Brussels, 18/12/2009 (Agence Europe) - On Thursday 17 December 2009, the European Commission published a draft Regulation on implementation measures for the value-added tax (VAT) rules adopted in 2008 that come into force in January 2010 (see EUROPE 9601). A rehash of Regulation (EC) 1777/2005, the new draft regulation gives details for the new VAT rules on the supply of services following detailed discussions with the Member States, explains the Commission in a press release. It also covers other issues planned before and after the initial 2005 regulation came into force.
The VAT package changes the rules on the taxation of business to business (B2B) services provided where the purchaser is based. For the supply of services to people not registered for VAT (B2C), the general rule is that VAT will be charged n the country where the supplier is based. Exceptions have been introduced for services like catering, electronic services, telecoms and broadcasting, where VAT will be charged in the country where the product is consumed/used/viewed in order to minimise unfair competition among Member States charging different rates of VAT. A lot of internet companies like Skype are based in Luxembourg and the country managed to get changes to the place where services are supplied postponed until 2015 for electronic services and telecoms, and then from 2015 to 2019, VAT income will be shared between the country where the service is based and the country where the services is consumed/viewed/used. The VAT package intensifies cooperation among tax offices by setting up one-stop-shops in each Member State. For further information, see: http: //ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_services/index_en.htm (M.B. trans fl)