Budget 2009 – Cross border VAT changes re place of supply rules
Significant changes to the VAT treatment of EU cross-border supplies of services will take place from 1 January 2010. These changes will affect all businesses which supply or receive cross-border services. There will also be changes to the process for claiming VAT refunds in EU countries and EC sales lists.
The legislation announced as part of the Budget implements the necessary changes in UK domestic law which will be supplemented by secondary legislation:
The main changes are as follows:
A major re-write of the rules for determining the place of supply of services within the EU. These changes significantly extend the reverse-charge mechanism to cover most business to business supplies. This means that in most cases services will be taxable in the EU member state of the customer.
New reporting obligations for cross-border supplies of services. EC Sales Lists reporting requirements will be extended to include most cross-border supplies of services.
Changes to the time of supply rules for reverse charge services from the time of payment to the earlier of when the service was completedor when payment is made.
New streamlined process for claiming VAT refunds where businesses are charged cross-border VAT. What is known as the ‘Eight Directive’ refund process will be streamlined and an electronic filing procedure introduced.