Telecommunication, broadcasting and electronic services to be taxed in customer’s country from 2015 onwards

Telecommunication, broadcasting and electronic services will consistently be taxed in the customer’s country of residence from the first of January 2015 onwards. According to a recent announcement by the Tax and Customs Administration, the new regime will apply to retail and wholesale customers alike irrespective of whether they are based within or outside the European Union.

Unfortunately you will have to continue distinguishing between the retail and wholesale customers of your services in your own financial records. Of course the reverse charge mechanism is available for wholesale deliveries within the European Union. This is all well and good, but the same mechanism does not apply to services supplied to retail customers. This puts you in an accounting cum fiscal tight spot as regards the set-up and filing of your EU tax returns. You’d better not slip up or you will have to take the matter up with the tax and customs administration in the relevant EU Member State, in their own language! All in all we suspect that the battle in the run-up to the 2015 regulatory overhaul is far from over.

Important notice
We urgently advise all of you whose business involves the supply of telecommunication, broadcasting and electronic services in good time to seek out information concerning the impending increase in your administrative burden, as the impact on the set-up of your financial records is bound to be considerable. Please ensure that you are ready for 2015!

Overview of the situation from 1 January 2015 onwards

Wholesale customers – no additional complications:

• No value-added tax withholding charge applies to you as your customer pays its value-added tax in its own EU Member State (under the reverse charge mechanism);
• You do not have to pay EU value-added tax in connection with non-EU based wholesale customers.

Retail customers:

• You pay the value-added tax charge relating to an EU-based retail customer in the customer’s EU Member state, e.g. in Romania for a Romanian customer and in Greece for a Greek customer, and so on;
• You do not have to pay EU value-added tax in connection with non-EU based retail customers.

The Tax and Customs Administration is launching its “Mini One Stop Shop” facility with effect from 1 January 2015 to enable your value-added tax returns in connection with the tax due and payable by yourself to be filed via just the one EU Member State. Many business owners look forward to using the new facility for filing their value-added tax returns when the time comes. Unfortunately it is our impression that the Mini One Stop Shop facility will prove not to be quite ready to deal with your notices of objection and/or petitions, so that you will find yourself having to liaise direct with the inspector of taxes in the relevant EU Member State – with all the problems this may well bring – where these aspects are concerned.