Summary

Legal basisisis

Changes to the EU VAT rules referring to the place of supply of telecommunications, broadcasting and electronic services will enter into force on January 1, 2015. Starting with this date, these services supplied by a business to a final consumer (B2C) will be taxable in the country where the customer is established or has his permanent address or usual residence (hereinafter "Member State of consumption") regardless of where the taxable person supplying these services is established (Article 58 of the VAT Directive 2008/8/EC of 12 February 2008 amending the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax).

The transposition into the national legislation on the provisions of the article 5 of the Directive 2008/8/EC was approved by the Emergency Ordinance no. 8 of February 28 2014 amending the Tax Code.

The specific EU regulations:

Council Directive 2008/8/EC - place of supply of services (see Article 5)

Council Implementing Regulation (EU) No 1042/2013 - place of supply of services

Council Implementing Regulation (EU) No 967/2012

Commission Implementing Regulation (EU) No 815/2012  

           

M1SS Scope

To support the businesses supplying telecommunications, broadcasting and electronic services in more countries, a new special scheme known as the Mini One Stop Shop (M1SS) will come into operation on January 1, 2015.

The M1SS scheme will allow companies to register, submit returns and pay the relevant VAT due to the Member States of Consumption through the web portal of the Member State of Identification (typically the Member State in which the business has its business establishment). The simplification consists in the opportunity of the business not to register in all the Member States where it is liable to pay VAT, but to benefit of the electronic services through the web portal of the Member State of Identification. Also, the business will be taxed at the VAT rate applicable in the consumer’s Member State.

Use of the M1SS will be optional and it will be available both to businesses with establishments in the EU (the EU scheme) and to those established outside the EU (the non-EU scheme). The current VAT on E-Services scheme (VOES) which applies to non-EU businesses supplying e-services in the EU will be replaced by the M1SS.

Further information is available in the M1SS Scheme Briefing, and in the Guide to the Mini One Stop Shop available on the website of the European Commission. See also the Explanatory Notes published by the European Commission relating to the new EU legislation (Council Implementing Regulation (EU) No 1042/2013) in order to assist tax administrations and businesses in preparing for these changes referring to the place of supply.

In addition, recommendations on the coordination of audit of the MOSS are in the process of being produced, with the intention that those recommendations of relevance to businesses will be published on the DGTAXUD website.

Further information on the M1SS implementation, including the procedure regarding the special scheme will be published on the NAFA website.