Modifications to EU VAT sourcing rules

As the oldest and most developed in the world, the European Union (EU) value-added tax (VAT) system is often used as a model for countries implementing a VAT. The EU is in the process of fundamentally modifying the structure of its VAT and adapting it to the business models of the 2lst century. In 2...

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Bibliographic Details
Published in:The Tax Adviser 2013-06, Vol.44 (6), p.360
Main Authors: Duncan, Harley, Stephanny, Philippe
Format: Magazinearticle
Language:English
Subjects:
Broadcasting industry
Business to business commerce
Consumption
Councils
Households
Internet
Laws, regulations and rules
Retail sales
Sales
Sourcing
Suppliers
Tax reform
Taxation
Telecommunications industry
Television programming
Value-added tax
VAT
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Summary:As the oldest and most developed in the world, the European Union (EU) value-added tax (VAT) system is often used as a model for countries implementing a VAT. The EU is in the process of fundamentally modifying the structure of its VAT and adapting it to the business models of the 2lst century. In 2010, the EU began modifying the sourcing rules for services to provide for taxation at the place of consumption, as opposed to taxation at the supplier's location or point of production. The process should be finalized in 2015, when the rules for sales to individuals and households will change to mandate taxation of telecommunications, broadcasting, and electronically supplied services where the customer is established, as opposed to where the supplier is established. These new sourcing rules have already inspired legislative amendments in Norway and Switzerland, among other countries. This article discusses the basic principles of the EU VAT; the existing sourcing rules for sales of telecommunications, broadcasting, and electronically supplied services to businesses and individuals; the modifications being made to those rules; and what those modifications could mean for future changes to the EU VAT.
ISSN:0039-9957