Telecommunications, broadcasting and electronic (TBE) services - new rules (2015)
Customer location and presumptions
Why do I need to know where the customer is located?
The place of supply in respect of TBE services to customers is the place in which the customer is established, has a permanent address or usually resides.
You should be aware of the rules and rates of the Member State in which the service is supplied to ensure the correct VAT treatment. The European Union (EU) Commission has developed a web portal which provides this information.
How do I identify the customer's location?
Supplies of TBE services are usually supplied remotely so it can be difficult for you, the supplier, to identify where the customer is established, has his permanent address or usually resides. To try to simplify the rules for some supplies, you can make a ‘presumption’ about the place where the supply is to be taxed. This presumption gives legal certainty to you without imposing a significant burden in identifying the place of taxation.
Generally, one specific presumption is sufficient unless there is contradictory information that points to a different customer location. (See exception to the specific presumption rule).
Specific presumptions for customer location
Types of TBE services covered by the presumption rule include where the service is supplied:
- At a telephone box, a telephone kiosk, a Wi-Fi hot spot, an internet café, a restaurant or a hotel lobby. For example the customer location is the place where the telephone box is located. This rule applies to the initial service only (that is the connection to the telecom or internet service) and not to any ‘over the top services’ delivered using the connection. ‘Over the top services’ are explained below under the last heading
- On board transport travelling within the EU (for example by ship, or train), the customer location is the Member State of departure for the journey:
- through an individual customer’s telephone landline, the customer location is the place where the customer’s landline is located
- through a mobile phone, the customer location is identified by the country code of the SIM card
- through a decoder without use of a fixed land line, the customer location is where the decoder is located or the postal address where the viewing card is sent.
Exception to the specific presumption rule
You must use the specific presumption unless you have three pieces of non-contradictory evidence indicating that the customer resides in a different Member State to that indicated by the presumption. In this case, you may override the presumption.
General presumptions for customer location
Where the services are supplied other than in the circumstances listed above, the supplier must determine the place of supply using two pieces of non-contradictory evidence.
‘Over the top services’ and how they are treated
‘Over the top services’ are services that can only be received once the connection to the internet or communications network is established (for example the download of an application (app) onto a mobile phone).
The specific presumptions can only be used if the supplier knows with certainty how the customer received the service. Usually the supplier will not know with certainty how the customer received an ‘over the top service’. Where this is the case, two pieces of non-contradictory evidence will be required to determine the place of supply. (See Presumptions – evidence requirements).
Next: Presumptions — evidence requirements