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Malta VAT Dep't Defines Electronically Supplied Services

by Jason Gorringe, Lowtax.net, London
23 March, 2015

Malta's Value Added Tax Department has released new Guidelines on the VAT treatment of electronically supplied services, following the change to place of supply rules at EU level for these services from the beginning of this year. The guidance is specific to Malta.

Since January 1, 2015, business-to-consumer supplies of broadcasting, telecommunications, and electronic services have uniformly been taxable in the location of the consumer, rather than the location of the supplier. For non-EU businesses, rules in place since 2003 required suppliers to account for VAT in the location of the consumer, but this requirement will now be more strictly enforced.

The guidance, targeted at domestic businesses and those foreign businesses registered under Malta's Mini One-Stop Scheme (MOSS), specifically concerns the definition of electronically supplied services for the purposes of the change.

The Guidelines point out that Article 7 of EC Regulation 282/2011 defines "electronically supplied services" as "services which are delivered over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology." Therefore, for a service to be classified as an electronically supplied services under Malta's VAT Act, the following conditions must be satisfied:

  • The service must be delivered over the Internet or an electronic network;
  • The nature of the service must be such that it renders its supply essentially automated and involving minimal human intervention; and
  • The nature of the service must be such that it renders its supply impossible to ensure in the absence of information technology.

To support taxable persons in complying with the rules, Malta has also released a "negative list" of supplies not covered by the term electronically supplied services, namely:

  • The purchase of goods over the internet or an electronic network, where the order is processed electronically;
  • The supply of books, newspapers, newsletters, or journals disseminated electronically on tangible media, such as audio books or books published on CDs, DVDs, SD cards or USB drives, even where these are ordered over the internet;
  • The purchase of services over the internet or an electronic network, where the order is processed electronically but the services are delivered in a traditional manner, such as accommodation, car-hire, restaurant services, and passenger transport services;
  • The online purchase of tickets to physically attend a cultural, artistic, sporting, scientific, educational, entertainment, or similar event;
  • An interactive online course, where the course content is delivered live by a tutor over the Internet or an electronic network (namely via a remote link), such as a live webinar;
  • An online course delivered by a tutor over the internet, where the course content is pre-recorded, but where live support is provided by a tutor;
  • The offering of a facility for the placing of bets on the internet or via an electronic network in connection with live horse races and other live sporting events;
  • The offering of a facility for internet gambling pursuant to the streaming of a live casino event;
  • Conventional auctioneers' services reliant on direct human intervention, even if the bids are placed over the internet;
  • The provision of professional services (such as professional services provided by lawyers and financial consultants), where the services are delivered by e-mail; and
  • The provision of access to the internet, including the World Wide Web (this service would classify as a "Telecommunications" service for the purposes of item 10 of Part 2 of the Third Schedule to the VAT Act).

The Department said that its Guidelines are only indicative and are not exhaustive; are based on the interpretation of the rules according to the VAT Department; and are only binding in Malta and are subject to change.


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