public consultation on rules that apply when services are supplied to private consumers
The European Commission has launched an open consultation for views from the public on possible improvements to the EU Value Added Tax (VAT) rules that apply when services are supplied to private consumers. The Commission will, on the basis of the reactions, decide whether to present a proposal to modify the current rules. The current basic rule in such cases is that the VAT rate that applies is that of the place of establishment of the service provider. However, with the increasing provision of services across borders, this rule no longer always ensures that the tax accrues to the Member State where consumption takes place. In addition, it can cause a competitive handicap for EU suppliers compared to non-EU suppliers. The paper that forms the basis of the consultation therefore seeks reactions to suggestions for possible modifications of the basic rule in the case of services provided at a distance. Similar changes have been made to the rules to cope with international trends in the supply of digital services and the Commission proposed changes to the rules governing the supply of services where the customer is a trader in December 2003.