Determining the place of consumption of services in the MOSS procedure

Probably the majority of entrepreneurs operating in the telecommunications, broadcasting and electronic industries have already read the information on the VAT revolution in relation to digital services, which is being prepared from January 1, 2015. As a reminder - from January 1, services provided to non-taxable persons by the above-mentioned industries, will be taxed according to their place of consumption, and thus, at the VAT rate applicable in the buyer's country.

Place of consumption of services

The place of consumption of services is the place where the buyer is established, has his permanent address or usually resides. If it has multiple locations, the seat shall be the place of performance of management functions, and for the private person, the permanent or usual place of residence. Provided there is no evidence that the service was used elsewhere.

In the case of a specific sale to a consumer in another country, the matter is simple, because the invoice should include the VAT rate of a given country, taking into account the place of residence or seat, and settle it according to its amount with the Second Tax Office Warszawa-Śródmieście.

The question of how to determine the place of consumption of services when it deviates from the statutory definition?

Services difficult to locate

Services that are difficult to locate should be understood as services provided only occasionally, for small amounts and requiring the physical presence of the client, e.g. in an internet cafe. In addition, services that are difficult to locate also include those provided on board a ship, plane or train, as well as payphones and mobile networks.

When the location is difficult or practically impossible to define, the application of the rules facilitates the presumption.

Presumption is the recognition of the existence of an undetermined fact on the basis of other facts, the existence of which is established. [sjp]

The main purpose of the presumption is to facilitate the establishment of the facts, in this context it will be to establish the real place of consumption of services. The feature of presumptions is their legal certainty and the fact that they can be rebutted in certain situations.

Types of presumptions

1. General presumption

2. Specific presumption

• The specific presumption is always used before the general presumption,

• If it is not possible to collect evidence that meets the conditions for the application of the special presumption, the general presumption applies (two non-contradictory evidence),

• If the service connects a fixed line with a decoder, then the presumption for a fixed line prevails.

In order to apply a presumption to determine the location of the buyer of the services provided, it is very important to have adequate evidence.

Evidence of the presumption in determining the place of consumption of services may be:

• invoice address,

• IP address,

• bank account details,

• country code from the SIM card,

• location of a landline connection,

• other commercially relevant information (e.g. information related to payment methods or customer transaction history).

Practical examples of the use of presumptions:

1. Services for which the physical presence of the buyer is necessary:

• Booths and payphones, wireless internet access points, internet cafes, restaurants, etc.

• Presumption that the buyer is located at the place of performance, e.g. in a cafe.

• Does not apply to OTT services.

 

2. Services provided on board a ship, plane or train:

• In the territory of the European Union, the route of the means of transport is important, and therefore it is important to presume that the buyer is located in the country where the route begins.

• Outside the Union, a different presumption or general rule applies.

• Does not apply to OTT services.

3. B2C transactions (provided to non-taxable persons):

• Fixed line - the place where the link is installed.

• Mobile telephony - country where the SIM card was issued.

• Decoder and similar devices - the place where the decoder and similar devices are located.

• OTT services.

When can the presumption be rebutted?

The service provider's obligation is to account for VAT on the services provided, and therefore it is in his interest to correctly determine the location of the buyer of the service. The rebuttal of the presumption may take place after contacting the customer who provided the new address or after collecting 3 non-contradictory evidence. The presumption may also be rebutted by the tax authority after finding irregularities or abuses.

How to prepare to determine the place of consumption of services?

In the case of many low-value transactions, it will be significantly easier to prepare an appropriate system to identify the buyer's location. It is necessary to ensure the credibility and accuracy of the collected information, as well as to regularly check the correctness of operation. However, it should be remembered that even the best system will not allow for complete accuracy in determining the buyer's location.