2015 VAT changes: the details and the practicalities

ACE (Kluwer), June 2014


Key VAT changes come into force at the beginning of next year, which must receive the attention of businesses providing telecommunications, broadcasting and electronically supplied services. The implications of these changes are far reaching for the businesses, and in this article the authors set out an overview of the changes and their implications.

By way of reminder, in 2008 the VAT Package was agreed by the EU Member States and introduced:

  • new rules relating to the place of supply of services for VAT purposes1;
  • new reporting obligations for cross border transactions and new provisions relating to cross border cooperation between Member States2; and
  • a new improved process for EU established businesses to recover VAT incurred in other Member States3.

The majority of the provisions came into force in 2010, with a number of minor changes coming into force in the subsequent years4.

The final major changes, those relating to B2C supplies of telecommunications services, broadcasting services, and electronically supplied services, will come into force on 1 January 2015.

On 1 January 2015, the VAT rules relating to where VAT will apply on supplies of telecoms, broadcasting and electronically supplied services, will change (“the 2015 VAT changes”). Currently supplies made by EU established suppliers to EU resident B2C customers are subject to VAT in the country where the suppliers is established; from 1 January 2015, the supplies will be subject to VAT in the country where the customer is resident5.

Following the changes to the relevant provisions of VAT Directive 2006/ 112 it was necessary to implement additional legislation and guidance to provide the details of the changes:

  • Following a number of months of intense discussions at a European level between institutions, Member States and businesses, Council Implementing Regulation (EU) No 1042/ 2013 ("Regulation 1042/ 2013") was agreed by Member States in June 2013, and published on 7 October 2013. This regulation amends Council Implementing Regulation (EU) No 282/ 2011 ("Regulation 282/ 2011") concerning the place of supply of services, and looks to provide guidance for tax payers and member States.
  • Following the publication of Regulation 1042/ 2013, the Commission recognised the fact that the provisions of the regulation could be open to interpretation, and could potentially result in difficulties for implementing them. On 3 April 2014 the Commission published a series of Explanatory Notes regarding the EU VAT changes and with reference to Regulation 1042/ 2013. It is important to note that these Explanatory Notes are not legally binding as such, and are not meant to be exhaustive. They are simply meant to provide guidance for the application of certain measures, and to consider a number of practical questions raised by businesses impacted by the changes.

The 2015 VAT changes have been in the Luxembourg news over the last number of months, as the Luxembourg VAT authorities look to implement the online platform for taxpayers to discharge their future VAT obligations (the Mini One Stop Shop or “MOSS”), and the new coalition government looks for ways to replace the imminent loss in VAT revenue. This article asks:

  • What is the scope of the 2015 changes?
  • What are some of the practical implications for taxpayers?
  • What happens next?

I; Defining the scope of the 2015 VAT changes

In order to fully understand the scope of the 2015 VAT changes, it is necessary to consider:

  • The definition of telecommunications, broadcasting and electronically supplied services;
  • How to determine the status of the customer as a B2C customer; and
  • What the 2015 VAT changes do not cover.

1.1; Defining telecommunications, broadcasting and electronically supplied services

Regulation 1042/ 2013 has amended the examples of electronically supplied services as set out in Regulation 282/ 2011, and has also added definitions of telecommunications services and broadcasting services.

  • Telecommunication services

According to New article 6(a) of Regulation No 282/ 2011, telecommunications services shall include the following:

(a) fixed and mobile telephone services for the transmission and switching of voice, data and video, including telephone services with an imaging component (videophone services);

(b) telephone services provided through the internet including voice over protocol internet Protocol (VoIP);

(c) voice mail, call waiting, call forwarding, caller identification, three-way calling and other call management services;

(d) paging services;

(e) audiotext services;

(f) facsimile, telegraph and telex;

(g) access to the internet, including the World Wide Web;

(h) private network connections providing telecommunication links for the exclusive use of the client.

Furthermore, telecommunications services shall not include electronically supplied services or radio and television broadcasting services.

  • Broadcasting services

According to New article 6b of Regulation No 282/ 2011, broadcasting services are those “consisting of audio and audiovisual content, such as radio and television programmes which are provided to the general public via communications networks by and under the editorial responsibility of a media service provider, for simultaneous listening or viewing, on the basis of a programme schedule”.

The second paragraph of the same article goes on to specifically include in the definition of broadcasting services:

  • (a)Radio or television programmes transmitted or retransmitted over a radio or television network;
  • (b)Radio or television programmes distributed via the internet or similar electronic network (IP streaming), if they are broadcast simultaneous to their being transmitted or retransmitted over a radio or television network.

The final paragraph excludes certain services from the definition6, including radio or television programmes distributed via the internet or similar electronic network unless they are broadcast simultaneously, and the leasing of technical equipment or facilities to receive a broadcast.

In the Luxembourg VAT law, Circular No 731 of 27 December 2007 defines broadcasting services for the purposes of ascertaining whether or not the super reduced rate of 3% VAT applies to the service.

"… En d’autres termes, bénéficie du taux super-réduit la perception des services payants qui consistent en l’émission de programmes de télévision ou de radio destinés au public, c’est-à-dire à un nombre indéterminé de téléspectateurs ou d’auditeurs potentiels (transmission "point à multi point"), que ces services soient transmis par un opérateur ayant la responsabilité éditoriale sur le contenu des programmes ou par un opérateur ayant la responsabilité sur le programme (câblodistributeur).…"

The new article of Regulation 282/ 2011 reflects most of what would have traditionally been included within the definition for the super reduced rate, as far as the idea of broadcasting to the general public is concerned. The Luxembourg Circulars refer to distribution that is "point to multipoint".

However, there are a couple of differences:

  • The current drafting of the Luxembourg Circular does not require the broadcaster to have editorial responsibility – in other words it is possible to apply the super reduced VAT rate to the purchase in and on sale of content.
  • The super reduced rate currently applies to broadcasting over any means, including over the internet, irrespective of whether or not the content is distributed simultaneously over more traditional networks ("… par n’importe quel réseau de communications éléctroniques, c’est-à-dire les programmes transmis par voie herzienne terrestre analogique ou numérique, par réseaux câblés, par satellites, sur internet, par ADSL ou par des réseaux de téléphonie mobile….)"; and
  • The super reduced rate also applies to the equipment needed for the broadcasting – the cabling and the set top box - when this is incidental to the overall supply of broadcasting.
  • Electronically supplied services

Regulation 282/ 2011 of 15 March 2011 defines electronically supplied services, stating that:

" "Electronically supplied services" as referred to in Directive 2006/112/EC shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.”7

The regulation goes on to define particular services that do or do not fall within the definition8.

This regulation is amended slightly to further exclude from the definition of electronically supplied services:

"tickets to cultural, artistic, sporting scientific, educational, entertainment or similar events booked online" and "accommodation, car-hire, restaurant services, passenger transport or similar services booked online"9.

This distinction makes sense as it makes the precision that the VAT qualification of the underlying transaction is not impacted by the fact that it is sold online. This is comparable to the statement that "where the supplier of a service and the customer communicate via electronic mail, that shall not of itself mean that the services supplied is an electronically supplied service10". However, we would nonetheless expect that any fee charged to either the vendor or purchaser for access to the relevant platform to purchase these supplies could be qualified as electronically supplied services. The Explanatory notes are silent on this point.

1.2 Determining the status of the customer as B2C

The 2015 VAT changes apply to sales made by EU established suppliers to B2C customers. In this context, the "C", or final consumer, will generally be a private individual – but it could also include non taxable legal persons, or public bodies that do not have a VAT number. While such additional persons might not be an obvious inclusion in the definition, given the nature of the services, it is an important point to keep in mind.

The status of the customer as a consumer or a business customer does not impact the place of supply of these services after 2015. In both cases, the supply of services will be deemed to take place where the customer is located:

  • Article 44 of the VAT Directive states that B2B supplies of services (including those of Telecoms, broadcasting and electronically supplied services) are deemed to take place where the customer, a taxable person, has established his business or has a fixed establishment;
  • Article 58 of the Directive, as applicable from 1 January 2015, states that B2C supplies of these services are deemed to be supplied at the place where the recipient of the service is established, has his permanent address or usually resides.

Notwithstanding all this, what does change depending on whether the supply is B2B or B2C, is the person liable for the VAT on the supply – the customer in the case of the B2B supply under the reverse charge, and the EU established supplier in the B2C supply. This was already the case of course (i.e. that the customer was liable for the B2B supply, and the supplier for B2C) – but this time the supplier is no longer liable in his own country of establishment for a B2C supply (except for local customers) – but he has liabilities in other EU countries.

And so the status of the customer continues to be important.

The preamble to Council Implementing Regulation No 1042/ 2013 states:

With a view to determining who is liable for payment of the VAT on the supply of telecommunications, broadcasting or electronically supplied services, and taking into account that the place of taxation is the same regardless of whether the customer is a taxable person or a non taxable person, the supplier should be able to determine the status of a customer solely based on whether the customer communicated his individual VAT identification number. This status must, in accordance with the general rules, be amended if such a communication is subsequently made by the customer. If no such communication is received, the supplier should remain liable for payment of the VAT.”

Keeping this in mind, new article 18(2) of Council Implementing Regulation No 282/ 2011 states that "...irrespective of information to the contrary, the supplier of telecommunications, broadcasting or electronically supplied services may regard a customer established within the Community as a non taxable person as long as that customer has not communicated his individual VAT identification number to him."

It is important to note that this is a "may" provision. In other words, the supplier can choose to consider his customer as a B2C customer, even if he has other evidence to the contrary, so long as he has not received a VAT number for the customer. By doing so, the taxpayer protects himself for any future liability. However, the tax payer can also choose to treat his customer as a B2B customer, with the caveat that the burden of proof will remain with him to prove the taxable status of his customer.

1.3 What the 2015 changes do not cover

The 2015 VAT changes apply to all B2C supplies of telecommunications, broadcasting and electronically supplied services, irrespective of where the customer is, or where the supplier is located.

Note that despite the fact that the new provision covers all supplies irrespective of the place of the supplier or of the customer, the provision only results in an actual change to the place of supply of B2C supplies to EU end consumers.

  • B2C supplies made to non EU resident customers are already subject to VAT in the country where the recipient is established, has his permanent address of usually resides (Article 59 Directive 2006/ 112). From 1 January 2015 there will simply be no longer a separate reference to non EU established customers, and they will fall within the scope of the overall B2C supplies of these services.
  • In the case of non EU suppliers rendering these services to B2C customers resident in the EU, the non EU supplier already has to apply VAT in the country where the customer has his permanent address or usually resides (according to the current wording of Article 58 of the Directive applicable until 31 December 2014 for electronically supplied services, and article 59b of the current text as applicable to telecoms services and broadcasting services).

Finally it is worth noting that there will be no change to the place where VAT applies in the context of B2B supplies of the services which remain the same, the place of supply being the place where the customer, a taxable person, has established his business or has a fixed establishment (article 44 Directive 2006/ 112). Furthermore, the 2015 VAT changes bring no change in the place of supply in respect of other B2C supplies.

II Practical implications of applying VAT in the country of the recipient

Having ascertained that from 1 January 2015 EU established suppliers will have to apply VAT in the country of their EU resident B2C customer, this change in rules might seem straight forward in theory.

However, the practical implications are quite fundamental:

  • How do I know where my customer is resident, particularly in sectors where the customer is generally anonymous due to the prepaid nature of the service, or due to the small amount of information collected about the customer?
  • What happens when there is a chain of parties in the transaction chain – how do I know who my customer is? How do I know who the supplier is vis à vis the client?
  • When I have determined where my customer is, what are my compliance obligations and what are my options to discharge them?

2.1 Determining the location of the customer

Once the customer is determined as a B2C customer – thereby rendering the supplier liable for the VAT – it is necessary for the taxable person to be able to determine where the customer is located and therefore where the supply will be taxed.

In the years since the introduction of the VAT package, we have seen enormous development in these different sectors. More and more consumers own more than one mobile phone; broadcasting services are no longer restricted to “traditional” televisions; and the sheer volume of on line content is quite astonishing. In particular, in the one line space, transactions are generally of high volume but low value, and consumers often remain anonymous vis à vis the supplier.

In the preamble to Regulation 1042/ 2013, the Commission recognises some of the practical aspects of the new rules.

  • Where the consumer is established in more than one place, or could use the services in more than one place, it is necessary to determine the place of actual consumption of the service;
  • Where in practical terms it is impossible to determine with any certainty where the customer resides, it is appropriate to establish certain presumptions;
  • However, where information is available to accurately determine where the customer is, it should be possible to rebut said presumptions;
  • There are also certain circumstances where it would be too burdensome on the taxpayer if they were required to produce and control evidence of the customer’s permanent or usual residence, or where such controls would give rise to problems relating to data protection.
  • Finally, there are some instances where it is not possible to determine presumptions as to the place of residence of the customer. In these cases, it is necessary to establish what evidence the supplier should have in order to determine the location of the customer. To that end, an indicative non exhaustive list should be drawn up of suitable evidence.

The Regulation therefore introduces a number of presumptions for determining the place where the final customer is established/ resident for the purposes of the provisions of telecommunications, broadcasting or electronic services.

New Article 24 of Regulation 282/ 2011 aims to avoid double taxation or non-taxation of telecommunications, broadcasting and electronic services supplied to a final customer who is established/ resides in more than one country. As such, the services will be taxed at the place of actual consumption of the service.

The regulation also elaborates rebuttable presumptions to easily determine the place of establishment of the end customer.

  • New Article 24a of Regulation 282/ 2011 considers the situation where the physical presence of the final customer is needed for the use of the telecommunication, broadcasting and electronic service, whereas the country where the customer actually belongs is impossible to determine. In these cases, the regulation assumes that the place of taxation will be the place where the customer is physically present and therefore consumes the services (place where the services is used and enjoyed). This is notably the case when the service is provided at a location such as a telephone box, a telephone kiosk, a wi-fi spot, an internet café, a restaurant or a hotel lobby where the physical presence is needed. In these cases, it shall be presumed that the customer is established, has his permanent address or usually resides at the place of that location and that the services is effectively used and enjoyed there.
  • The new article 24b assumes that where telecommunications, broadcasting or electronically supplied services are supplied to the end customer:

(a) through his fixed land line, the customer is presumed to be established, have his permanent address or usually resides at the place of installation of the fixed land line;

(b) through mobile networks, presumption according to the country identified by the mobile country code of the SIM card used when receiving those services;

(c) for which the use of a decoder or similar device or a viewing card is needed and a fixed land line is not used, that the customer’s residence can be determined according to where that decoder or similar device is located, or if that place is not known, at the place to which the viewing card is sent with a view to being used.

If none of these presumptions apply, the supplier may consider that the end customer is established/resident at the place identified as such by the supplier on the basis of two items of non-contradictory evidence.

Based on the new article 24d, any of these presumptions may be rebutted by the supplier through the use of three non-contradictory pieces of evidence indicating that the customer is established, has his permanent address or usually resides elsewhere. A tax authority can rebut any of the presumptions where there are indications of misuse or abuse by the supplier.

New Article 24f settles a list of potential pieces of evidence which can be used for rebutting or establishing presumptions. They include notably:

(a) the billing address of the customer;

(b) the internet Protocol (IP) address of the device used by the customer or any method of geolocation;

(c) bank details such as the location of the bank account used for payment or the billing address of the customer held by that bank;

(d) the Mobile Country Code (MCC) of the Internet Mobile Subscriber Identity Module (SIM) card used by the customer;

(e) the location of the customer’s fixed land line through which the service is supplied to him;

(f) other commercially relevant information.

This list is not exhaustive and has for aim to ensure a uniform application of the evidences within the EU Member States. This should ensure a relative certainty regarding where the customer belongs but the burden of proof must not be excessive for the supplier. Therefore, the point (f) (other commercially relevant information) has not been further developed and should allow the supplier to easily rebut presumption foreseen by the law.

The above considerations have a number of far reaching practical and operational implications that businesses need to assess and take management decisions on.

2.2 Particular complications when chains of transactions involve many parties

In the years since the entry into force of the VAT package we have seen an incredible development in the online industry. In particular, it has become more and more usual for customers to download content on to their mobile phones and smart devices. As well as being able to access music, games and videos, customers can also access services such as directory enquiries, weather forecasts, and other kinds of applications.

When accessed via the mobile phone, these services are often billed via premium rate services (SMS), with the additional charges being included on the mobile phone of the customer. In other cases, the customer will pay for credit on an account with a credit card, or some other payment method, and use the credit to access content via their phone.

How does this become relevant for VAT?

The number of parties in such distribution chains can vary – either through direct contact between content provider and the end customer, or through long and complex supply chains involving payment a number of different parties. One example of the latter case involves the case when creators of apps contract with app stores or platforms, and where customers will purchase the apps by paying the online store or platform through which the app is purchased.

As the chains become more complex, and in a number of cases also cross borders, it becomes more difficult to answer some of the most fundamental VAT questions– who is the supplier? who is the customer? what supply is being made? Due to differing interpretations given by different Member States when the changes are long, complex and cross border, it was felt that more legal certainty was required in order to ensure clear rules relating to how these chains of transactions should be dealt with for VAT purposes.

New article 9(a) of Council Implementing Regulation 282/ 2011 looks to provide certainty by:

  • introducing a presumption to determine which party is making the supply,
  • providing the means to rebut this presumption, and
  • indicating when the presumption cannot be applied.

(i) Introducing a presumption

The article introduces the following presumption in the context of the supply of electronically supplied services or internet telephone services provided through a telecommunications network, interface or portal:

"a taxable person taking part in that supply is acting in his own name but on behalf of the provider of those services".

As a result of the presumption, for each transaction in the chain, each taxable person is deemed to have received and on sold the electronic (or internet telephone) supply himself.

(ii) Rebutting the presumption

The provision also allows that presumption to be rebutted under certain conditions. If those conditions are fulfilled, the intermediary rebutting the provision is no longer to be deemed to be receiving and on supplying the underlying service.

In order to rebut the presumption, it is necessary that:

  • the provider of the service is explicitly indicate as the supplier by this taxable person; and
  • this is reflected in the contractual arrangements.

As a result of this, if the conditions are met for each intermediary in the chain, the presumption no longer applies and the content provider is considered as the supplier of the content, and it is he who is liable for the VAT on the supply to the end customer.

Notwithstanding the above possibility to rebut, a taxable person that authorises the charge to the customer or the delivery of the services, or who sets the general terms and conditions of the supply, shall not be permitted to explicitly indicate someone else as the supplier.

(iii) Instances where the presumption cannot be applied

The provision clearly states that the presumption will not apply to a taxable person who only provides for the processing of payments in respect of the services in question, and who does not take part in the supply.

This new Article 9(a) – has been arguably one of the most problematic provisions to have agreed by all Member States. Furthermore, input from businesses in the sector has made it clear that this provision will present practical difficulties for the different parties. Essentially, as a result of this provision, the changes in 2015 will potentially bring certain businesses into the scope of the B2C changes, and take others out.

In order to provide additional guidance as to the elements to take into account to determine who this article should be interpreted depending on the particular scenario, the Explanatory Notes provide detailed guidance on different situations, including flow diagrams and descriptions.

2.3 Complying with new VAT obligations – the options

Following the changes in VAT rules on 1 January 2015, taxpayers will have new obligations in relation to the supply of B2C services to EU resident customers. In order to charge and pay the relevant VAT to the local VAT authorities they will have to either:

  • register directly in each of the Member States where they have customers, and subsequently submit periodic and / or annual VAT returns in that country according to the local VAT rules; or
  • choose to register under MOSS, the Mini One Shop, enabling them to register in a single Member State and submit quarterly returns in that country alone.

MOSS is an extension to the current One Stop Shop (OSS) that was introduced in 200311 to allow Non EU established suppliers of electronically supplied services to register in a single Member State and to discharge all its obligations through that registration. By submitting a single return that included details of sales to all Member States, and setting out the local VAT in each country of sales, the taxpayer would submit a payment for the total VAT due in all countries, and the Member State of Identification would submit payments to each of the Member States in question.

MOSS goes further than the OSS:

  • it is extended to include EU established suppliers;
  • it is extended to include supplies of telecommunications and broadcasting services.

The taxpayer decides where it will register, and this Member State becomes its Member State of Identification (MSI).

  • for EU established suppliers, the MSI will be the Member state where it has its establishment ("Member State of Establishment"). If it has more than one establishment, it can choose which Member State to register in.
  • for non EU established suppliers, the taxpayer can choose which Member State to register in.

It is important to note that if the taxpayer has VAT registrations in other countries, but no establishment there (e.g. due to distance sales made to those Member States), the existence of the VAT registrations will not impact the possibility to register under MOSS.

Once registered under MOSS, the MOSS regime will cover all supplies of telecommunications, broadcasting and electronically supplied services made to EU resident customers in Member States where the taxpayer has no establishment. It is not possible for the taxpayer to choose to include some sales in MOSS and to have direct registrations in other countries.

Finally, it is also important to note that the MOSS return only covers sales - it just details output tax due on sales to other Member States. It does not include purchases, and so does not enable the taxpayer to recover local input VAT on its return. Any VAT incurred by the taxpayer should be recovered either via the normal VAT return for the taxpayer in the country of establishment, or via normal EU refund procedures.
In order to illustrate this, let’s take an example of a Luxembourg established taxpayer making supplies of electronically supplied services to customers in all Member States. This same taxpayer has a branch and VAT registration in Belgium.

  • The taxpayer decides to register under MOSS in Luxembourg.
  • When he applies for the registration, he must inform the Luxembourg VAT authorities that he has an establishment in Belgium, and provide the VAT number of the Belgian branch.

The taxpayer then submits returns as follows:

  • in his Luxembourg VAT return, the taxpayer will include all sales:
    • sales to Luxembourg established customers as subject to VAT; and
    • sales to customers in other Member States as "sales taking place abroad".
  • he will also include all his purchases as normal.
  • in the Belgian VAT return of the branch, he will include all sales to Belgian resident customers, as well as any other relevant supplies or purchases.

in the MOSS return, he will include all sales made by the Head office to customers established in other Member States a apart from Luxembourg and Belgium, as well as sales made by the Belgian branch.

Once the taxpayer submits his return to the Luxembourg authorities via the electronic portal, and makes the relevant payment, the Luxembourg authorities will send the data and VAT relevant to sales to French customers to the French authorities, relating to German customers to the German VAT authorities, and so on.

Note, however, that during a period of four years, the Member State of Identification for taxpayers established in the EU will retain a certain amount of VAT. In years one and two, the MSI will keep 30% of the VAT. In years three and four, it will retain 15% of the VAT collected. This does not apply for MOSS relating to non EU established taxpayers.

The Commission has published a set of guidelines to provide details of the workings of MOSS, with reference, for example, to the details required for registrations, deadlines for the returns and related payments, making corrections to returns. However, the successful working of MOSS comes down to the ultimate leap of faith – to what extent will Member States trust each other to properly collect their VAT? In the case of a cross border audit – eg where the Member State of Consumption ("MSC") – the country of the customer - wants to perform an audit on a taxpayer established and registered under MOSS in another member state (MSI) – how will that be undertaken? Although it is clear from the legislation that the MSC has the right to perform the audit, as it is ultimately that Member State that has the right to the VAT, current discussions at an EU level seek to introduce guidelines for Member States for cooperation, suggesting that audits pass via a single point of contact in the MSI. As 2015 draws close, a lot of details remain unclear.

Finally at a more national level, the Luxembourg Authorities are currently finalising the electronic portal required for this regime. Their aim is to provide a business friendly and pragmatic solution for businesses to be able to register and submit returns, that will also enable them to have an overview of payments and returns submitted in the different Member States. Taxpayers will be able to register under MOSS in Luxembourg or any other Member State as from 1 October 2014, although the effective date of any registration will be at the earliest 1 January 2015.


While the basic rules that were set out in the context of the VAT package looked straight forward enough, the fast growth of the technology and service offerings in the different sectors has meant that in order to implement these VAT changes detailed secondary legislation was essential, together with additional guidelines by way of Explanatory notes.

The legislation has been agreed at an EU level, and it is now for the different Member States to agree on the national legislation that will be required to introduce the changes.

At the date of writing this article, the Luxembourg draft legislation that will implement the terms of the VAT directive that introduce the 2015 changes is currently under discussion12. In particular the draft legislation includes modifications to the definitions of telecommunications services and electronic services, and introduces certain practical aspects for the application of the MOSS regime with Luxembourg as either Member State or Identification or Member State of Consumption.

Due to the fact that Regulations 282/2011 and 1042/2013 have direct effect in Luxembourg, the provisions of these regulations are not included in the draft law. Notwithstanding this, it would be most welcome to businesses if the Luxembourg authorities were to publish guidance in the form of an administrative Circular to further clarify the interpretation of some of these more problematic areas. It is important to note that the European Explanatory notes are not meant to be legally binding, and reflect simply a consensus between Member States. However, we can only hope that the Luxembourg VAT authorities recognise the need for taxpayers to have certainty about particular provisions, and take this into account when deciding whether and to what extent to publish an administrative circular.

With respect to the implementation of the electronic platform required for MOSS, the Luxembourg VAT authorities recently demonstrated the platform to major stakeholders. The VAT authorities gave a clear message that they wish to implement a user friendly and pragmatic business solution that will go beyond the minimum requirements imposed on Member States at a European level.

Arguably though, the successful roll out of MOSS is likely to depend on more than simply the electronic portals being ready and user friendly for taxpayers. In particular it will be important that the larger context be clarified – such as the practicalities for carrying out audits under MOSS, as well as whether or not there will be a requirement for businesses to store and ultimately provide data in a standard format accepted throughout the EU.

And so, as 2015 draws close, the ultimate leap of faith will require a buy in from all – businesses, Member States and tax authorities alike. As such, the new rules should not then be a threat to an ongoing and impressive continued development of the ICT industry.

1: Directive 2008/8/EC

2: Regulation 904/2010

3: Directive 2008/9/EC

4: For example in relation to the long term hire of means of transport

5: Article 58 Directive 2006/112 applicable as of 1 January 2015.

6: telecommunications services, electronically supplied services, the provision of information about particular programmes on demand, the transfer of broadcasting or transmission rights

7: Article 7§1 Council implementing regulation (EU) No 282/ 2011

8: Article 7§2 Council implementing regulation: the definition shall cover in particular: (a) the supply of digitised products generally, including software and changes to or upgrades of software; (b) services providing or supporting a business or personal presence on an electronic network such as a website or a webpage; (c) services automatically generated from a computer via the Internet or an electronic network, in response to specific data input by the recipient; (d) the transfer for consideration of the right to put goods or services up for sale on an Internet site operating as an online market on which potential buyers make their bids by an automated procedure and on which the parties are notified of a sale by electronic mail automatically generated from a computer; (e) Internet Service Packages (ISP) of information in which the telecommunications component forms an ancillary and subordinate part (i.e. packages going beyond mere Internet access and including other elements such as content pages giving access to news, weather or travel reports; playgrounds; website hosting; access to online debates etc.); (f) the services listed in Annex I. Article 7§3 covers those service that do not fall within the definition of electronic services.

9: Article 7 point (t) and (u) of the Council implementing regulation (EU) No 282/ 2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of VAT

10: Article 58 Directive 2006/112

11: Directive 2002/38/EC

12: Bill project n°6642 under discussion before the Budget and Finance Committee