With different rates of value-added tax (VAT) applying throughout Europe, the place that a supply is made (and hence the VAT rate which is applicable) can be a very important matter.
The basic 'place of supply' rule is that in normal circumstances (and subject to some exceptions), the place of supply for a service is the place where the supplier 'belongs' – in other words, where they normally do business. However, this has caused considerable problems where the supply is one of services, not goods. Accordingly, the rules were changed on 1 January 2010, such that the basic rule for the place of supply of a service is now where the customer belongs if the customer is a business.
The new rules are complex and should be understood fully if they affect you.
