One Stop Shop VAT system
The One Stop Shop system is effective because service providers have to be in contact with the tax authority of one member state only. The necessary technical and organizational, institutional conditions were tested successfully by electronic service providers having their seat outside the EU as well as the One Stop Shop systems for foreign VAT refunds, we can therefore have confidence in the efficient operation of the system to be launched next year in 28 member states with standard, transparent processes.
Registration under the One Stop Shop VAT system
Use of the One Stop Shop system will not be compulsory. Service providers may decide to manage their VAT obligations in the relevant states individually (i.e. to register, file tax returns and to pay tax in each member state). The One Stop Shop system will be available to service providers established within as well as outside the EU. We have to differentiate between the EU and non-EU versions, however, as there are minor variances.
EU version of the One Stop Shop VAT system
The EU version of the One Stop Shop VAT system will be available to TBE service providers, which have their seat or permanent establishment within the territory of the EU. By the main rule, these enterprises will be able to register in the One Stop Shop VAT return filing system in the member state of their seat. If a service provider’s seat is outside the EU but it has a permanent establishment in the EU, the service provider may register in the state of its permanent establishment. If it has two or more permanent establishments, the service provider may select the place of registration freely from the member states of the establishments (this is the only case in the EU version of the One Stop Shop system in which the enterprise may select the place of registration under the system). This choice cannot be altered in the given calendar year and the two subsequent calendar years.
Non-EU version of the One Stop Shop system
The Non-EU version of the One Stop Shop VAT system will be available to TBE service providers, which do not have either a seat or permanent establishment in the EU and do not have a tax number (and are not obliged to register for tax purposes either) in any of the member states. In the non-EU version, service providers may choose freely in which member state they wish to register for the One Stop Shop VAT system. The only exception is if the service provider has already filed VAT returns under the One Stop Shop system as an electronic service provider (VoeS),in which case, repeated registration is not necessary.
Service providers may register under the One Stop Shop VAT system (both the EU and non-EU versions) in one member state only and if they choose to use the One Stop Shop system, service providers will have to file VAT returns on all TBE services provided to non-taxable-person customers in a member state in which they do not have an establishment (i.e. in which they neither have a seat, nor a permanent establishment) in the One Stop Shop VAT system: they will not have a choice in respect of individual member states.
The following table summarizes the rules regarding the place of registration under the One Stop Shop system depending on the service provider’s seat, permanent establishment(s) and/or foreign tax numbers in other member states:
(The CAPITAL LETTERS in the above table stand for EU member states.)
In the EU version, the tax number used in the One Stop Shop system is the tax number of the service provider used in the member state of registration for the filing of domestic VAT returns. In the non-EU version, the service provider receives a tax number in the format EUxxxyyyyyz during registration in which “xxx” is the three-character ISO code of the member state issuing the ID, “yyyyy” is a five-digit identification number and “z” is a control number.
Registration is done electronically, the necessary data is available here (source: Guideline of 23 October 2013 of the Taxation and Customs Union Directorate General of the European Commission). According to plans, registrations may start from 1 October. By the main rule, registrations will be effective from the first day of the quarter following the quarter of registration so there will be plenty of time until 1 January.
The creators of the system also thought of the service providers who miss the registration deadline and register under the One Stop Shop system after starting the supply of services: the system accepts late registrations until the 10th of the month following the date of first supply of TBE services to non-taxable-person customers. If registration is performed until this extended deadline, it will apply (retroactively) with effect of the actual commencement of service supply. If, for instance, a service provider first supplies TBE services on 1 March 2015 to a non-taxable-person customer and registers this in the One Stop Shop system until 10 April, it may apply the One Stop Shop system from March 1. This applies to both the EU and non-EU version.
I will summarize the most important information on the services declared under the One Stop Shop system and report on important details of VAT return filing and tax payment in the One Stop Shop system in my upcoming post.