Electronically supplied services
What is an electronically supplied service?
An electronically supplied service is a service that is:
- delivered over the internet (or an electronic network which is reliant on the internet, or similar network, for its provision)
- is heavily dependent on information technology for its supply. The service is essentially automated involving minimal human intervention and, in the absence of information technology, does not have viability.
- digitised products (such as software and changes to, or upgrades of, software)
- services which provide, or support, a business or personal presence on an electronic network (for example, a website)
- services automatically generated from computer via the internet, or an electronic network, in response to specific data input by the customer
- other automated services which are dependent on the internet, or an electronic network, for their provision.
The place of supply for electronically supplied services depends on who you are supplying.
Business to Business (B2B)
The normal B2B place of supply rules apply.
Business to Consumer (B2C)
Subject to the B2C €10,000 threshold, the place of supply is where the customer:
- is established
- has their permanent address
- usually resides.
For cross border supplies, the supplier must either:
- register in the Member State of their customers
- use the One-Stop Shop (OSS) to register in their own Member State and pay the Value-Added Tax (VAT) due on these supplies.
B2C €10,000 threshold
Where the value of Telecommunications, Broadcasting and Electronic (TBE) services supplied to non-taxable customers is less €10,000 in the current and preceding calender year, the supplies will be subject to domestic VAT.
This threshold is subject to the following conditions:
- the supplier is established, has a permanent address or is residing in, only one Member State
- the supplier supplies TBE services to customers who are established, have a permanent address or are residing in, another Member State
- the value of the TBE services and intra-Community distance sales supplied to other Member States is not more than €10,000 in the current and preceding calendar year.
The supplier may decide to apply the general place of supply rules to their supplies. If this option is exercised, they will either register for VAT in the Member State to which the supplies are made, or register for the Union scheme One-Stop Shop.
Where a supplier opts to apply the general place of supply rules, they will be bound by that decision for two years.
As soon as the €10,000 threshold is exceeded, the supplier cannot avail of the exception for the place of supply rules. The general rules in relation to place of supply will apply to all supplies after the threshold is exceeded. The VAT is due in the Member State in which the customer is based.
The €10,000 threshold does not apply to supplies of TBE services made by a supplier who is not established in the European Union, or to distance sales of imported goods.
Further guidance contains more detailed information on the VAT treatment on Telecommunications, broadcasting and electronic (TBE) supplied services.