The New EU VAT Rules on the Place of Supply of B2C E-Services: Practical Consequences – The German Example

Abstract:

This article provides a comprehensive summary of the new place of supply rules regarding electronic services ('e-services') supplied to non-taxable persons with a special focus on electronically supplied services. The new rules, which apply as from 1 January 2015, are interpreted especially on the basis of the Explanatory Notes on the European Union ('EU') Value Added Tax ('VAT') changes to the place of supply of telecommunications, broadcasting and electronic services that enter into force in 2015 (Council Implementing Regulation (EU) No. 1042/2013) published on 3 April 2014 by the European Commission ('EC'). The article aims to illustrate important impacts of the new rules on the VAT Law of the different EU Member States with particular regard to Germany. E-business as well as local tax authorities are faced with significant challenges in order to apply the new rules governing the place of supply of eservices correctly. The article deals especially with the definition of electronically supplied services, the determination of the location of the customer including presumption rules, the service commission framework and the mini One-Stop Shop ('MOSS') scheme. Some important weaknesses of the new rules are pointed out. Precisely, potential double taxation situations, technical, economical and legal difficulties in connection with the determination of the location of the customer and potential infringements of EU Law are discussed. The author analyses potentials for improvement not only on EU but also on German Level. Finally, useful information regarding the new introduced MOSS scheme is provided.