EU VAT immovable property

The European Commission has published guidance on the new rules for the VAT treatment of services relating to immovable property. The new regime is due to come into force from 1 January 2017.

The changes have been passed by a VAT Implementation Regulation, give new guidance on the determining the place of supply of services. Generally, B2B services are taxable in the location of the customer. This ‘general rule’ is modified in certain situations, including immovable property, to a where the service is provided – the ‘special rule’. This includes immovable property since the location of the property is a fairer proxy for the place of consumption of the services and therefore the country where the tax is payable.

The new explanatory note provides detailed criteria and guidance on various types of services related to the immovable property.