VAT - place of supply of services
This measure introduces the UK's implementation of the place of supply of services rules. The changes are part of an EU-wide initiative which is intended to ensure that, where possible, VAT is due in the country where services are consumed.
Who will be affected?
The measures will affect any UK business purchasing or supplying cross border services.
With a few exceptions the new basic rule for supplies of services to businesses overseas will be that VAT is due in the place where the customer is established. For supplies to non-business customers the place of supply remains where the supplier is established.
Most of the changes will take effect on 1 January 2010. From 1 January 2011 and 1 January 2013 the changes will be phased in for certain other services such as supplies of cultural, artistic, educational and entertainment services.
The measures have been widely consulted on and reflect many of the concerns raised by businesses in the UK and around the EU. However there are likely to be teething problems, not least in adapting systems and processes for the new changes. As a result affected businesses will need to give this careful consideration before 1 January 2010.