How does the place of residence affect the taxation and obligations of technology services?
Since January 2015, the controversy surrounding the VAT of electronic services, which had led to differences in tax rates across European Union countries, has been resolved. From that date, all technological services are deemed to be provided and taxed in the Member State where the recipient is established or domiciled, regardless of whether the recipient is a business, a professional, or an end consumer, and irrespective of whether the service provider is based within or outside the EU.
The application of location rules in relation to new technologies basically involves placing the location of these services at the recipient's headquarters or, at least in certain cases, at the place where the effective consumption of the services occurs.
This means that the service provider must take into account the client's status, the quality of their conduct, and their place of business. For these purposes, only the circumstances existing at the time the tax accrues should be considered.
Once the place where the taxable event of the tax is carried out has been defined, that is, where the service is considered to be provided, we must define who the taxpayer is .
When the provider and the recipient are both residents in the same territory, the liable party is the service provider, who will charge the corresponding VAT amounts on the invoice and will be obliged to declare and pay them in their tax return.
When the provider and the recipient are residents in different territories, taking into account that the taxable event occurs at the recipient's location (or where the services are actually consumed), we will generally be faced with two possibilities:
- The recipient is a businessperson or professional in the course of their business: the taxable person will be the recipient by investment, either because it is an intra-community service, or because the provider is a non-community.
- The recipient is a private individual ; the liable party is the service provider, who must identify themselves for these purposes in the destination country and declare and pay the corresponding fees. The provider may opt for the special EU scheme , provided that the other requirements for this purpose are met, if they are a resident of the EU, or for the special non-EU scheme if the provider is not a resident of the EU
In subsequent articles we will emphasize these two special regimes that facilitate the management and settlement of the tax within the Community, avoiding identification in each of the countries in which operations are carried out.
As you can see, VAT is a complex tax, full of nuances and exceptions. This article provides the basic guidelines for identifying the place and party responsible for the tax, but there are numerous situations that require further investigation and clarification. This blog will attempt to explain the various scenarios, which we hope you will find interesting and useful.
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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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