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

The proposed definition of ‘services
connected with immovable property’ –
effective 1/1/2017
Graziella Demanuele Bianco
15th October 2014
What is changing?
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Special place of supply rule in Article 47 of the EU VAT
Directive
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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 7th October 2013 to
ensure uniform treatment introducing:
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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
The current rule
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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.
Imp. Reg. 1042/2013
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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)
New Articles 13b, 31a and 31b
New Article 13b
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“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
New Article 31a
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Article 47 shall include only those services that have a
sufficiently direct connection with that property i.e.
 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;
 Where the services are provided to, or directed towards,
an immovable property having as their object the legal or
physical alteration of that property.
New Article 31a
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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
New Article 31a
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
New Article 31a
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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
New Article 31a
Parties
Maltese
supplier and
Polish
business
customer
Belgian
supplier
and Maltese
business
customer
Service
Complex storage
without exclusive
property use
Stand and
ancillaries
Location
Treatment
Reverse charge
Polish VAT
Warehouse in Malta
Reverse charge
Maltese VAT
Fair in Belgium
Italian supplier
to a Bulgarian
individual
Maltese VAT
chargeable by the
Italian supplier
Repairs
Holiday home in Malta
New Article 31b
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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.
Timeline
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Directive 77/338/EEC – Article 9(2)(a) – ‘The place of
supply of services connected with immovable property,
including the
services
of estate
agents andon
experts, and
VAT
Committee
Guideline
of services for preparing and coordinating construction
insurance loss adjustment
works, such as the services of architects and of firms
services
re immovable
property
providing
on-site supervision,
shall be
the place where
the property is situated’.
Timeline
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C-60/96 – EC v. France
Discussion whether tents,
caravans, mobile homes and
light framed leisure dwellings
are immovable property
1977
1984
Timeline
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VAT Committee Guideline on
place of supply of tiling,
papering and parqueting
1984
1997
Timeline
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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’
1984
1997
C-315/00 – Maierhofer
Discussion whether
buildings made from
prefabricated
components are
immovable property
2000
Timeline
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C-428/02 – Marselisborg
Discussion on whether
mooring berths are
immovable property
1997
2000
2003
Timeline
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1997
C-166/05 – Rudi Heger
Whether sale of fishing
permits is connected with
immovable property
2000
2003
2005
Timeline
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2000
VAT Committee Guideline
on the connection of legal
services to immovable
property – legal or
physical alteration
Directive 2008/8/EC –
The VAT Package
Directive introduced
today’s Article 47
2003
2005
2006
Timeline
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2003
C-37/08 – RCI Europe
Re fees paid for
exchange of timeshare
usage rights
2005
2006
VAT Committee Guideline
on services of
intermediaries - arranging
hotel accommodation
2008
Timeline
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VAT Committee Guideline
on definition of immovable
property, ‘sufficiently direct
connection’ and list of
services falling
within/outside of Article 47
2005
2006
2008
C-530/09 – Inter-Mark
Re stands in
fairs/exhibitions
2009
Timeline
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2006
C-532/11 – Leichenich
Discussed whether a houseboat
was immovable property
2008
2009
2011
Timeline
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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.
2008
2009
2011
2012
Regulation
1042/2013
Timeline
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Request for
input on
new Articles
13b, 31a
and 31b by
EC
2010
2011
Cross
border
ruling
FISCALIS
workshop
2012
2013
OECD
Guidelines
Timeline
25
2011
Explanatory
notes
2012
2013
2014
Timeline
26
2011
Effective
date
2012
2013
2014
2015
Thank you
Graziella Demanuele Bianco
Senior Manager, Indirect Tax
KPMG
Tel: (00356) 2563 1032
Email: [email protected]