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The 2010 VAT Package – How is it Impacting Businesses?

28 Jan 2010

1 January 2010 was a crucial date in terms of European VAT as it meant the entry into force of the so-called "VAT Package". All 27 countries in the European Union member states have adopted the new VAT Package with rules affecting all companies, big or small, conducting business in the EU... But what are the impacts for these businesses and what additional changes have jurisdictions implemented to suit their domestic legislation? Taxand's European Indirect Tax team investigate the finer details to understand how the changes imposed by the VAT package can benefit multinationals.

Click here for a refresh of the 2010 VAT Package

Subsequently there have been additional VAT amendments in some EU countries:

Since each EU jurisdiction has its own tax laws implementing the VAT Package has meant adaptation of domestic legislation. Certain Member States took advantage of this opportunity to implement additional changes in their domestic VAT legislation. An exhaustive review of all changes would obviously be lengthy and potentially of limited interest. We however found relevant to address a few points that could have implications on your business. In this respect, we draw your attention to the following:

  • The rules defining the person liable for the payment of VAT have in some cases been revised, meaning taxable persons who up till now haven't registered for VAT should do so now.
  • The deadlines to submit VAT returns have changed in certain Member States to be in line with the deadlines set for the submission of the new European Sales Listings. Please note that in certain cases, the changes imply different deadlines for the filing of the VAT returns and for the filing of the EC Sales Listings and therefore all deadlines should be revisited and checked.
  • Certain Member States have imposed additional administrative obligations to those laid out in the VAT Package such as the reporting of acquisitions of goods/services from foreign EU suppliers.
  • "Use and enjoyment" rules, which set out the place of taxation within the EU, even if the services are deemed to be supplied outside the European Union, have been implemented in certain Member States. Multinationals should check to see if this affects them.
  • The definition of certain VAT concepts, such as the notion of "fixed establishment", has also been further clarified in certain Member States which should help to reduce misinterpretation.
  • Certain Member States have made amendments to the tax point (moment when VAT is due) for continuous supplies of services.

Taxand's Take


The changes imposed by the VAT package should benefit multinationals. The new package simplifies VAT treatment of cross-border supply of services while additional clarification of certain VAT concepts means there is less room for misinterpretation bringing with it added legal certainty for businesses. What's more the new procedure for the refund of input VAT borne in foreign countries should allow faster refunds with a less administration, making this much less time consuming procedure.

However, the difficult and ongoing fight against VAT fraud does impose additional administrative requirements for businesses. If not yet done, we recommend to businesses to determine how the new rules affect their business to be able to manage all requirements and avoid potential penalties.

Your Taxand contacts for further queries are:
Laurent Gren?on
T. +352 26 940 251
E. Laurent.Grencon@atoz.lu

Nicolas Devillers
T. +352 26 940 204
E. Nicolas.Devillers@atoz.lu

Refresh yourself:

The 2010 VAT Package - A new set of rules for EU Countries

1. New place of supply rules for services

  • B2B services will be taxable in the country where the recipient is established, and no longer where the supplier is located. In other words, the reverse charge mechanism will be applied more extensively.
  • B2C services remain in principle taxable where the supplier is established.

2. Enhanced cooperation between Member States
In order to fight against EU VAT fraud and evasion, administrative cooperation and exchange of information between Member States will be enhanced, notably through the obligation to submit an EC Sales List for intra-EU supplies of services.

3. Intra-EU reporting obligation for goods and services
In order to accelerate the exchange of information between Member States allowing a more effective control of the intra-community transactions, additional filing requirements will be imposed on businesses as from January 1, 2010.Such reports could be filed on a quarterly or on a monthly basis.

4. New electronic VAT refund procedure
As from January 1, 2010, a new fully electronic procedure for claiming VAT incurred in another Member State will be introduced.
These VAT changes affect all companies, big or small, conducting business in the EU.

Your Taxand contacts for further queries are:
Laurent Gren?on
T. +352 26 940 251
E. Laurent.Grencon@atoz.lu

Nicolas Devillers
T. +352 26 940 204
E. Nicolas.Devillers@atoz.lu

Taxand's Take Author