How to Identify Customers of e- Services in VAT

Abstract

The growth of e-commerce asks for adjustments in EU VAT. Through the internet, products can be supplied all over the world, without requiring the physical presence of the supplier in the state of consumption. To remain fiscal neutrality, as of 1 January 2015 all B2C supplies of e-services will be taxable at the customer’s location. To apply the correct VAT rate and to assign the liability of VAT, suppliers must subsequently determine the status of the customer, his capacity and the location to which the e-service is provided. Especially in B2C ecommerce it may be difficult for suppliers to identify their customer. To stimulate customers to provide all relevant information and reduce their incentives to manipulate, suppliers are effectively required to implement fast and simple ordering systems and impose a universal pricing strategy. This will be the only way for suppliers to get in compliance with the new legislation.