How to determine the place of service provision in accordance with the VAT Act?

Determining the place of supply of services refers to a situation where both parties to the transaction, i.e. the recipient and the service provider, are established or reside in different countries. This is especially important for determining which of the parties is required to settle the VAT due on sales.In the light of the VAT Act, the place of supply of services is the place of taxation of a given activity (service or supply). So how to determine the place of performance?

How to determine the place of service provision?

The actual place of performance of a given activity is not always the place where it is performed.

The general principle of the place of provision of services is governed by Art. 28b of the VAT Act. According to it, the place of supply of services to the taxpayer:

• is the place where the taxable person who is the customer is established;

• when the services are supplied for the taxpayer's fixed place of business, which is different from his seat, the place of supply is his fixed place of business;

• where the customer has no seat or fixed establishment, the place of supply is the place where he has his permanent address or usually resides.

Article 28b of the Act concerns services provided to taxpayers.

The place of supply of services to non-taxable entities in accordance with art. 28c of the Act is, in principle, the place where the service provider has his registered office.

The VAT Act also distinguishes the catalog of services for which the place of supply is determined in a special way, i.e. different than in art. 28b of the VAT Act.

Place of service provision - special rules

According to special rules, the place of performance is determined for:

• brokerage services - this is the place where the main transaction is made;

• real estate services - this is where the real estate is located;

• passenger transport services - the place where the transport takes place, taking into account the distances covered;

• admission services to cultural, artistic, sporting, scientific, educational, entertainment or similar events to the taxpayer - the place where these events actually take place;

• ancillary services to transport services and tangible property services - the place where the services are actually performed;

• restaurant and catering services - a place where the services are actually performed;

Exception! Where restaurant and catering services are actually performed on board ships, aircraft or trains during the part of the transport of passengers within the territory of the European Union, the place of supply of the services is the place where the transport of passengers starts.

• short-term rental of means of transport - place where these means of transport are actually put at the disposal of the recipient;

• telecommunications services, broadcasting services and electronic services for private persons - the place where these entities have their registered office, permanent residence or habitual residence;

• tourism services accounted for in the margin system - the place of service provision is the place where the service provider has his registered office

• if the tourism services are supplied from the provider's fixed place of business different from his place of business, the place of supply is the fixed place of business;

• if the provider has no establishment or a fixed establishment, the place of supply is the place where he has his permanent address or usually resides.