VAT Flash: Political agreement – Ecofin Council – B2C

Written by Patrick Boone 1 July 2013


We are happy to announce that the Ecofin Council (“ECOFIN”) reached political agreement on the proposal for a VAT Implementing Regulation as regards the place of supply of services (including B2C 2015) in a meeting in Luxembourg last Friday 21 June.

Furthermore, a package of two anti-VAT fraud measures was adopted without discussion:

  • a Quick Reaction Mechanism (QRM), which will make it possible for Member States to take immediate measures in cases of sudden and massive VAT fraud;
  • a Reverse Charge Mechanism (RCM) allowing Member States to apply, on a temporary basis, a reversal of the liability of VAT payment to predetermined categories of goods and services, including mobile phones and tablet computers.

Implementing Regulation COM(2012)763 as regards the place of supply of services (including B2C 2015)

Implementing Regulation COM(2012)763 amends/complements Council Regulation 282/2011/EU with regard to the place of supply of services. It provides for binding new measures and further clarifications to ensure that the new VAT rules governing the place of supply of B2C telecommunications, broadcasting and electronic services are applied uniformly within the EU.

The provisions relating to the B2C 2015 VAT changes will apply as from 1 January 2015.

With this final piece of EU implementing legislation now being adopted, businesses that will be affected by the B2C 2015 VAT changes should now urgently start their scoping and implementation project.

Besides, the Implementing Regulation also contains provisions in respect of the definition and scope of services connected to immovable property and the place of supply of distribution of event tickets.

The provisions in respect of services connected to immovable property will only apply as from 1 January 2017.

Quick Reaction Mechanism

The purpose of this proposal is to introduce a procedure in the VAT Directive that would provide a legal basis for Member States to take immediate measures in the fight against sudden and massive fraud. This is called the “Quick Reaction Mechanism”.

The proposal has been fundamentally changed and was adopted by ECOFIN on 21 June.

The amended Directive will enter into force on the twentieth day following its publication in the Official Journal of the EU and it will apply until 31 December 2018.

Reverse Charge Mechanism

Also situated in the fight against VAT fraud is the proposal for a Council Directive amending the VAT Directive as regards an optional and temporary application of the reverse charge mechanism. The reverse charge mechanism will be introduced for a pre-defined list of goods and services that, according to recent experience, are particularly prone to fraud. In this respect, goods and services prone to fraud will be added in article 199a of the VAT Directive.
The proposal was adopted by ECOFIN on 21 June 2013.
The amended Directive will enter into force on the twentieth day following its publication in the Official Journal of the EU and it will apply until 31 December 2018.

If you have any questions in this respect, please contact your regular PwC VAT adviser or one of us.

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