Atanas Mihaylov[1]
This article provides an overview of the new rules for place of supply of services related to real estate, which are effective as of 1st of January 2017. These rules have been introduced by Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation (EU) No 282/2011 as regards the place of supply of services to ensure the uniform application of EU law in respect to services related to real estate.
The article outlines the various rules for place of supply of services under Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and explains how the place of supply rules of services related to real estate differ from the general place of supply rules. It further examines certain problems with the existing framework of services related to real estate which have led to non-uniform application of the provisions of under Council Directive 2006/112/EC by the Member States and the attempts of the Court of Justice of the European Union to ensure uniform application through its case law.
The article further focuses on the rules introduced with Council Implementing Regulation (EU) No 1042/2013 and analyses their effect towards achieving uniform application of the place of supply rules throughout the EU. The new definitions of “real estate” and “sufficiently direct link” are examined in details where the author has considered also the relationships between these new definitions and the existing case law of the Court of Justice of the European Union.
The author has also analysed the application of the new rules for place of supply of services related to real estate to three types of services: (i) lease and letting of real estate, (ii) physical alternations of land and building, and (iii) professional services. The analysis includes detailed argumentation to which of these services the new rules should be applied and which services would fall outside of the scope of the new rules. It is also considered that some of the new rules differ from the previous case law of the Court of Justice of the European Union and, therefore, services which previously have not been considered to be related to real estate are now deemed to be related to real estate. Likewise, services which previously have been considered to be related to real estate are now not to real estate.
Finally, the article makes an overall assessment of the uniformity of application of the place of supply rules of services related to real estate achieved by Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013.
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Link to the article in Bulgarian language: Новости в Европейския режим на ДДС при услуги, свързани с недвижими имоти
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[1] Atanas Mihaylov, Senior associate, Wolf Theiss Law Firm, Sofia, Bulgaria, email: atanas.mihaylov@wolftheiss.com
The opinions and positions expressed by the author in this article are his personal scientific views on the topic. they may not be attributed to Wolf Theiss Law Firm or its lawyers, and are not necessarily identical with their position on the matter.