EU rules for VAT in telecommunications, broadcasting and electronic services
From January 1. 2015 EU will change the application of VAT rules in intra-community trades. The new rule will change current situation where VAT tax is taxed where the company or person is providing services to customer. The new rule will change the place where VAT is taxed, and starting from year 2015, the VAT will be in the Member State where customer belongs. The rule will apply whether or whether not the customer is a business or consumer or whether the supplier is based in European Union or not.
More specific legislation
The current legislation already provides non-exhaustive list of examples on telecommunications and electronic services. However, the legislation does not provide any information regarding electronic services in what cases the VAT will be paid for consumer’s Member State. The new legislation is set to change this problem. In electronic services, providing content for consumer can include complex structures and it might be unclear according which rules the VAT should be paid.
Mini one-stop shop to help with VAT changes
EU will also set up a new scheme to enable businesses engaging in activities in Member States where they are not established to have a single point of electronic contact for VAT identification, declaration and payment purposes. This scheme is called ‘mini one-stop shop’ (MOSS). Businesses using MOSS electronically submits quarterly VAT returns detailing supplies of telecommunications, broadcasting and electronically supplied services to non-taxable persons in other Member States along with VAT dues. MOSS is a platform for VAT issues arising in other member state than the company’s own member state.
Tony Koivula, attorney at law of the Gencs Valters Law Firm in Tallinn.
Practising in fields of Telecoms Law in Latvia, Lithuania, Estonia.
T: +372 61 91 000
F: +372 61 91 007