VAT on services within EU community
VAT on services is paid at the place where the service has been supplied. This will most often, but not always, be where the service supplier is established. The trader will in those cases account for VAT on his services in the Member State where he is established, applying the VAT rate of that country.
Depending on the nature of the service, VAT may need to be paid in another Member State than that where the supplier is established. This is for example the case with services connected to immovable property; transport of passengers or goods; cultural, artistic, sporting, scientific, educational, and entertainment services.
B2B services [Article 44 of the VAT Directive].
Example 18: The place of supply of services supplied by a company in Salzburg to a business client in Vienna will be Vienna. As the supplier is established in Austria, he will charge Austrian VAT to his client.
Example 19: For accountancy services supplied by a Bulgarian company to a business customer with his place of business in Austria, Austrian VAT must be charged. If the Bulgarian supplier is not established in Austria, the Austrian customer will account for VAT under the reverse charge mechanism.
Example 20: Finnish VAT must be charged (by the customer using the reverse charge procedure) where legal services are supplied by a Polish company to a customer whose place of business is in Sweden but provided to the customer’s fixed establishment in Finland.
Example 21: Advertising services supplied by an Italian company to a public authority in Spain which, because of its intra-Community acquisitions of goods, is identified for VAT purposes, are taxed in Spain using the reverse charge mechanism.
B2C services [Article 45 of the VAT Directive].
Example 22: For consultancy services provided by a supplier established in Lisbon to a private customer who resides in Denmark, Portuguese VAT must be charged.
Example 23: A supplier established in Greece will need to charge Greek VAT to a business customer established in Romania who acquires legal services to be used for his private purposes.
However, in order to ensure that VAT receipts accrue to the Member State of consumption, several exceptions have been introduced:
B2B services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment and similar events will be taxed at the place where those events actually take place [Article 53 of the VAT Directive]
Example 34: When an Irish company for business purposes pays for the entry to an opera in Verona, the ticket will contain Italian VAT. That applies whether the ticket is bought on-line or at the ticket booth.
Example 35: For a conference organised in Stockholm for participants paying a fee to attend, Swedish VAT is charged.
Example 36: The work of drawing up a scientific report by the University of Cologne for a pharmaceutical company in Denmark will be subject to Danish VAT and accounted for by the Danish company (because it is not a service in relation to the admission to an event). This service will instead be taxed under the general rule of Article 44.
B2C services relating to cultural, artistic, sporting, scientific, educational, entertainment and similar activities will be taxed at the place where those activities actually take place [Article 54 of the VAT Directive]
Example 37: A ticket bought by a tourist going to England for a football match played in Liverpool will contain UK VAT.
Example 38: A student living in Antwerp who follows a management course in a business school in the Hague will be charged Dutch VAT.