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World Journal of VAT/GST Law Volume 3, 2014 - Issue 1
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Original Articles

The OECD International VAT/GST Guidelines on Place of Supply of B2B Services and Intangibles

Lena Hiort af Ornäs Leijon Lena Hiort af Ornäs Leijon is a lawyer working at the Swedish Ministry of Finance (Tax and Customs Department, Division for VAT and Excise Duties). She is also a PhD student at the Faculty of Law, Uppsala University (Sweden).
&
Eleonor Kristoffersson Prof Dr Eleonor Kristoffersson is a professor in tax law at Örebro University in Sweden ( www.oru.se). She is also a visiting professor at Gävle University, Sweden ( www.hig.se) and a visiting professor at Salzburg University, Austria. She is also a member of the Swedish Better Regulation Council (Regelrådet,  www.regelradet.se). All views expressed in this paper are those of the authors.
Pages 32-49 | Published online: 07 May 2015

  • OECD, Revenue Statistics 2013 (OECD Publishing, 2013), http://dx.doi.org10.1787/rev_stats-2012-en-fr. All websites accessed March 2014.
  • As described in the OECD International VAT/GST Guidelines, the term ‘VAT’ (Value Added Tax) covers all taxes on consumption which are to be paid, ultimately, by final consumers and collected by businesses. VAT is known as Goods and Services Taxes (GST) in some OECD countries.
  • OECD, Consumption Tax Trends 2012: VAT/GST and Excise Rates, Trends and Administrative Issues (OECD Publishing, 2012) 8.
  • International Monetary Fund, Taxing Times: World Economic and Financial Surveys (Fiscal Monitor, 2013) p 29, table 12 and 28.
  • For a complete list, see eg http://gst.customs.gov.my/en/gst/Pages/gst_ci.aspx, cf Jeffrey Owens (Director), Piet Battiau (OECD Centre for Tax Policy and Administration) and Alain Charlet (WTS France), ‘VAT's Next Half Century: Towards a Single-Rate System?’ [2011] OECD Observer No 284, Q1 2011.
  • OECD, Measuring Globalisation: OECD Economic Globalisation Indicators (OECD Publishing, 2010) 155–69.
  • CTPA/CFA2014(3).
  • CTPA/CFA2014(3) Preface, para 5.
  • For example, Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax [2011] OJ L77/1 and Council Regulation (EU) No 967/2012 of 9 October 2012 amending Implementing Regulation (EU) No 282/2011 as regards the special schemes for non-established taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons [2012] OJ L290/1.
  • See eg the Swedish Administrative Court of Appeal in Sundsvall 2012–03–20 Case No 2741–2743–10 and Skatteverket, Tillämpningsinformation för Skatteverket: Ställningstagande 2011–06–16. ‘Mervärdesskatt, svenska näringsidkares försäljning av applikationer’, dnr 131 419422–13/111, where B2B supplies of mobile applications from Sweden to Luxembourg were subject to double taxation.
  • See Armin Spitaler, Das Doppelbesteuerungsproblem bei der direkten Steuern (Verlag Dr Otto Schmidt KG, 2nd edn 1967) 1: ‘Das Doppelbesteuerungsproblem ist uralt. Er ist so alt wie die älteste Steuer.’
  • See eg para 62 of the Preamble to Council Directive (EC) 2006/112 of 28 November 2006 on the common system of value added tax (‘the VAT Directive’). See also Johannes Heinrich, ‘Territoriale Anknüpfung als grundlegendes Merkmal der Mehrwertsteuer’ in Markus Achatz and Michael Tumpel (eds), Leistungsort der Umsatzsteuer (Linde Verlag, 2009) 22.
  • Current member countries are Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.
  • OECD, Taxation and Electronic Commerce: Implementing the Ottawa Taxation Framework Conditions (OECD Publishing, 2011).
  • OECD, Guidelines on Consumption Taxation of Cross-Border Services and Intangible Property in the Context of E-commerce (2001), www.oecd.org/ctp/consumptiontax/2001%20E-Commerce%20Guidelines.pdf.
  • Consumption Tax Guidance Series (2002), www.oecd.org/ctp/consumptiontax/consumptiontaxguidanceseries.htm.
  • CTPA/CFA2014(3), Core Features of Value Added Tax, para C 1.8.
  • Guideline 3.1.
  • CTPA/CFA2014(3), Core Features of Value Added Tax, para C 1.8.
  • ibid.
  • ibid.
  • OECD (n 14) 18.
  • ibid, 20.
  • www.oecd.org/tax/consumption/5594831.
  • OECD (n 14) 20.
  • See Pernilla Rendahl, ‘Cross-Border Consumption Taxation of Digital Supplies' (2009) 18 Doctoral Series IBFD Academic Council 251.
  • ibid, 400–1.
  • See eg European Commission, EU Project on Baseline Measurement and Reduction of Administrative Costs: Final Report, incorporating report on Module 5.2—Development of Reduction Recommendations 2010, 39–40.
  • OECD International VAT/GST Guidelines, Draft Consolidated Version, October 2013, p 13 Section C.2.
  • CTPA/CFA2014(3), Core Features of Value Added Tax, para C 1.9 and 1.10.
  • ibid, para C 1.11.
  • ibid.
  • ibid, Box 3.1.
  • ibid, para 3.9.
  • ibid, para 3.22.
  • ibid.
  • ibid, para 3.34.
  • ibid.
  • ibid.
  • ibid.
  • ibid, para 3.25.
  • ibid.
  • ibid, para 3.26.
  • ibid.
  • ibid, para 3.27.
  • ibid, para 3.28.
  • ibid.
  • ibid.
  • ibid.
  • ibid, para 3.29.
  • ibid.
  • ibid, para 3.30.
  • ibid.
  • ibid.
  • ibid.
  • ibid, para 3.31.
  • ibid, para 3.32.
  • ibid.
  • ibid, para 3.81.
  • ibid.
  • ibid, para 3.33.
  • ibid, paras 3.30, 3.33.
  • VAT Directive, Arts 24–25.
  • Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/116/EC as regards the place of supply of services.
  • VAT Directive, Art 43.
  • The ‘VAT package’ contained: a directive on the place of supply of services; a mini one-stop shop for telecom, broadcasting and e-commerce services; a Directive on procedures for VAT refunds to non-established businesses and a Regulation on the exchange of information between Member States which is necessary to underpin the new arrangements.
  • Council of the European Union, 5698/07 (Presse 270), Press Release, 2836th Council meeting, Brussels, 4 December 2007.
  • Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services; Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State; Council Regulation No 143/2008 of 12 February 2008 amending Regulation (EC) No 1798/2003 as regards the introduction of administrative cooperation and the exchange of information concerning the rules relating to the place of supply of services, the special schemes and the refund procedure for value added tax.
  • Art 44 of Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/116/EC as regards the place of supply of services.
  • ibid, Art 45.
  • See eg Caroline Kindl and Petra Reinbacher, ‘Ort von Dienstleistungen bei B2B-Umsätzen und B2C-Umsätzen' in Achatz and Tumpel (n 12) 145; Petra Reinbacher, Christine Weinzierl and Rupert Wiesinger, Das neue Mehrwertsteuerpaket, Steuer- und WirtschaftsKartei (Linde Verlag, 2009) 4f.
  • Directive 2008/8/EC, Art 47.
  • ibid, Art 53.
  • ibid, Art 58.
  • VAT Directive, Art 176.
  • Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax amending Implementing Regulation (EU) No 282/2011 as regards the special schemes for non-established taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons (‘the Implementing Regulation’).
  • See Madeleine Merkx, ‘Should EU VAT Apply the Recharge Method in the Place of Supply Rules for B2B Services?’ (2013) 22 EC Tax Review 282.
  • Implementing Regulation, Art 21.
  • ibid, Art 22(1) para 1.
  • ibid, Art 22(1) para 2.
  • ibid.
  • ibid, Art 22(2).
  • Merkx (n 77) 286.
  • Case C-653/11 Her Majesty's Commissioners of Revenue and Customs v Paul Newey [2013] ECR 2013 (not yet published), para 48.
  • Case C-260/95 Commissioners of Customs and Excise v DFDS A/S [1997] ECR I-1005, para 21.
  • ibid, para 23.
  • European Commission, Group on the Future of VAT, Taxud c l (2013)3384189 GFV N 036, OECD International VAT Guidelines.
  • Draft Consolidated Guidelines, revised version, 11 October 2013.
  • Box 3.3.1 to the Draft Guidelines.
  • Case C-210/04 Ministero dell'Economia e delle Finanze och Agenzia delle Entrate mot FCE Bank plc [2006] ECR I-2803.
  • Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
  • VAT Directive, Art 9.
  • ibid, Art 2(c).
  • Cf Case C-388/11 Le Crédit Lyonnais v Ministre du Budget, des Comptes publics et de la Réforme de l'État (not yet published in ECR).
  • Commissioners of Customs and Excise v DFDS A/S (n 85) para 44.
  • Ministero dell'Economia e delle Finanze och Agenzia delle Entrate mot FCE Bank plc (n 90) para 34.
  • ibid, para 35.
  • ibid.
  • ibid, para 37.
  • ibid.
  • ibid.
  • In our opinion Art 10 is not exclusive, in the sense that it is irrelevant to discuss independence in situations other than the ones mentioned in Art 10. By discussing independence regarding transactions within the same legal entity, the CJEU has already shown this in the FCE Bank case. In addition, Art 11 of the VAT Directive regarding VAT groups shows that the concept of independence is not reserved only to the individuals, but is also relevant for legal persons. In our opinion, the wording of the VAT Directive as such does not prevent a branch from being considered as independent, especially in VAT Grouping cases.
  • European Commission, Group on the Future of VAT (n 87); OECD International VAT Guidelines, p 5.
  • Art 22(2) of the Implementing Regulation.
  • European Commission, Group on the Future of VAT (n 87).
  • Guideline 3.2.
  • Ch 3 of the Guidelines.
  • CTPA/CFA2014(3) Core Features of Value Added Tax, para C 1.13.
  • ibid.
  • ibid.
  • ibid.
  • ibid.
  • VAT Directive, Art 40.
  • ibid, Art 30.
  • ibid, Art 146.
  • CTPA/CFA2014(3), para 3.37.
  • See Michael Lang, Introduction to the Law of Double Taxation Conventions (Linde Verlag, 2013) 29.
  • OECD Model Convention and the UN Model Double Taxation Convention (para 1 of the introduction).
  • OECD Commentary to Article 9 of the OECD Model Convention (subparagraph of the commentary to Article 9).
  • See Thomas Ecker, A VAT/GST Model Convention (IBFD, 2013) 35ff; Pernilla Rendahl, Cross-Border Consumption Taxation of Digital Supplies: A Comparative Study of Double Taxation and Unintended Non-Taxation of B2C E-Commerce (Jönköping International Business School, 2008) 38.
  • Rendahl (n 120) 300–1.
  • See Thomas Ecker and Elena Variychuck, ‘VAT Treaties: The Russian Federation' (2013) 2 World Journal of VAT/GST Law 82 with references in n 5.
  • Where double taxation would occur if the service was supplied from country A to country B, unintended nontaxation would occur if the transaction was supplied from country B to country A.
  • VAT Directive, Art 1. See Gianluigi Bizioli, ‘Comparative Analysis of the Causes of Double (Non-) Taxation in the Income and VAT/GST Contexts' in Michael Lang, Peter Melz and Eleonor Kristoffersson (eds), Value Added Tax and Direct Taxation: Similarities and Differences (IBFD, 2009) 396.
  • Section 1 of the introduction to the OECD Model Convention.
  • ibid.
  • European Commission, Report on the Outcome of the Consultation on ‘Introduction of a Mechanism for Elimination Double Imposition of VAT in Individual Cases', Brussels, 24 October 2007, TAXUD/D1/EWS/mav D(2007) 15925, p 5.
  • Art 169(a) of the VAT Directive.

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