As of January 2015 services of telecommunications, broadcasting and electronic services provided by third country operators to EU private individuals will be subject to EU VAT.

This change is a consequence of the adoption of the ‘VAT Package’ in 2008. The changes bring the VAT treatment of these services in line with one of the main principles of VAT, in that, as a consumption tax, it accrues to the Member State in which the goods or services are consumed.

This principle, which is already in force for e-services provided by third country operators, will be extended to telecommunication and broadcasting services, as well as to intra-European supplies.

The new rules, which are in line with OECD principles in this respect, are a response to existing distortions of competition. Taxation at the place of establishment of the supplier has been, in the context of services which can easily be provided at distance, detrimental to operators located in EU Member States with a high rate of VAT.

A mini One Stop Shop (MOSS) will be introduced at the same time as a simplification measure and will allow the foreign supplier, rather than registering for VAT in each Member State in which they have a customer, to register, declare and pay the VAT due on supplies of telecommunications, broadcasting and electronic services in other Member States via a single web portal in the Member State of its choice. They will therefore submit once a quarter a single VAT declaration to this administration.

With a view to the changes in 2015, the Commission has drafted a comprehensive Guide to the MOSS, which can be found here. This guide explains to businesses what the new rules are and how they will work in practice.

To find out more about Taxation and Customs Union, click here