From 1 January 2015 significant changes will be introduced in the EU VAT legislation for the provision of services in the areas of telecommunications, broadcasting and electronic services. More specifically, the supply of such services to private individuals and non-business customers will always be taxed in the country where the customer belongs – i.e. the Member State of the customer and not the Member State of the supplier. The adoption of the aforementioned changes was part of the “VAT Package” (Council Directive 2008/8/EC amending Directive 2006/112/EC) for purposes of the proper functioning of the internal market.
Following the changes in the VAT place of supply rules, it was also decided to set up a single electronic portal to allow for the simplified implementation of the new rules (Council Regulation No. 143/2008), namely the mini One Stop Shop (MOSS). The scheme will allow taxable persons to avoid registering in each Member State of consumption. More specific, the application of the scheme will allow taxable persons supplying telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons in Member States in which they do not have an establishment to account for the VAT due on those supplies via a web-portal in the Member State in which they are identified (single point of electronic contact for VAT identification, declaration and payment purposes).
The Member State of identification is the member state in which the taxable person is registered for using the MOSS. For example a Bulgarian company which makes B2C supplies to customers in Romania, Greece and Cyprus may choose the latter as the Member State of identification and will therefore declare and pay VAT in Cyprus for supplies made in the said countries.
The MOSS scheme will be available to taxable persons established in the EU (Union Scheme) and taxable persons not established in the EU (Non Union Scheme). Under the Union scheme, the Member State of identification has to be the member state in which the taxable person has established its business. However, if the taxable person does not have its business establishment in the EU, it can choose any member state in which it has a fixed establishment. Under the non-Union scheme, the taxable person is free to choose its Member State of identification.
Under the Union scheme, the taxable person will maintain the same individual VAT identification number with which it is identified for its domestic VAT returns for the MOSS purposes. Under the non-Union scheme, whereby the taxable person can choose any Member State to be the Member State of identification, the said State will allocate an individual VAT identification number to the taxable person.
A Guide was prepared by the European Commission in October 2013, providing the necessary guidelines for the MOSS scheme in relation to Registration, Deregistration, Exclusion and Quarantine period, VAT groups, VAT returns, Payments and Corrections. The guide even though not final, can provide more thorough understanding and significant insight to the MOSS scheme and its practical application.
Further to the above, a survey was made by Taxand with regards to the invoicing requirements in 2015 for businesses registered in various countries in relation to the provision of services to non-business customers.
According to the findings, taxable persons registered under MOSS in Bulgaria, Croatia and Greece will need to issue invoices to non-business customers.
On the other hand, in Cyprus businesses under MOSS will not need to issue invoices to non-business customers. It should also be noted that according to the report prepared on 26 June 2014 from the Commission to the Council it is recommended that member states refrain from the option to require an invoice on B2C supplies covered by the new place-of-supply rules.
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