Clarification of VAT Rules EU Wide

 

At the European Finance Ministers’ meeting (ECOFIN) on 21 June 2013 the Council reached political agreement on a draft regulation aimed at amending VAT rules as regards  the place of supply of telecommunications, broadcasting and electronic services, real estate services and the distribution of tickets for entry to cultural, artistic, sporting, scientific, educational, entertainment and similar events.

We hold a copy of the draft regulation, which we can expect to be implemented shortly (and will be happy to provide you with a copy).  The regulation has direct effect, which means it changes UK VAT Law.  One of the more important aspects is the insertion into the Principal VAT Directive of definitions of land and services related to land, where we have seen some minor repositioning in the UK as a result of the draft regulation (for example, some exhibition services, supplies in airport lounges and certain storage services), but it will be on day to day issues determining whether a supply is related to land or not where the biggest changes will be felt.  Certainly, some supplies which have till now been treated as the supply and installation of goods (for example large industrial plant within new factories) will be treated as construction services, removing a liability to register in the UK for many overseas businesses (although for practical purposes, some may decide to retain their UK VAT ID or even obtain one for the first time).

It should also mean that UK businesses have more certainty as to the nature of their transactions in other member states (albeit that local regimes, such as local reverse charges, may still also apply).

Our recommendation is that if you are involved in any of the sectors affected by the new regulation, and have not already done so, you need to check what it has to say and consider changing how you treat supplies for VAT purposes if you find you are at variance.

If you would like a copy of the regulation, please email help@covertax.co.uk

 

Written on 1st August 2013 by Steve Botham, S&H LLP Associate 

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