We explain how the EU's single window for declaring VAT on electronic services works.
In our article “VAT on Technology Services,” we explained that electronic services are considered to be provided in the country where they are received, and that this is especially important when the recipient of the service, i.e., the client, is a private individual. It's also worth remembering that different VAT rates apply in different EU countries , and invoices must be issued with the rate applicable in each country where the transaction takes place.
“The EU facilitates VAT declaration for electronic services with a single point of contact to avoid having to identify oneself in each of the EU countries in which one operates.”
The dynamics of the tax lead us to believe that the company supplying electronic services should identify itself for the purpose of declaring and paying VAT in each of the territories and submit its corresponding VAT return in each of them in order to pay the amounts that have been invoiced for its particular residents.
This seems somewhat complicated to me, since each country will have its own internal procedures, and understanding them requires a significant effort and, of course, involves management costs.
Fortunately, the EU has been sensitive to this problem and since January 2015 has implemented what is known as the “one-stop shop” or “one-stop shop”.
What are the advantages of using a one-stop shop?
- It allows you to submit a single quarterly VAT return in the Member State in which you have registered, which will contain the information corresponding to the services provided to customers in each Member State of consumption.
- The Member State of identification breaks down the VAT return submitted through the single window by Member State of consumption and forwards the data to the various Member States of consumption and establishment.
- The Member State of identification generates a unique identification number for each VAT return submitted through the single window and communicates this number to the taxable person to whom reference must be made when making the corresponding payment.
Who can register at the single window?
Any VAT-registered entity that provides electronic services (among others) to individuals in an EU country where it does not have an establishment.
How do I register to use the one-stop shop?
I will need to provide certain identification information to the Member State, which will be collected by the specific State, always by electronic means.
If the taxable person is already registered for VAT purposes in the Member State of identification because he or she provides services within the national scope, that Member State may already have much of the necessary information.
Once the identifying Member State has received and validated the information required for registration, it is stored in its database and forwarded to the other Member States.
Will I be assigned an individual identification number for VAT purposes?
If I already belong to the EU, the individual identification number for VAT purposes is the same as the one already assigned in the Member State for the provision of services at the national level.
If I am a non-EU businessperson, the Member State of identification will assign the taxable person an individual identification number for VAT purposes.
When is registration effective?
Generally speaking, the first day of the quarter immediately following the application date
Can I use the one-stop shop to declare services from only one country?
No, using the single window system requires a single VAT return for all countries where services are provided. This return will include detailed information for each country.
If I incur expenses subject to VAT in any of the countries where I provide services, can I deduct those amounts in the tax return submitted through the single window?
No. If I am subject to fees in the countries where the services are provided, I must request a refund through the established mechanism.
In conclusion
The use of the single window greatly simplifies compliance with tax obligations in the EU, avoiding the identification of the company in each of the countries in which it operates and allowing for the simplification of the procedures for declaring the VAT charged.
However, to recover the fees paid we will have to use another of the mechanisms provided, which we will refer to in future articles.
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A graduate in Business Administration from the University of Barcelona, she has furthered her training in tax and accounting by attending courses and seminars offered by the EAE Business School, the College of Economists, the Bar Association, and the Terrassa Chamber of Commerce.
She combined her studies with work in the family business and as a substitute in the production audit department of Bimbo SA.
She has spent her professional career at Àmbit Assessor, where she joined in 1991 to support the accounting and tax department, becoming a consultant a few years later.
Since 2000, she has been the managing partner of the company.
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