International Trade

Author:Mr Graham Elliott
Profession:Withers LLP

People who provide services delivered through electronic means ('Electronic Services'), sold to final consumers based in other EU states, need to cope with the change of 'place of supply' rules from 1 January 2015.

Place of supply rules are one of the more hotly debated areas of VAT. They determine which nation state can collect consumption taxes, with a view to avoiding more than one state claiming tax on one supply (double-taxation) or no state claiming any tax on a supply. There are different rules for B2B and B2C which acknowledge the fact that business customers can self-account for VAT whereas private consumers do not pay VAT unless it is charged to them by the supplier. Beyond this distinction, there are several special rules.

The change in January 2015 relates to Electronic Services, namely ones that do not involve human intervention. Classics of this genre are downloads of music, video and literature material, but more complex interactive programmes, 'apps', broadcasting, and the like are also involved, and now make up a very substantial market.

Up until 1 January 2015 the place of supply in such cases is where the UK supplier belongs, so the supplier accounts for UK VAT irrespective of whether the customer is in the UK or in Spain. This all changes on 1 January, so that the home location of the private customer will be the...

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