European Union: EU VAT Place Of Supply. The New Rules Of Telecommunications, Broadcasting And Electronic Services

Last Updated: 23 December 2014
Article by Demetra Constantinou


As of 1st January 2015, supplies of telecommunications, broadcasting and electronically supplied services by suppliers located in the EU to private consumers and non-taxable customers (i.e. B2C those that are not deemed to be "in business" for VAT purposes) will be taxable in the Member State where the customer is established, or has a personal address or normally resides.

It should be noted that this is a requirement irrespective of where the supplier is established or usually resides and will need to account for VAT at the applicable rate in that Member State having in mind that no minimum thresholds will apply and thus supplies to just one customer in one Member State will trigger a VAT Registration requirement in that Member State.

Until the end of 2014, business to final consumer (B2C) supplies by EU businesses are taxed in the country of the supplier.

The underlying reasons for these changes were to bring the VAT treatment of these services in line with one of the main principles of VAT that, as a consumption tax, revenues should accrue to the Member State in which goods or services are consumed and also to provide a level playing field removing the competitive advantage that businesses established in Member States applying lower VAT rates have over businesses established in other Member States.


'Broadcasting services' shall include services consisting of audio and audio-visual content, such as radio or television programmes which are provided to the general public via communications networks by and under the editorial responsibility of a media service provider, for simultaneous listening or viewing, on the basis of a programme schedule.

'Electronically supplied services' (hereinafter 'electronic services') shall include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

'Telecommunications services' shall mean services relating to the transmission, emission or reception of signals, words, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception, with the inclusion of the provision of access to global information networks.


Businesses making cross border supplies of telecommunications, broadcasting and electronically supplied services on a B2C basis as follows:

  • Providers of telecommunication services (fixed and mobile telephone , telephone through the internet, sms, paging services, audiotext services, facsimile, telegraph, telex, private network connections etc)
  • Providers of broadcasting (television and radio programmes through radio, television network or similar electronic network-IP streaming)
  • Providers of electronic services (website hosting, software downloads, cloud business, online gaming, certain e-learning, online payment services, etc)


Currently, a company located in one of the European Union countries (EU) providing telecommunication, broadcasting or electronic services to private customers (B2C) in one of the EU countries, must pay VAT in the EU country of its establishment. This means that if a company is located in Cyprus and supplies telecommunication, broadcasting or electronic services to private customers in the EU, it has to pay 19% Cyprus VAT for the revenue collected from these customers in the different EU countries.


Based on this new VAT rule, an EU Company must pay VAT in the EU country of establishment of its customers. In the above example, the Cyprus Company will have to pay different VAT rates applicable in each of the EU countries where its private customers are located. This means for example that the Cyprus company will need to pay 19% Cyprus VAT for the fees collected from its Cyprus private customers, 25% Swedish VAT from its Swedish private customers and 18% Maltese VAT from its Maltese customers, etc.

In principle this new rules mean that if you have private customers in each of the 28 EU countries, you will need to register for VAT in each of the 28 EU countries, file VAT returns in each of these 28 countries and charge local VAT with different rates in each of the 28 countries. Such a rule actually already applies towards non - EU service providers.


To reduce the VAT administrative burden for the EU service provider as from 1 January 2015, the new VAT rules provide the possibility for the EU service provider to apply for the so-called Mini One Stop Shop (MOSS) scheme. Under this MOSS scheme, the EU service provider can under certain conditions opt to report its EU VAT liability in one of the EU country only. For Cyprus service providers, this means that under certain strict conditions they can opt to file the VAT returns for their supplies to private customers in the 28 EU countries with the Cyprus tax authorities only. It should however be noted that the Cyprus service provider must take into account the applicable VAT rates in the countries of the buyers for reporting and payment of the VAT due.

As mentioned above, MOSS is an optional scheme for businesses and a business may choose to register in each EU Member State if it wishes. However, if MOSS is used then it must be applied in all applicable Member States (it is not optional on an individual Member State by Member State basis). The only exception to this is when a business also has an establishment in another EU Member State. In that instance, those supplies should be declared on a domestic VAT return in that country, not via MOSS.


Identifying the location of the customer is crucial as the supplier will charge the customer the VAT applicable rate of that Member State. As in many situations it is practically impossible to determine the place of consumption with certainty and in order to provide both clarity and certainty on this point, the EU regulations contain a number of presumptions which will have legal effect in all 28 EU Member States. The first step in this process will likely involve determining if any of the presumptions laid down in the implementing regulations apply. There are some sets of conditions which, if met, can be relied upon to determine where a customer belongs:

  • Supplies in combination with provision of accommodation

Where telecommunication, broadcasting or electronic services are provided in combination with the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or camping sites the services are deemed to be supplied at the place where the accommodation is located.

  • Physical location

If a supplier of telecommunications, broadcasting or electronic services provides services at a fixed location such as:

  • a telephone box;
  • a telephone kiosk;
  • a wi-fi hot spot;
  • an internet café;
  • a restaurant; or
  • a hotel lobby

where the physical presence of the recipient at that location is needed for the service to be provided, the place of supply will be presumed to be that location.

If this is on board a ship, aircraft or train carrying out a passenger transport operation, the country of the location shall be the Member State of departure of the passenger transport operation.

  • Fixed line

For telecommunications, broadcasting or electronic services supplied via their fixed land line, the presumption shall be that the place of supply is the place of installation of the fixed land line.

  • Mobile networks

For telecommunications, broadcasting or electronic services supplied through mobile networks, the presumption shall be that that the place of supply is the Member State identified by the mobile country code of the SIM card used when receiving those services.

  • Decoder/Viewing cards

For telecommunications, broadcasting or electronic services, for which the use of a decoder or similar device or a viewing card is needed and where a fixed land line is not used, the presumption is that the place of supply is the place where that decoder or similar device is located, or if that place is not known, the place to which the viewing card is sent with a view to being used there.

If none of the presumptions are relevant then the supplier will need to obtain two pieces of converging evidence from the following list to support where the customer is resident:

  1. the billing address of the customer;
  2. the Internet Protocol (IP) address of the device used by the customer or any method of geolocation;
  3. bank details such as the place where the bank account used for payment is and the billing address of the customer held by that bank;
  4. the Mobile Country Code (MCC) of the International Mobile Subscriber Identity (IMSI) stored on the Subscriber Identity Module (SIM) card used by the customer;
  5. the location of the customer's fixed land line through which the service is supplied to him; and
  6. other commercially relevant information.


  • Analyse the effect of the 2015 changes on business activities
  • Setting up the correct data collection infrastructure to determine the location of your customers in order to enable you to report for the correct VAT rates
  • Identify any changes that may need to be implemented to comply with the new rules
  • Advise on the types of information and systems that may need to be implemented to correctly capture the place of supply
  • Identify additional compliance responsibilities that might be created as a result of the new rules
  • Assist with identifying necessary changes to accounting, billing and invoicing systems
  • Assist businesses to understand and meet the invoicing requirements of other EU Member States
  • Assist with the registration for the Mini One-Stop Shop scheme
  • Completion and submission of the electronic quarterly VAT Returns
  • Payments of the VAT payable amount through bank transfers
  • Advise businesses on the advantages or disadvantages of the Mini One-Stop Shop scheme and determine whether this would outweigh any benefits of retaining separate VAT registrations in other Member States

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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