taxud/2414/08 - European Commission - Europa

taxable person which is located in a different place, the place of supply is where
that fixed establishment is located (second sentence of Article 44). Where such
B2B supplies are cross-border, Articles 196 and 192a provide that the reverse
charge mechanism applies with the recipient taxable person becoming the person
liable for VAT.
Example 4: Bank (A) established in France supplies financial services to another
bank (B) established in the UK (B2B). The place of supply is in the UK and B
becomes the person liable. As long as the service is exempt from VAT, no
problems arise. However, this changes if A opts for taxation. In that case A will
invoice without VAT because it is B who needs to report and pay VAT to the UK
tax authorities. B and the UK tax authorities will need to know that A has opted
for taxation, supplies a fully taxable service and that B must report VAT on this
supply to the UK tax authorities (It is possible that B has also opted for taxation,
which might generate a right to deduct for the input VAT which he reports on the
supply from A).
Example 5: Bank (A) established in France supplies financial services to a
permanent establishment located in France of another bank (B) established in the
UK (B2B). The place of supply is in France because the permanent establishment
is located in France and A is the person liable in accordance with the normal
VAT rules. B will recover the input VAT invoiced by A in accordance with the
normal rules.
- Under Article 45 of Directive 2006/112/EC as amended by Council Directive
2008/8/EC the place of supply of financial and insurance services to non-taxable
persons (B2C) will be where the supplier has established his business. However,
if those services are supplied by a fixed establishment of the supplier located in a
different place, the place of supply is where that fixed establishment is located
(second sentence of Article 45).
Example 6: Bank (A) established in France supplies financial services to a nontaxable
person (private consumer) (B) established in the UK (B2C). The place of
supply is in France and A is the person liable. In the case of A opting for taxation,
A will thus invoice B with French VAT which B, being a consumer, cannot
recover.
Example 7: Bank (A) established in France supplies financial services via its
permanent establishment located in the UK to a non-taxable person (private
consumer) (B) established also in the UK (B2C). The place of supply is in the UK
because the p.e. is located in the UK, with A being the person liable in
accordance with the normal VAT rules. In the case of A opting for taxation, A
will thus invoice B with UK VAT which B, being a consumer, cannot recover.
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