Reply To: Passing on VAT

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#56069
VAT-adviser
Member

This sounds like a complex transaction that requires a detailed review.

The first consideration is to ascertain what services you provide – are you an agent or principal in this transaction since you are simply passing the supplier products? A detailed review of the agreements/ arrangements is required. If agent then VAT is charged on your agency fees and the supplier is responsible for the VAT to customers.

The second consideration is to assess the scope of these virtual host services which can either be normal service, e-service or electronically supplied service etc for VAT purposes. And whether these virtual services are provided with or without human intervention.

Live interactive online services are considered an ‘entertainment activity’ or ‘amusement activity’, which must be considered to be ‘materially’ or ‘actually’ take place where the service provider has established his seat of business or a permanent establishment from which he provides the service or, failing that, his place of residence or his usual place of residence – for VAT purposes.

If the services are electronically supplied service, then the place of supply is where the customer is located, the host might have to register for VAT purposes in a different Member State.

Hence it is quite a complex case that requires more information to address the key issues.