VAT Services

On 1 January 2010, the EU VAT rules on liability and reporting for supplies of services will change significantly as a result of the EU's so-called 'VAT Package', as will the way in which EU businesses recover VAT incurred in EU Member States in which they are not established.

In summary, the most significant changes involve:

• changes to the VAT treatment of international services, in particular cross-border business-to-business (B2B) supplies - where VAT is chargeable and who must account for this VAT;
• a new obligation to report in an EC Sales List (ESL, or recapitulative statement) services rendered to EU businesses where the recipient is liable to pay VAT in its country;
• a new obligation to complete electronic VAT returns and EC Sales Lists for goods and services, and
• a new electronic procedure, together with tighter timeframes, for the processing and paying of refunds of VAT incurred in other Member States.

In general, any business (both EU and non-EU) which provides or receives services to or from EU entities, including those which make or receive 'management' charges or inter-company recharges involving EU entities, stands to be affected. Non-EU businesses which provide or receive services to or from other non-EU entities may also be affected where the new rules deem such services to be "effectively used and enjoyed" in the EU.

How we can help 

As part of our Tax Consulting, PricewaterhouseCoopers offers a broad scope of specialized, tax-related services corresponding to various levels of support. In the field of indirect taxation, we possess durable experience in Luxembourg and in the rest of the world through our global network: 

VAT Package Monitoring Service - monitoring implementation of the new rules across the EU 27

PwC has launched the “VAT Package Monitoring Service” to ease the pain for clients of monitoring how the new rules, including the various options given to Member States, are being implemented across the EU Member States in which they operate.

It is an online service which is updated regularly and can be accessed, for a subscription, via GlobalVATOnline.

Transaction consulting

PwC can help clients identify and resolve issues around the application and interpretation of the new rules by the Member States, and can also support clients in reviewing their service contracts, VAT registration and business structures.

Examples of areas where business issues are currently arising include:

• determining customer status and location, and how to deal with global contracts;
• how the B2B rules will apply in relation to business customers receiving supplies for a non-business activity;
• hire of means of transport, where the key issues are what is meant by the terms "put at the disposal" and "continuous possession or use";
• the definition of restaurant and catering services, in particular what is the level of service that turns a supply of goods into one of services;
• cultural, artistic, educational, entertainment services, in particular what is covered by "admission to an event";
• how the provision to deal with 'force of attraction' will be applied (i.e., how the term "intervene" in new article 192a Principal VAT Directive will be interpreted by Member States); and
• transparency in relation to how Member States will apply the 'use and enjoyment' provisions.

Systems advice and reconfiguration (including training staff)

Our team includes experienced VAT specialists, experienced systems specialists, and VAT professionals with significant systems and technology experience. Together these specialists can help clients identify and analyse the VAT accounting processes and the ERP/accounting system requirements arising from the rule changes, advise on their reconfiguration and implementation and/or carry out post-implementation reviews. Clients may also be interested in using this opportunity to make further value added systems changes (e.g. enhanced tax coding).

Beyond the systems advice, we can also support clients with any staff training needs as a result of system and/or process changes.

Structuring advice

We can help clients review the 1 January 2010 changes against their current operating structure and models to identify any significant additional VAT costs and/or potential opportunities.
Where costs are identified, we can advise on what steps may be taken to preserve any beneficial VAT treatment currently enjoyed, and how present arrangements may be restructured to minimise any adverse impact resulting from the VAT Package. 

The suitability of any proposed re-structuring will need to be considered in relation to each individual client's circumstances, and from a VAT technical perspective in each relevant jurisdiction by local ITX specialists. In line with best practice, direct tax and other advice may also need to be sought on any proposed re-structuring.

VAT compliance

PricewaterhouseCoopers can help you manage your local and global VAT compliance issues, risks and opportunities and face your needs and challenges, allowing you to have firm control.
We have a strong local and international network of VAT compliance professionals, providing a consistently high quality service, coordinated across as many territories as you require.
Our outsourcing proposition allows our clients to rely on us to deal with their VAT obligations and manage the risk of non-compliance, allowing us to cut back on support function costs, focus on core competencies and centralise accounting systems.

VAT recovery

We have a tried and tested approach, which can help identify both VAT that has been paid in error and VAT which has not been correctly recovered. We have proven expertise to achieve the best possible approach to VAT recovery, thereby maximizing savings and reducing costs.