In Germany, the Bundestag and Bundesrat in July 2014 approved a law to transpose, into German law, an EU Directive on the value added tax (VAT) treatment of electronically supplied services through a telecommunications net, an interface, or a portal. The new treatment generally applies VAT to the place of supply of telecommunications services, radio, and television when supplied to non-business entities.
The “place of supply” is the place where the service recipient is a resident (previously, the place of the supplier determined the rules for application of VAT).
Under the German law, there is an exception if the services are supplied by a business that is not a resident of the European Community, but the services are in fact used in Germany. For example, if a business located in a non-EU country provides telecommunication services to a French resident who, in turn, uses the services during holiday in Germany (e.g., a call on a mobile phone to home), the place of supply would not be the residence of the customer (France) but in this situation, would be Germany (the place where the services are consumed).
However, under EU law changes, the place of supply may only be permitted as the tax location if the customer is a resident outside the EU. Thus, the German law provision would appear to be interpreted in a restrictive way. Whether there will be further clarifying guidelines remains to be seen.
Read a July 2014 report prepared by the KPMG member firm in Germany: MwST.VAT Newsletter (July 2014)
Other topics discussed in this report concern:
- Case law from the BFH and the Court of Justice of the European Union, including cases concerning input apportionment for mixed-use buildings
- Input VAT deduction and VAT treatment for vehicles
- Apportionment for payments of simultaneously issued print and electronic newspapers and books