VAT Modernization and Competition in the Cross-border Mail Market

More documents

Recommendations

Info

Before January 2010 terminal dues were considered to take place in the country of thereceiving DO mainly because the remuneration was paid to the receiving DO and that thedelivery service was provided in the country of destination. As a consequence the VATexemption rules of the country of the receiving DO applied. In other words, the localprovision of the VAT exemption for postal services was considered. Since January 2010, thechanges following the Council Directive treat both the sending and receiving parties on aB2B basis and terminal dues are considered to take place in the country of the sending DO.Now the VAT exemption rules of the country of the sending DO apply.Applying this principle to the cross-border postal service, the service supplied by thedelivering operator in the country of destination (Member State B) to the sending operator(customer) established in Member State A, will be located in Member State A, although theservice will physically be carried out in the country of destination (B). The place of supplyfor cross-border postal services has now changed from the country where the deliveringoperator is established (supplier) to the country where the sending operator (customer) isestablished. 283.2.2 The Commission’s OpinionThe VAT Package means significant changes to the way some firms do business in theEuropean Union. The rules affect cross-border B2B services most significantly. According tothe Commission Opinion as expressed in a recent working paper, these conditions could alsoaffect the cross-border postal service. Against this background, the Commission (DGTAXUD) takes the view that after the TNT-ruling, the exemption for the “public postalservice” in Article 132(1)(a) of the VAT Directive applies to cross-border services within theEU if the following cumulative conditions are fulfilled: 29On the “outgoing side” (in the country of departure of the mail, that is Member State A)The following conditions must be met in Member State A, since the place of supply of theservice is located in the country where the customer is established (Article 44 of the VATDirective):28 As explained in Working Paper No 658, op cit.29 Next paragraphs are quoted from TAXUD Working Paper No 65816
a) The specific cross-border service falls under the definition of “universal service”, asdefined by Member State A in accordance with Article 3 of the Postal Directive;b) The sending operator, irrespective of whether it is a private or public operator, is inMember State A acting in his capacity as a universal service provider, and thus, actsunder a “special legal regime” entailing particular obligations for him.On the “incoming side” (in the country of destination of the mail, that is Member State B)c) The delivering operator (supplying the service to the sending operator), irrespective ofwhether it is a private or public operator, is in Member State B acting in his capacityas the universal service provider, and thus, acts under a “special legal regime"entailing particular obligations for him.Only the combination of all three conditions allows the cross-border service to be VATexclusive. If one of the criteria fails, the VAT exemption would not apply. For example, theinterpretation and scope of what is included within the scope of the universal services issignificantly different between Member States. Consequently, some services will not be VATexempted after crossing the border, despite the fact that the services are considered USOproducts in the destination country. The schematic presentation of the new rules issummarized in exhibit 4.Exhibit 4: Place of Supply Rules and VAT Exemption USPCountry ACountry BClearanceSortingOffice ofExchangeTransportOffice ofExchangeSortingDeliveryOfficeDeliverySenderPPO APPO BRecipientService provided by PPO A:Outbound cross-border serviceUniversal service according to national postal regulationsin country ATerminal DuesService provided by PPO B:Inbound cross-border serviceUniversal service according to national postal regulationsin country B+ Obligation to provide inbound cross-border mailThe complications between the different national USO regimes and the effects on fiscalneutrality are further explained in 3.2. It is for the range of economic and operational impacts(as discussed in 3.3) that the supply of services rule would be best served based on the17
Page 1 and 2: Paul SCHOORL - CRNI Conference, 19
Page 3 and 4: a de facto universal service obliga
Page 5 and 6: apid growth of specialized services
Page 9 and 10: Provider (USP) so that the services
Page 11 and 12: the removal of the VAT exemption co
Page 13 and 14: Although TNT lost its case, the Cou
Page 15: VAT exemption for postal services a
Page 19 and 20: for example, it avoided including p
Page 21 and 22: outinely charged for bulk parcels f
Page 23: Commissioner Mr. Barnier in his spe
Page 27 and 28: In the situation that cross-border
Page 29 and 30: level of Operations and Accounting
Page 31 and 32: of the described complications in t

VAT Modernization and Competition in the Cross-border Mail Market

Create successful ePaper yourself

Delete template?

Save as template?