VAT Package enters into force on January 1 2010: Commission adopts new implementing measures

From 1 January 2010, the new "VAT Package" enters into force across the EU, including new provisions which will see VAT for business-to-business services paid in the country of consumption rather than the country where the supplier is located, while for business-to-consumer services, VAT will continue to be paid in the Member State in which the supplier is established. In preparation for the entry into force of these new rules, the Commission today adopted a proposal on implementing measures for the VAT Directive 2006/112, which includes a number of measures related to the VAT Package, in particular to prevent situations of double taxation that could arise as a result of diverging interpretations of the new rules. For example, there are guidelines for suppliers on establishing the location and tax status of the customer, as this will determine the rate of VAT that must be paid.

Other guidelines focus on the provisions within the VAT Package which complement or provide exceptions to these general new rules. The VAT Package, which was adopted by Member States at the ECOFIN Council in February 2008 (see IP/08/208), also provides for a faster, more effective electronic procedure for businesses to reclaim the VAT that they pay in a Member State other than the one in which they are established.

For more information, see: http://ec.europa.eu/taxation_customs/index_en.htm