European Commission to regulate the application of VAT on services provided by digital platforms – Madrid VAT Forum 2022
The European Commission will regulate the application of VAT to services provided by digital platforms this year. For this to happen, the EC will have to decide whether the platforms are only intermediaries or if they are the providers of the service. This has been one of the main aspects of the Community legislation on Value Added Tax that has been addressed at the Madrid VAT Forum 2022 by advisors and representatives of the European Commission, held on 10 February.
Fernando Matesanz, Managing Director of Spanish VAT Services Advisors, the office that has organized the four annual editions of the congress, considered that the platforms “are intermediation services”, which is something that not all experts agree on. He also mentioned that EC Brussels opened a public consultation just two weeks ago on the role of platforms that mediate services in which all experts whose activity is related to this tax gave their opinion.
What the community institutions are attempting to settle is whether they only mediate or whether they can be considered to provide the service themselves. ”Something that is not very clear when, to give an example, in some specific cases, such as passenger transport, they set rules for vehicle drivers,” Matesanz pointed out. Considering that their role is one or the other has implications in the application of VAT, a tax that is not clear how they should be paid.
Under the title ‘VAT and the digital economy – Future challenges and what is coming?‘, Matesanz has also explained why concepts such as mediation, the degree of human intervention or the taxation of service providers carried out through digital platforms must be reviewed to adapt them to the new economic reality.
After the introduction, Agustín Míguez, VAT Policy Officer of the European Commission, outlined the action plan adopted by the European Commission in July 2020 to achieve fair and simple taxation, in the “VAT in the Digital Age“, one of the political actions included in the plan. Among the objectives set by Brussels, he highlighted moving towards a single VAT registry in the EU, continuing to expand single window systems, modernizing VAT obligations, facilitating electronic invoicing, and adapting the EU VAT framework to what he called “the platform economy“.
Fabiola Annacondia, Senior VAT Specialist at IBFD (the International Bureau of Tax Documentation), has detailed the VAT implications of changing consumption patterns due to the rapid growth of the digital economy. For example, the traditional demand for consumer goods is being transformed into subscriptions to paid services. The expert highlighted the rules on the place of supply, information and VAT collection systems often do not conform to these new forms of consumption that are primarily dependent on the place of supply of intangible digital services. She added that different jurisdictions around the world, including the EU, are taking steps to adapt to this new economic reality.
David Hummel, Legal Secretary of the Office of Advocate General Kokott, Court of Justice of the European Communities, and associate professor at the University of Leipzig, has exposed the impact of the ECJ Case C-695/20 (Fenix International) on the digital economy. In December 2020, the United Kingdom Court of First Instance asked the European Court of Justice (ECJ) for a preliminary ruling that may have a significant impact on the digital economy. The question referred seeks to clarify whether Article 9a of the Council Implementing Regulation on VAT exceeds the scope of Article 28 of the VAT Directive. This means, in practice, that the CJEU may have to clarify when an intermediary, such as a digital platform, acts on its own behalf and therefore
Six months have passed since the e-Commerce VAT package took effect. Sophie Claessens, Director of Public Policies, EU, Taxes and Payments of Amazon Europe, has recounted the experience of Amazon with the new model, at the time when the changes were introduced, the results, and what could be improved for the future can already be evaluated.
The closing speech of the Madrid VAT Forum 2022 referred to the legislation of the Court of Justice of the European Union in relation to VAT in the digital economy. Francisco Javier Sánchez Gallardo, Finance Counselor at the Spanish Embassy in Brazil, and State Treasury Inspector reviewed some of the relevant ECJ cases and the rulings on this new modern way of doing business.
Source: madridvatforum.tax
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