European Gaming Lawyer magazine Spring 2014 | Page 37

The recast brings together various provisions
in a single piece of legislation. It provides
a clearer overview of EU VAT legislation
currently in force. The VAT Directive codifies
the provisions governing the introduction of
the common system of VAT in the EU.
Binding implementing measures to ensure
uniform application of the VAT Directive
can be found in the VAT Implementing
Regulation (Council Regulation (EU) No
282/2011). Unlike directives, those measures
are directly applicable without transposition
into national law.
Under certain conditions, Member States
may be authorised to derogate from the
common VAT rules to simplify the procedure
for charging the tax or to prevent certain
types of tax evasion or avoidance.
2. Place of supply of
telecommunications, broadcasting and
electronic services
Over the years, gradual changes were
undertaken with regard to the place
of supply of services. Globalisation,
deregulation and technological progress
created enormous changes in the volume
and pattern of trade in services.
Since 2010, following the Council
Directive 2008/8/EC amending the VAT
Directive as regards the place of supply of
services, the EU VAT Directive distinguishes
between business-to-business transactions
(“B2B”) and business-to-consumer
transactions (“B2C”).
For B2B transactions, the EU VAT
Directive generally states that the place of
supply of services shall be the place where
the recipient is established. With regard to

B2C transactions, those transactions are
generally sourced in the location where the
provider is established.
Furthermore, the Directive currently
distinguishes between supplies into or from
the EU and supplies between EU countries.
In addition to that, Article 58 of the
Directive provides special rules for the
supply of electronic services by a non-EU
business to non-taxable persons.

that fixed establishment is located. In the
absence of such place of establishment or fixed
establishment, the place of supply of services
shall be the place where the supplier has his
permanent address or usually resides.

3. Electronic B2C Transactions
Annex II to the VAT Directive shows
an indicative list of the electronically
supplied services. (4) of the Annex explicitly
refers to supply of (….) games, including
games of chance and gambling games.
According to the provisions of the VAT
Directive and its amendments by Directive
2008/8/EC a distinction needs to be drawn
between supplies by EU-businesses and
non-EU businesses.

b. Operator outside Europe
Non-EU businesses supplying electronic
services to consumers in the EU must
charge VAT in the EU country where that
consumer belongs (is registered, has a
permanent address or usually lives). Article
58 of the VAT Directive reads as follows:

a. Operator in Europe
When supplying a consumer in the EU, the
EU business must charge VAT in the EU
country where the business is based, no
matter where the customer belongs. Article
45 of the Directive reads as follows:
Article 45
The place of supply of services to a non•
taxable person shall be the place where
the supplier has established his business.
However, if those services are provided from
a fixed establishment of the supplier located
in a place other than the place where he has
established his business, the place of supply
of those services shall be the place where

This scheme sets out the so called “Country-of-origin principle” according to which
VAT is charged locally by the supplier at the
local VAT rate.

Article 58
The place of supply of electronically supplied
services, in particular those referred to in
Annex II, when supplied to non• taxable
persons who are established in a Member
State, or who have their permanent address
or usually reside in a Member State, by
a taxable person who has established his
business outside the Community or has
a fixed establishment there from which
the service is supplied, or who, in the
absence of such a place of business or fixed
establishment, has his permanent address or
usually resides outside the Community, shall
be the place where the nontaxable person is
established, or where he has his permanent
address or usually resides (…)
Non-EU businesses supplying electronic
services to consumers in the EU can make

European Gaming Lawyer | Spring Issue | 2014 | 37