The document summarizes changes to the place of supply rules for telecommunications, broadcasting, and electronic services that take effect on January 1, 2015. Specifically, the place of supply will be determined by where the business customer is established rather than the supplier's location. Suppliers must implement systems to capture customer location data and comply with the tax rules in each European Union member state where they have customers. Businesses affected by these changes have significant work to do before the January 2015 deadline to update their systems and processes.

1. 2015 Changes to the Place of Supply Rules
Locating the Customer
Karen Robb
VAT Partner
March 2014
© 2014 Grant Thornton UK LLP. All rights reserved.

2. Background
1 January 2015 – changes to
the place of supply rules for
supply of Telecommunications,
Broadcasting and Electronic
services
Place of supply = where the
customer "is established, has his
permanent address or usually
resides"
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Supply is on a
business to consumer
(B2C) basis
7 March 2014 =
300 days to go
Lots to do

3. Background continued
Suppliers
of
telecoms
services
Web
hosting
Suppliers of
'electronic'
services such
as:
Music and
video
downloads
Internet
access
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Downloaded
software
Affected
businesses
Suppliers of
broadcasting
services

4. Place of supply
Determination of the correct
place of supply for every
transaction – very important if
tax is to be paid to the correct
Member State
Affected businesses need
to take active steps now
© 2014 Grant Thornton UK LLP. All rights reserved.
Where does customer 'belong'?
– implementing regulations
stipulate different rules for
different services
Can existing systems capture
and retain information?

5. Where does the customer belong? - 1
Presumptions
Article
24a
Supplies of TBES where
physical presence of the
customer is required
eg telephone boxes, WiFi
hotspots, internet café etc
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Customer is presumed to be
established at the location of
the service (ie where the phone
box / kiosk / hotspot is actually
located)

6. Where does the customer belong? - 2
More presumptions
Supplies of
TBES:
Through a
decoder eg
satellite TV
Article
24b
Where decoder is
located or where
viewing card was
sent
Through a
mobile
network
Through a
fixed phone
line
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Place of
installation
of the line
Place identified
by the country
code of the
customer’s
telephone
number

7. Where does the customer belong? - 3
Even more presumptions
Billing address
of the customer
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Payment details
Country code of
the customer’s
mobile phone
number
Location of the
customer’s fixed
land line
Article
24c
Supplies not covered by
articles 24a or 24b:
determined by the supplier
based on two items of noncontradictory evidence
Geolocation (IP
address of the
customer’s
device)
Other
commercially
relevant
information

8. Where does the customer belong?
Rebuttal of presumptions
For services covered by
Article 24a (place of
physical location) and
Supplier can
rebut a
presumption:
For services covered by
Article 24b involving a fixed
land line, mobile network or
a decoder
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On the basis of three items
of non-contradictory
evidence indicating that the
customer belongs
elsewhere
Supplier 'may rebut' – but is
not obliged to rebut

9. Rebuttal of presumptions
Tax Authority
A Tax Authority
may rebut
presumptions
made by the
supplier
where there
are indications
of misuse or
abuse by the
supplier
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Tax Authority cannot simply impose
a preferred location – there has to
be an indication of abuse or misuse
Customer has no say in the matter
– cannot rebut any presumptions
made by either supplier or Tax
Authority

10. Evidence for identification of customer's location
Billing address of the
customer
Article
24c
Supplies not covered by
articles 24a or 24b:
determined by the supplier
based on two items of noncontradictory evidence
Bank details (location of
branch used for payment or
billing address held by bank)
Other commercially relevant
information
© 2014 Grant Thornton UK LLP. All rights reserved.

11. Evidence for identification of customer's location and
for rebuttal of presumptions
Billing address of the
customer
IP address of the device
used by the customer (or
any method of geolocation)
Bank details (location of
bank account used to
make payment)
Mobile Country code on
SIM card used by the
customer
Location of fixed land line
through which service
supplied and
Other commercially
relevant information
© 2014 Grant Thornton UK LLP. All rights reserved.

12. Transitional arrangements
If the tax point
for the supply
occurs prior to 1
January 2015
Place of supply is determined by
reference to supplier's
establishment - regardless of
when the service completes
Place of supply is determined
by reference to the
customer's establishment regardless of when the
service commences
© 2014 Grant Thornton UK LLP. All rights reserved.
If the tax point
for the supply
occurs on or
after 1 January
2015

13. Compliance with local rules in Member States
The 2015 place of
supply changes for
B2C services require
suppliers to
determine the place
of supply
© 2014 Grant Thornton UK LLP. All rights reserved.
Suppliers must also
comply with
obligations imposed
in Member State of
supply
For example – the UK
does not require a tax
invoice to be issued to
non-business
customers but Italy
does

14. Lots to do
Urgent need to:
• establish systems for capturing
and storing customer location
• establish local rules in Member
State where supplies take place
Affected businesses
have lots to do and not a
lot of time to do it!
© 2014 Grant Thornton UK LLP. All rights reserved.
• Grant Thornton can help with
these projects. Offices and
contacts in all Member States

15. Grant Thornton
Karen Robb
Partner
020 7728 2556
Karen.Robb@uk.gt.com
© 2014 Grant Thornton UK LLP. All rights reserved.

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