The VAT Package – It’s on its way!

Tuesday, November 24, 2009

by Nick Ryan

With effect from 1 January 2010, the majority of measures adopted by the ECOFIN Council in respect of the place of supply rules for services encompassing the additional compliance and reporting obligations to be applied by their introduction and the new procedures to be implemented for the making of 8th Directive refund claims will be effective. These changes have been collectively referred to as the “VAT Package”.

With only just over a month to go, time is running out in ensuring your businesses’ VAT accounting and reporting systems can manage these changes correctly.

There is too much information to cover in this blog post and we can send you a detailed information note if required (please contact us by email for this) but the key issues to note are:

For B2B services, under the VAT Package, the general rule will switch from the place where the supplier is established to the place where the recipient is established. There are a number of exceptions to the rule including services made in connection with immovable property, passenger transport and cultural, artisitic, scientific, sporting and entertainment services.

For B2C services, the general rule will continue to apply i.e. the place of supply of services is the place where the supplier is established (though the current exceptions provided to this rule will continue to apply).

There will be an option for Member States to introduce “use and enjoyment” rules for supplies of services where the place of supply is outside the EU but the use and enjoyment is in the EU or, where the supply is within the EU but used and enjoyed outside of the EU.

The VAT Package will replace the existing refund machanism through the 8th Directive and introduces a number of key changes including, a detailed timetable for processing claims, a simplified, electronic procedure, an extension to the current deadline for submission that provides businesses with more time to prepare and submit refund claims and, where Revenue delay in processing claims, the potential for businesses’ to seek entitlement to interest in lieu of the delay experienced.

The new rules result in a need to extend the reporting requirements for VIES and Intrastat by businesses to encompass supplies of services. This can result for some businesses in additional VAT reporting and accounting requirements in order to meet its complinace obligations. Therefore businesses need to assess their current VAT accounting and reporting sytems to assess what changes etc. they need to implement by 1 January 2010.

Should you require any assistance in cosnsidering how these changes impact on your business, what steps you need to take, would like to share your experiences or have any questions then please either make a comment to this blog or contact us.

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