EU VAT Committee backs 2015 VAT Moss refunds

The European Union’s VAT Committee is a body created by the member states to review contentious issues regarding the operation of the EU VAT regime. It provides guidance to the practical issues for the member states to use on a range of issues, and is made-up of VAT experts from each country.

The committee recently reviewed the position on the recoverability of foreign input VAT by EU-based companies where they are providing digital services. In 2015 B2C digital services EU VAT underwent a change in the place of supply rules. This meant EU providers had to track and charge the VAT rate of the country of their consumers for the first time. They then should report the VAT on a country-by-country basis through a single, quarterly VAT return. The return is to be filed through new Mini One Stop Shop (MOSS) portals.

The Committee reviewed whether this new reporting regime undermined the right of providers to then use the VAT Refund Directive to claim for local input VAT outside of their home country. It concluded unanimously that it did not. The providers may continue to tick the box on the VAT Refund claim that they have not provided taxable supplies in the appropriate country even though they have via the MOSS reporting regime.

The Committee's guidance is non-binding. However, certain recommendations are picked-up by the European Committee and introduced into the EU VAT Directive via VAT Implementing Regulations.