Press Release: VAT: public consultation on rules that apply when services are supplied to private consumers

The European Commission on 3 February 2005 launched an open consultation for views from the public on possible improvements to the EU Value Added Tax (VAT) rules that apply when services are supplied to private consumers. The Commission planned, on the basis of the reactions, to decide whether to present a proposal to modify the current rules. The current basic rule in such cases was that the VAT rate that applied was that of the place of establishment of the service provider. However, with the increasing provision of services across borders, this rule no longer always ensured that the tax accrued to the Member State where consumption took place. In addition, it could cause a competitive handicap for EU suppliers compared to non-EU suppliers. The paper that formed the basis of the consultation therefore sought reactions to suggestions for possible modifications of the basic rule in the case of services provided at a distance.