E-commerce

On 12 February 2008, the Council of the European Union issued a press release stating that it had adopted new legislation changing the rules on the place of supply of services for VAT purposes. A more detailed press release on this development was released by the European Commission on the same day. The legislation as adopted has subsequently been published (see European Commission, Legislation recently adopted).The legislation as adopted is in largely the same form as the version published on 13 December 2007 (see Legal update, Legislation published on new VAT place of supply rules). The major changes in the adopted version are:1. The legislation confirms that the special rules for telecommunications, broadcasting and electronically-supplied services will not start until 1 January 2015. The current regime is extended to 31 December 2014 and the Commission is to report on the feasibility and suitability of the new rules at that time.2. The fact that the member state of establishment of the supplier is to retain a reducing proportion of VAT receipts arising under the special rules mentioned above until 2019 (see Legal update, Revised press release on change of VAT place of supply rules) is enshrined in the legislation.3. The new refund rules have been refined so that they do not apply where an application for the relevant refund is made before 1 January 2010 (when the rules come into effect).

The European Commission has presented a proposal to simplify current VAT compliance obligations, to help cross-border traders who supply goods and services to other EU member states, which includes changes to the rules relating to distance selling.

On 13 December 2007, the Council of the EU published proposed new legislation that will change the place of supply of many cross-border services for VAT purposes, generally, with effect from 1 January 2010. The aims of the proposed legislation are to ensure that VAT on services accrues to the country where the service is consumed and to prevent distortions of competition between member states that operate different VAT rates.The package of proposed new rules is contained in:1. A draft Directive on the place of supply of services.2. A draft Directive on procedures for VAT refunds to businesses established in a member state that is not the refunding country.3. A draft Regulation on improved administrative co-operation and exchange of information between member states.The proposed new rules represent a significant extension of the reverse charge mechanism for business to business supplies. This will have significant compliance implications for all businesses receiving cross-border supplies and, for partially exempt businesses, may affect the amount of irrecoverable VAT which they suffer.

This feature article looks at the law and practice of electronic signatures, and assesses how it has developed alongside the growth in e-commerce.

The European Commission has proposed to extend the EC VAT and E-Commerce Directive until 31 December 2008.

HM Revenue & Customs has published a brief guidance note on the application of value added tax (VAT) to businesses which trade on the internet. The guidance includes information regarding the VAT payable on website income and an overview of the different VAT schemes available.Source: HM Revenue & Customs press release, 27 February 2006.

HM Revenue & Customs has published new internet-based guidance on the tax rules which apply to people who trade online for a profit. The guidance explains the circumstances in which those who sell goods online on sites such as eBay may be liable for tax.Source: Directgov press release, 6 February 2007.