European Union Value Added Tax - Supply of Services

Supply of Services

A supply of services is the supply of anything that is not a good.

The general rule for determining the place of supply is the place where the supplier of the services is established (or "belongs"), such as a fixed establishment where the service is supplied, the supplier's permanent address, or where the supplier usually resides. VAT is then charged at the rate applicable in the member state where the place of supply of the services is located and is collected by that member state.

This general rule for the place of supply of services (the place where the supplier is established) is subject to several exceptions. Most of the exceptions switch the place of supply to the place where the services are received. Such exceptions include the:

• supply of transportation services,
• supply of cultural services,
• supply of artistic services,
• supply of sporting services,
• supply of scientific services,
• supply of educational services,
• supply of ancillary transport services,
• supply of services related to transfer pricing services,

and many miscellaneous services including

• supply of legal services,
• supply of banking and financial services,
• supply of telecommunications,
• supply of broadcasting,
• electronically supplied services,
• supply of services from engineers and accountants,
• supply of advertising services, and
• supply of intellectual property services.

The place of supply of services related to real estate is where the real estate is located.

There are special rules for determining the place of supply of services delivered electronically.

The mechanism for collecting VAT when the place of supply is not in the same member state as the supplier is similar to that used for Intra-Community Acquisitions of goods, i.e. zero-rating by the supplier and reverse charge by the recipient of the services (if a taxable person). But if the recipient of the services is not a taxable person (i.e. a final consumer), the supplier must generally charge VAT at the rate applicable in its own member state.

If the place of supply is outside the EU, no VAT is charged.