, h will still therefore have to be proven by means of several supporting documents that the place of the service has been correctly and fairly determined. Invoicing and bank details, IP addresses, etc. may be used to provide such evidence.
Entrepreneurs who supply customers in various EU Member States should in theory have to register for VAT in all these Member States. However, Europe has provided that, by means of an optional MOSS system (Mini One Stop Shop system), entrepreneurs will be able to pay in their Member State of establishment the VAT they owe in the various other EU Member States where they supply customers, without additional VAT registrations. This is actually an extension of the existing system for non-EU entrepreneurs who provide electronic services to EU consumers.
For entrepreneurs established in Belgium, this means they will periodically (on a quarterly basis) have to declare and pay the VAT due in other Member States on the sale of electronic services, telecommunications services or radio and television broadcasting services to non-taxpaying EU consumers through the Belgian tax administration. In this regard, the Belgian Intervat portal will be adapted to allow registration for the MOSS system and the submission of a simple MOSS declaration (via an electronic signature).
However, local deliveries of these transactions still have to be processed in the Belgian VAT return. Therefore this cannot be done through the MOSS system. If an entrepreneur has a permanent establishment in one of the Member States he supplies with electronic services, telecommunications services or radio and television broadcasting services, regardless of whether the services are provided by this permanent establishment, he cannot pay the VAT due in these Member States through the MOSS system.
Points to watch
From 1 October 2014, Belgian entrepreneurs can get themselves fully ready for the changes that will take effect on 1 January 2015. The registration module in Intervat will then be accessible to entrepreneurs. It will require a minor mental adjustment on the part of monthly declarers, who will have to submit the MOSS declaration on a quarterly basis, even if no transactions have taken place in the previous quarter.
If Belgian entrepreneurs wish to use the MOSS system, we should also point out that it is worthwhile checking now in which Member States VAT deregistrations will be (possible and) necessary for its application and how long such VAT deregistrations could take.
Should you have any further question or require a personal advice with respect to the impact of these rules on your company, please contact your usual contact person at BDO or you may send an email to [email protected] for the attention of one of the members of our Competence Centre VAT:
- Erwin Boumans: 02/778.01.00
- Pascal Dauw: 09/210.54.10
- Kaatje Bondewel: 02/778.01.00
- Brigitte Braeckmans: 03/230.58.40
- Joëlle Teuwen: 081/ 20.87.87