taxud/2414/08 - European Commission - Europa

- Under Article 46 of Directive 2006/112/EC as amended by Council Directive
2008/8/EC 12 and applicable from 1 January 2010, the place of supply of services
rendered to a non-taxable person (B2C) by an intermediary acting in the name
and on behalf of another person shall be the place where the underlying
transaction is supplied.
Against this background the Commission services have arrived at the conclusion that an
option for taxation being with the economic operator could work in practice where the
following conditions are fulfilled:
- The right to exercise the option should be with the supplier who must be able to
behave like any other ordinary economic operator supplying taxable services;
- the option should either be irreversible or at least binding for a longer period for
preventing unnecessary administrative costs for fiscal administrations;
- exercising the option should lead to a situation where the entire business activities
of the taxable person concerned become taxable, allowing to identify – in
particular in cross-border scenarios - without doubt, that taxable services are
supplied;
- there should be an additional reporting mechanism in Article 226 No 11 of
Directive 2006/112/EC which ensures that the invoice clearly shows that the
supplier has opted for taxation (with registration no), supplies fully taxable
services and the reverse charge mechanism applies. One might also consider an
additional exchange of information between the Member States.
- One might consider an additional joint liability of the supplier for VAT, where he
fails to comply with his invoicing and reporting obligations.
(ee) Cost-sharing
The second solution respecting the principle of tax neutrality was co-operation on a cost
sharing basis. This approach has absolutely nothing to do with VAT grouping according
to Art. 11 of the VAT Directive (despite similar names in some languages)! Basically it
just allows a group of economic operators to pool their investments.
Example 8: Three insurance companies need new software tools to comply with new
regulatory requirements. They establish an independent group. This group buys the
software with VAT from an independent provider. The software is then re-distributed
from the group to its three members; each member will pay 1/3 of the price for the
software. In fact the group itself will not charge any VAT to its members. Where the
corresponding Member States agree, the group and one or more of its members can be
established in different Member States.
The following reasons have motivated the Commission services to propose this solution:
12 OJ L 44 page 11 of 20.02.2008
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