Aspects of VAT on the place of supply rules of services in electronic commerce

Abstract

In the first chapter of this Term Paper the author will provide a general understanding and knowledge of the impact that ‘e-commerce’ has brought in today’s day and age. This chapter will differentiate between different supplies as presented by law and in the context of them being supplied over the Internet. The second part of this chapter will focus on place of supply rules and the historical timeline of such rules, which have evolved throughout the years starting from inception to date. This section will feature a number of amendments and highlight the motivation for such modifications. This Paper will only focus on the rules and situations with regards to a business-toconsumer formation and not business-to-business formation. The last part of this chapter will delve into the very first examples given to portray the meaning of an electronically supplied service. The second chapter will provide a more definite legal definition for the term electronically supplied service. The second part of this Chapter will provide contradictory non-binding opinion found within the Commission Working Papers and VAT Committee Guidelines. The difficulties in obtaining unanimity will also be brought to light. This Chapter will conclude by underlining a number of issues and opinions brought about by one of the essential criteria found within the definition of an electronically supplied service, leaving the reader questioning whether the simple legal definition provided within the law suffices. Chapter 3 will delve into the issue relating to the place of supply of an electronically supplied service. This Chapter provides the reader with an explanation of the business-to-consumer position in relation to the place of supply with effect from 2015, which essentially shifted the place of taxation of an electronically supplied service from the country where the supplier is established to the country where the customer is established. This Chapter will give the reader insight to a number of definitions that are pertinent for the purposes of determining the location of the consumer. Due to these rules, determining the location of the customer has become fundamental and also problematic when dealing with the VAT of an electronic service. Therefore the second part of this Chapter will provide an explanation of number of presumptions that have been put into place in order to aid the supplier in identifying the country of taxation of a particular transaction. The author shall also explore the ‘Special Schemes’ and provide further analysis on the present 2 schemes provided for by the European Union (mini One Stop Shop) referred to in Chapter 1. The author will provide the reader with a simplified evaluation as to what the mini One Stop Shop is and the amendments which provided for the extension of the One Stop Shop. Chapter 4 will delve into the newly promulgated amendments, which are to apply from the 1st of January 2019. This final Chapter will discuss the newly developed thresholds and the problems arising as a result of. There shall be reference to Article 7 of the Implementing Regulation 282/2011 throughout. Reference will continuously be made to the Council Directive 2006/112/EC and to articles found in the Implementing Regulation 282/2011 and Implementing Regulation 1042/2013. The author shall also provide a number of opinions found within EU Commission’s Working Papers and by the Confédération Fiscale Européenne.