From the 1st of January 2015 the new VAT order will begin to apply to B2C electronic services providers due to directive 2008/8/EC of the European Commission. The specified services will start to be taxed in the country where the recipient of the service is located.
Which electronic services will taxation change for?
The changes affect services enabling the use of Internet and electronic network and services provided via the internet and electronic network. Such services are for example web administration, sale and maintenance of electronically transmittable software, sale of electronically transmittable music, films, books and games. The changes do not include goods sold over the Internet.
What does a provider of electronic services have to consider?
- The provider of electronic services must ascertain the location of the user of the service also when providing a service to private persons and persons without liability for value added tax.
- The service will be taxed in the country, where the location or residence of the recipient of the service is. Specified services will not be taxed for persons located outside the European Union, this will be done by the country of location of the recipient of the service.
- In case the location of the purchaser of the service is not known it will be determined on the basis of the invoice address and bank account, from where the service has been paid for.
- If the service is provided by way of a landline telephone, the location of the client is the location of the installation of the phone.
How must a provider of electronic services act?
A provider of electronic services has two options in light of the given changes: to register itself as a person liable for value added tax in all Member States, where the location of the recipient of the service is or to apply the special order in their country of location. In case a Swedish service provider wants to voluntarily apply the special order Mini One Stop Shop (MOSS), they have to register with the Swedish Tax Board to use the MOSS service.
How to apply the special MOSS?
When applying the MOSS special order the service provider must declare and pay VAT to the Swedish Tax Board and the administrator will in turn transfer the respective sum to the tax board of the country of location of the recipient of the service. VAT has to be calculated according to the VAT rate in force in the country of location. When applying the special order, a value added tax return of the services covered with the special order has to be submitted to the e-tax board for each quarter.
You can find the Swedish Tax Board’s Mini One Stop Shop (MOSS) service here. You will find the explanations of the Swedish Tax Board here.
To get additional information contact the accountants of 1Office Sweden on the number +46 10 510 2000 or write to contact@1office.se.
Read more about 1Office Sweden accounting service here.
