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The proposed definition of ‘services connected with immovable property’ – effective 1/1/2017 Graziella Demanuele Bianco 15 th October 2014.

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Presentation on theme: "The proposed definition of ‘services connected with immovable property’ – effective 1/1/2017 Graziella Demanuele Bianco 15 th October 2014."— Presentation transcript:

1 The proposed definition of ‘services connected with immovable property’ – effective 1/1/2017 Graziella Demanuele Bianco 15 th October 2014

2 What is changing?  Special place of supply rule in Article 47 of the EU VAT Directive  Transposed in Item 4 of Part Two of the Third Schedule  The subject of a number of CJEU cases  Different interpretations across EU Member States  Implementing Regulation 1042/2013 of 7 th October 2013 to ensure uniform treatment introducing:  An EU wide definition of immovable property for the purposes of the EU VAT Directive  Guidance on the interpretation and application of Article 47  Effective 1/1/2017 2

3 The current rule Supply of services connected with immovable property Article 47 EVD The place of supply of services connected with immovable property, including the services of experts and estate agents, the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or sites developed for use as camping sites, the granting of rights to use immovable property and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the immovable property is located. 3

4 Imp. Reg. 1042/ A 3-step approach to the application of Article 47  Establish that the supply is one of services  Determine whether the property in question is immovable and is specific  Determine whether the service has a sufficiently direct connection with that property (a list of inclusions/exclusions provides guidance)

5 New Articles 13b, 31a and 31b

6 New Article 13b 6 “Immovable Property”  Specific part of the earth, on or below its surface, over which title and possession can be created  Building/construction fixed to or in the ground which cannot be easily dismantled or moved  Installed items that make up an integral part of the building/construction without which it would be incomplete e.g. doors, windows, roofs, staircases and lifts  Items/equipment/machine permanently installed which cannot be moved without destroying or altering the building/construction

7 New Article 31a 7 Article 47 shall include only those services that have a sufficiently direct connection with that property i.e. derived from constituent elementcentral toessential for  Where the services are derived from an immovable property and that property makes up a constituent element of the service and is central to, and essential for, the services supplied; provided todirected towards the legal or physical alteration of that property.  Where the services are provided to, or directed towards, an immovable property having as their object the legal or physical alteration of that property.

8 New Article 31a 8 List of 17 services covered by Article 47 including:  Drawing up of plans for a particular plot of land  On-site supervision or security  Construction and demolition (incl. pipelines)  Maintenance, renovation, repair (incl. pipeline)  Work on land e.g. agricultural services  Surveying and assessment of risk and integrity  Valuation  Accommodation  Other rights e.g. licences, access to airport lounges

9 New Article 31a 9 List (contn’d) of 17 services covered by Article 47 including:  Installations of items eventually qualifying as immovable property  Maintenance, repair, inspection and supervision of such installed items  Property management (not of investments in real estate)  Intermediation  Certain legal services  Leasing, letting incl. storage in areas for exclusive use

10 New Article 31a 10 8 exclusions including:  Advertising even if it involves use of immovable property  Intermediaries acting in the name and on behalf of another person  Provision of stand location at fair/exhibition together with other services  Certain legal services connected to contracts e.g. advice on the terms of a contract, to prove existence of a contract, whether such services are not specific to a transfer of title

11 New Article 31a 11 PartiesServiceLocationTreatment Maltese supplier and Polish business customer Complex storage without exclusive property use Warehouse in Malta Reverse charge Polish VAT Belgian supplier and Maltese business customer Stand and ancillariesFair in Belgium Reverse charge Maltese VAT Italian supplier to a Bulgarian individual RepairsHoliday home in Malta Maltese VAT chargeable by the Italian supplier

12 New Article 31b 12 Equipment put at the disposal of a customer:  Falls within Article 47 if the supplier assumes responsibility for the execution of the work on immovable property;  Rebuttable presumption if the supplier provides the customer with the equipment plus staff for its operation.

13 Timeline Directive 77/338/EEC – Article 9(2)(a) – ‘The place of supply of services connected with immovable property, including the services of estate agents and experts, and of services for preparing and coordinating construction works, such as the services of architects and of firms providing on-site supervision, shall be the place where the property is situated’. VAT Committee Guideline on insurance loss adjustment services re immovable property

14 Timeline C-60/96 – EC v. France Discussion whether tents, caravans, mobile homes and light framed leisure dwellings are immovable property

15 Timeline VAT Committee Guideline on place of supply of tiling, papering and parqueting

16 Timeline COM (2003) 822 proposal – Article 9(2)(a) to include ‘the provision of hotel or similar accommodation’ and ‘the granting of rights to use immovable property’ C-315/00 – Maierhofer Discussion whether buildings made from prefabricated components are immovable property

17 Timeline C-428/02 – Marselisborg Discussion on whether mooring berths are immovable property

18 Timeline C-166/05 – Rudi Heger Whether sale of fishing permits is connected with immovable property

19 Timeline Directive 2008/8/EC – The VAT Package Directive introduced today’s Article 47 VAT Committee Guideline on the connection of legal services to immovable property – legal or physical alteration

20 Timeline C-37/08 – RCI Europe Re fees paid for exchange of timeshare usage rights VAT Committee Guideline on services of intermediaries - arranging hotel accommodation

21 Timeline VAT Committee Guideline on definition of immovable property, ‘sufficiently direct connection’ and list of services falling within/outside of Article 47 C-530/09 – Inter-Mark Re stands in fairs/exhibitions

22 Timeline C-532/11 – Leichenich Discussed whether a houseboat was immovable property

23 Timeline C-155/12 – RR Donnelley (Opinion and Judgement) Complex storage service comes within the scope of Article 47 if storage is the principal service of a single transaction and if the recipients are given a right to use all or part of expressly specific immovable property. Regulation 1042/2013

24 Timeline Request for input on new Articles 13b, 31a and 31b by EC FISCALIS workshop Cross border ruling OECD Guidelines

25 Timeline Explanatory notes

26 Timeline Effective date

27 Thank you Graziella Demanuele Bianco Senior Manager, Indirect Tax KPMG Tel: (00356)


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