2015 changes to the place of supply rules

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Information about 2015 changes to the place of supply rules
Finance

Published on March 7, 2014

Author: GrahamBrearley

Source: slideshare.net

Description

A slide presentation on the 2015 place of supply changes. Affected businesses need to determine where their customer belongs.

2015 Changes to the Place of Supply Rules Locating the Customer Karen Robb VAT Partner March 2014 © 2014 Grant Thornton UK LLP. All rights reserved.

Background 1 January 2015 – changes to the place of supply rules for supply of Telecommunications, Broadcasting and Electronic services Place of supply = where the customer "is established, has his permanent address or usually resides" © 2014 Grant Thornton UK LLP. All rights reserved. Supply is on a business to consumer (B2C) basis 7 March 2014 = 300 days to go Lots to do

Background continued Suppliers of telecoms services Web hosting Suppliers of 'electronic' services such as: Music and video downloads Internet access © 2014 Grant Thornton UK LLP. All rights reserved. Downloaded software Affected businesses Suppliers of broadcasting services

Place of supply Determination of the correct place of supply for every transaction – very important if tax is to be paid to the correct Member State Affected businesses need to take active steps now © 2014 Grant Thornton UK LLP. All rights reserved. Where does customer 'belong'? – implementing regulations stipulate different rules for different services Can existing systems capture and retain information?

Where does the customer belong? - 1 Presumptions Article 24a Supplies of TBES where physical presence of the customer is required eg telephone boxes, WiFi hotspots, internet café etc © 2014 Grant Thornton UK LLP. All rights reserved. Customer is presumed to be established at the location of the service (ie where the phone box / kiosk / hotspot is actually located)

Where does the customer belong? - 2 More presumptions Supplies of TBES: Through a decoder eg satellite TV Article 24b Where decoder is located or where viewing card was sent Through a mobile network Through a fixed phone line © 2014 Grant Thornton UK LLP. All rights reserved. Place of installation of the line Place identified by the country code of the customer’s telephone number

Where does the customer belong? - 3 Even more presumptions Billing address of the customer © 2014 Grant Thornton UK LLP. All rights reserved. Payment details Country code of the customer’s mobile phone number Location of the customer’s fixed land line Article 24c Supplies not covered by articles 24a or 24b: determined by the supplier based on two items of noncontradictory evidence Geolocation (IP address of the customer’s device) Other commercially relevant information

Where does the customer belong? Rebuttal of presumptions For services covered by Article 24a (place of physical location) and Supplier can rebut a presumption: For services covered by Article 24b involving a fixed land line, mobile network or a decoder © 2014 Grant Thornton UK LLP. All rights reserved. On the basis of three items of non-contradictory evidence indicating that the customer belongs elsewhere Supplier 'may rebut' – but is not obliged to rebut

Rebuttal of presumptions Tax Authority A Tax Authority may rebut presumptions made by the supplier where there are indications of misuse or abuse by the supplier © 2014 Grant Thornton UK LLP. All rights reserved. Tax Authority cannot simply impose a preferred location – there has to be an indication of abuse or misuse Customer has no say in the matter – cannot rebut any presumptions made by either supplier or Tax Authority

Evidence for identification of customer's location Billing address of the customer Article 24c Supplies not covered by articles 24a or 24b: determined by the supplier based on two items of noncontradictory evidence Bank details (location of branch used for payment or billing address held by bank) Other commercially relevant information © 2014 Grant Thornton UK LLP. All rights reserved.

Evidence for identification of customer's location and for rebuttal of presumptions Billing address of the customer IP address of the device used by the customer (or any method of geolocation) Bank details (location of bank account used to make payment) Mobile Country code on SIM card used by the customer Location of fixed land line through which service supplied and Other commercially relevant information © 2014 Grant Thornton UK LLP. All rights reserved.

Transitional arrangements If the tax point for the supply occurs prior to 1 January 2015 Place of supply is determined by reference to supplier's establishment - regardless of when the service completes Place of supply is determined by reference to the customer's establishment regardless of when the service commences © 2014 Grant Thornton UK LLP. All rights reserved. If the tax point for the supply occurs on or after 1 January 2015

Compliance with local rules in Member States The 2015 place of supply changes for B2C services require suppliers to determine the place of supply © 2014 Grant Thornton UK LLP. All rights reserved. Suppliers must also comply with obligations imposed in Member State of supply For example – the UK does not require a tax invoice to be issued to non-business customers but Italy does

Lots to do Urgent need to: • establish systems for capturing and storing customer location • establish local rules in Member State where supplies take place Affected businesses have lots to do and not a lot of time to do it! © 2014 Grant Thornton UK LLP. All rights reserved. • Grant Thornton can help with these projects. Offices and contacts in all Member States

Grant Thornton Karen Robb Partner 020 7728 2556 Karen.Robb@uk.gt.com © 2014 Grant Thornton UK LLP. All rights reserved.

© 2014 Grant Thornton UK LLP. All rights reserved 'Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This information has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of this material. © 2014 Grant Thornton UK LLP. All rights reserved.

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