On September 23, 2014, Taxamo held a 100-day countdown to the new EU VAT rules on digital services. Presentations were made by Andrew Webb, of HMRC; Esteban Van Goor, of Baker McKenzie, and John McCarthy, CEO of Taxamo.

1. 1
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2015 EU VAT
Barclays Accelerator, London
September 23, 2014
0
DAY COUNTDOWN FOR MERCHANTS
Hosted by EU VAT Compliance Solution -Taxamo

2. 2015 VAT Rule Change for Digital Service Supplies andMini-One Stop Shop (MOSS)
Andrew WebbHM Revenue & Customs
Taxamo Webinar
23 September 2014

3. Content
1. 2015 VAT rule change for cross border supplies of digital services
2. Issues arising from 2015 B2C rule change
3. VAT Mini-One Stop Shop (MOSS) Special Schemes
4. MOSS Registration and Functioning
5. Conclusions

4. 1. 2015 VAT rule change for cross-border supplies of digital services
•Final step in implementing a series of VAT rule changes which will embed theprinciple of taxation at the place of consumption (destination) to cross-border supplies
•Rule already in place for Non-EU to EU business to consumer (B2C) electronic service supplies (2003 VAT on E-Services Scheme (VoES)
•From 1 January 2015 EU rules will change for intra-EU cross- border supplies of digital services (ietelecommunications, broadcasting and e-services) so VAT will be due where customer is located
•To minimise potential VAT accounting administrative burden, EU introducing a Mini-One Stop Shop (MOSS)

5. Project Name: VAT Package | | 5
2. Issues arising from 2015 B2C Rule Change
a)Definition of digital services (telecommunications, broadcasting and e-services) -scope
Examples, which are not exhaustive, provided in Articles 6a, 6b and 7(3) of Regulation 282/2011 as amended by Implementing Regulation
b) Who is making the supply (Article 9A of Imp Regs)
Where digital services are supplied through a telecommsnetwork, an interface or portal such as a marketplace for applications, the presumption is that intermediary is acting in their own name but on behalf of the service provider

6. Project Name: VAT Package | | 6
2. Issues arising from 2015 B2C Rule Change
b) Who is making the supply? (Continued)
The presumption is that the intermediary (egthe network provider) is acting in his own name, but on behalf of the service providerUNLESS:
(a) the provider is explicitly indicated as the supplier, and this is reflected in contractual arrangements;
(b) Any invoice issued/made available by each taxable person taking part in the supply identifies the services and the supplier;
(c) Any bill or receipt issued/made available to the customer identifies the services and the supplier.
BUTa taxable person who authorises the charge to the customer, authorises the delivery of the services, or sets the general terms and conditions of the supply, shall not be permitted to explicitly indicate another person as the supplier.

7. Project Name: VAT Package | | 7
2. Issues arising from 2015 B2C Rule Change
c) Determining status of the customer (non taxable person)
•Supplier may regard the customer as a non-taxable person when no VAT Registration Number (VRN) provided and there is no evidence to the contrary
d) Determining “place of consumption” (Reg282/2011)
•The customer’s “permanent address” (in population register), or where person “usually resides”
•However,presumptions for supplies via: (i) Telephone box or internet café, where these are located; (ii) land line, where land line located; (iii) mobile networks; mobile country code of the SIM card, (iv) Viewing card or decoder; where card or decoder posted

8. Project Name: VAT Package | | 8
2. Issues arising from 2015 B2C Rule Change
e) Evidence to support taxing decision
•For most supplies, place of consumption is determined by reference to 2 pieces of non-contradictory evidence
•Evidence: Billing address; Internet Protocol (IP) address; bank details; SIM Card; fixed land line, other commercially relevant information
•Withpresumptionsat (d), they can be disregarded only if supplier holds 3 pieces of non-contradictory evidence that customer located elsewhere
•In all cases a tax administration can rebut a presumption, but only where there are indications of misuse or abuse by the supplier

9. Project Name: VAT Package | | 9
3. EU VAT Mini-One Stop Shop (MOSS) Special Schemes
•Changes to VAT place of supply rules means businesses that make B2C supplies of services to other Member States would have to register for VAT in all those Member States
•To reduce the burdens and costs on businesses, EU VAT MOSS will allow suppliers of telecommunications, broadcasting and e-services the optionof registering for VAT in one Member State (the Member State of Identification (MSI), and to submit a single electronic MOSS VAT return and a single payment in respect of all their EU B2C supplies
•The MSI tax authority will disaggregate return data and payments, and transmit them to the relevant Member State (s) of Consumption (MSC) tax authority

10. Project Name: VAT Package | | 10
3. EU VAT Mini-One Stop Shop (MOSS) Special Schemes
•Implementation of a VAT MOSS Scheme for intra-EU Business to Consumer (B2C) supplies of digital services will align arrangements with those which have been in place since 2003 for Non-EU to EU supplies of digital services-the VAT on E-Services (VoESScheme)
•Current VoESscheme only covers e-services, but from 1 January 2015 the scope will be extended to cover broadcasting and telecommunications and it will be renamed the Non-EU MOSS Scheme
•HMRC will support existing VoESregistered businesses to migrate to Non-EU MOSS Scheme if they wish to stay registered for the scheme and to have the UK as their MSI

11. Project Name: VAT Package | | 11
4. MOSS Registration & Functioning (Registration)
•Use of schemes is optional
•If business decides to register for (Union-Scheme) MOSS, they must do so in the Member State in which they are ‘established’. Can only have one EU MOSS registration
•Business completes MOSS VAT registration application form (see Annex to Regulation 815/2012) and sends it to the tax authority
•Businesses can register with tax authority (HMRC) from 20 October 2014, so they are able to use MOSS from January 2015. Otherwise MOSS registration takes effect from beginning of calendar quarter
•If approved, business will be identified for MOSS with the same VAT Registration Number as for domestic VAT

12. Project Name: VAT Package | | 12
4. MOSS Registration & Functioning (Returns)
•For in scope supplies, MOSS registered businesses must submit, by electronic means, a MOSS VAT return, to their tax authority within 20 days of end of each calendar quarter. ‘Nil’ returns are required.
•MOSS return (see Annex to Regulation 815/2012 of 13 September 2012) contains details of sales made in each MSC by the taxable person
•Single related MOSS VAT Return payment must be made within the same time period.
•Non-Euro countries may require payment in their national currency. If supplies in other currencies, conversion shall be made by applying European Central Bank rate published on the last day of calendar quarter

13. Project Name: VAT Package | | 13
4. MOSS Registration & Functioning (Audit & Control)
Following EU level discussions between the Commission and Member State tax administrations the following MOSS taxpayer audit and control arrangements, which aim to balance Member States need to protect VAT revenues with avoiding imposing administrative burdens on business, have been agreed. They have the support of almost all Member States:
•Member State tax authorities will create network of MOSS
co-ordinators to facilitate management of new schemes
•Initial contact and engagement with MOSS business should, where possible, be routed through the MSI tax authority (although acknowledged that MSC has legal right to contact MOSS business if it wants to do so)

14. Project Name: VAT Package | | 14
4. MOSS Registration & Functioning (Audit & Control)
•MSIs should use their normal national procedures when contacting businesses registered for Union Scheme, and e- mail for non-Union scheme
•Where the MSC tax authority wants to contact the MOSS business this should be initiated via the businesses contact e- mail address
•All Member States will accept SAF-MOSS format (in XML) if a business chooses to use this format to supply requested information to tax authorities
•MSI tax authority will normally co-ordinate MOSS audits to avoid imposing unreasonable administrative burdens

15. Project Name: VAT Package | | 15
4. MOSS Registration & Functioning (Record Keeping)
The records which a MOSS business must keep are those specified in paragraph 63 (c) of Regulation 967/2012. They include:
-Member State of consumption to which service supplied and
information used to determine location of customer
-type of digital service supplied date of supply
-VAT rate applied; and
-amount of VAT payable and the currency used.
The records must be kept for a period of 10 years

16. Project Name: VAT Package | | 16
5. Conclusions
In recent months the main issues which have generated discussion and debate include the following:
•Article 9 of the place of supply implementing regulations defining who is deemed to be making the supply
•Use of ‘presumptions’ to determine the place of consumption, and the evidence which businesses will need to support their taxing decisions
•Will Member States MOSS systems be ready on time?
•the requirement that to register to use the MOSS schemes a business must already be ‘identified’ (registered) for VAT
•Audit and compliance of MOSS businesses

17. Project Name: VAT Package | | 17
5. Conclusions
•On 1 January 2015 important changes to EU VAT place of supply rules for digital services
•Need to begin planning for changes now, as they will impact on contractual terms and conditions
•EU VAT MOSS a potentially beneficial simplification scheme for businesses making B2C supplies to other EU Member States
•Provided MOSS is successful, it will pave the way for incremental developments including extending its scope to B2C supplies of goods and eventually B2B supplies.

18. Thank you
HM Revenue & Customs
100 Parliament Street
London
SW1A 2BQ
andrew.webb@hmrc.gsi.gov.uk

19. Baker & McKenzie Amsterdam N.V. is een vennootschap van Baker & McKenzie Internationaal, een Zwitserse Verein waarvan vennootschappen over de gehele wereld lid zijn. In overeenstemming met de in de professionele dienstverlening gebruikelijke terminologie wordt met de term "partner" bedoeld personen die partner zijn van een dergelijke vennootschap of een daaraan gelijkwaardige functie bekleden. De term "kantoor" wordt gebruikt om te verwijzen naar een vestiging van een dergelijke vennootschap. © 2014 Baker & McKenzie Amsterdam N.V.
2015 EU VAT: 100 DAY COUNTDOWN
The upcoming VAT changes
Taxamo B2C 2015 event London –Esteban van Goor @EAVGR

20. Agenda

21. © 2014 Baker & McKenzie Amsterdam N.V. 21
Agenda
‒Purpose upcoming VAT changes
‒Questions in practice

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Digital transformation

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VAT -the EU game changer
Source: Taxamo.com

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Questions in practice (1)
‒B2B or B2C customer?
‒PSP/portal/gateway/aggregator –disclosed or undisclosed agent?
‒What to do with the data used determining customer location?
‒Multi country ruling possible?
‒Is it necessary to issue a B2C invoice?
‒MOSS? How does it work?

25. © 2014 Baker & McKenzie Amsterdam N.V. 25
Questions in practice (2)
‒How to determine customer location?
Steps:
1.Presumptions for the customer location –physical location.
2.Presumptions for the customer location –additional indicators.
3.Presumptions for the customer location –two points of evidence.

26. © 2014 Baker & McKenzie Amsterdam N.V. 26
Thank you!
31 December 23:59 –is sooner than you think!
Esteban van Goor
M: esteban.vangoor@bakermckenzie.com
T: +31 20 551 7029
Twitter: @EAVGR
LinkedIn: nl.linkedin.com/in/estebanvangoor

27. Practical Compliance

28. •Pricing
•Watching your bottom line
•Evidence Collection
•What evidence to use without annoying your customer
•Under the Hood
•Collect / File / Pay
•Gotchas
•Small Print
OUTLINE

29. PRICING
Universal
Vs
Dynamic Pricing
Margin Key Driver

31. LOW MARGIN -DYNAMIC PRICING
High Margin –Optional…
MARKET PRICE
VAT RATE
PRICE LESS VAT
COST OF SALE
MARGIN
MARGIN PERCENTAGE
UK
€15.49
20%
€12.91
€10.00
€2.91
19%
Sweden
€15.49
25%
€12.39
€10.00
€2.39
15%
21% Reduction
MARKET PRICE
VAT RATE
PRICE LESS VAT
COST OF SALE
MARGIN
MARGIN PERCENTAGE
UK
€15.49
20%
€12.91
€5.00
€7.91
51%
Sweden
€15.49
25%
€12.39
€5.00
€7.39
48%
6% Reduction

33. EVIDENCE COLLECTION
STAYING ON THE RIGHT SIDE OF THE LAW
VS
RUNNING A BUSINESS

34. EVIDENCE COLLECTION
What Proxies to use?

35. 22.118.101.18
Billing Country
BIN

36. EVIDENCE COLLECTION
•Do you get evidence from the payment page?
•Is it a hosted payment page?
•What do you do if you cannot get two? Do you abandon transaction?
•What are the risks?
•How to ensure you do not interrupt customer journey
•Prompt for User input at payment page
•Explanatory Notes are not the Law!

37. UNDER THE COVERS
Collect
File
Pay

38. MOSS
•Data Protection
•First Name Last Name / Invoice Details
•VAT Return
•Today only ebookshave a reduced rate in 2 –3 countries
•Settlement & Refunds
•You have 20 days + 10 after to settle
•Inter quarter refunds are complicated
•What happens if you are not ready by Jan 01?
•I don’t really know…
•No MOSS after the fact

39. GOTCHAS
THE SMALL PRINT

40. INVOICING

41. INVOICING
•Commission is publishing Invoicing requirements of different states in October
•You need to think about these…

42. Vat RatesChange!

43. 11
4
W
E
E
K
S
TO GO
ONLY
…and it can’t move…

44. TAXAMO ECOSYSTEM

45. Q&A

46. FOR MORE INFORMATION
John McCarthy
john@Taxamo.com
view: taxamo.com
read: taxamo.com/blog
follow: @taxamo
Andrew Webb
andrew.webb@hmrc.gsi.gov.uk
http://www.hmrc.gov.uk/posmoss
Esteban van Goor
esteban.vangoor@bakermckenzie.com
+31 20 551 7029
@EAVGR
nl.linkedin.com/in/estebanvangoor