Amendments to VAT place of supply rules on services
As from 1 January 2015 the place of supply (i.e. where vat is due) of certain services will change.
These will come into force by a decision of the Council Directive 2006/112/EC and amended by
The change in the place of supplies rules will ONLY affect the sales transactions done between a
vat registered seller (business) to non vat registered buyer (consumer). Such transactions are often
referred as B to C.
Business to Business (B to B) transactions will not be affected by this change.
Which services will be affected?
• Telecommunications (e.g. fixed & mobile telephone, internet access)
• Electronic supplied services (e.g. website/page hosting, automated maintenance of
programmes, online data warehousing, software downloads, search engines, banner ads,
music/movie downloads, game downloads, automated online games, remote gaming).
Place of supply rules on these type of services as from 1 January 2015
MALTA CO - B to B; B to C - Business/Consumer (Maltese) = Place of Supply Malta
MALTA CO - B to B - Business EU (Vat Registered) = Place of Supply Seller's country
MALTA CO - B to C - Consumer EU (Non Vat Registered) = Place of Supply Buyer's country
Implications & considerations of the amendments (B to C transactions)
• The seller should start charging the Vat of the customer's country. This will mean charging different vat rates according to the vat rates of each country.
|Member state||Standard Vat rate (%)||Member state||Standard Vat rate (%)|
• Thus the seller other than Malta should register for vat also in each EU customer's country and should comply with the vat obligations (including paying vat) of each country. A simplified online solution was designed by the EU to avoid multiple vat registrations and facilitate the compliance requirements. This should be submitted on a quarterly basis.
• Existing contracts with customers might need to be amended.
• Details of clients must be more accurate and updated to establish in which country the clients are situated.
• There will be more compliance cost in order to abide with VAT requirements of different countries. One should consider if commercially still makes sense to trade B to C transactions.
• How will these changes impact pricing and profits? Would you introduce variable pricing according to where your customers are established?
The change in a practical example:
MALTA CO Electronic supplied services to consumer(s) Italian Non vat registered consumers PLACE OF SUPPLY
ITALY i.e. Charging Italian Vat
Some solutions to minimize the impact
• Obtain accurate information about your clients that are based within EU. Such details should include an EU valid vat number if any.
• Amend your IT systems if your billing is issued automatically to your clients. Remember that different vat rates should be charged according to where your EU clients (B to C transactions) are established.
• Obtain advice about the vat rates of your customers' country and if any exemptions apply.
• Make use of the EU vat reporting system (MOSS) through the Malta Vat e-id services for compliance.
• Start preparing for these changes from now.
How can 3a help
• Provide assistance to help you understand the changes of the Vat rules.
• Assistance with the setup of the e-id Vat services and MOSS system.
• Preparing and submission of the MOSS declarations on a quarterly basis.
• Guide you during the whole process of implementation
For more information, kindly contact: