Luxembourg Compensated by EU for Changes to VAT Place of Supply Rules

Luxembourg knows how to play the EU tax game to its advantage. For years Luxemburg has done very well by getting a VAT slice off the top of VAT that, morally and economically, belonged to sales in other countries. The advantage to non-EU online retailers was that they could avoid paying out the higher rates of VAT in the countries they were actually selling in by claiming the transaction went through low-VAT Luxembourg. That changed for e-services in January 2015 to the place of supply, and so accounting for the VAT taken, now being the customer’s EU country where the transaction really took place. But as a sweetener, so as to get the changes voted through with Luxembourg’s agreement, it is to receive parachute payments of €1 billion, perhaps more, over the next few years.

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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About Eamon McNicholas

Tax Barrister, Accountant www.EamonMcNicholas.com
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