The EU VAT Directive 2006/112/EC includes a ”may” (optional for Member States to implement) provision on the place of supply of services specifically on ”Use & Enjoyment”.
Article 59a
In order to prevent double taxation, non-taxation or distortion of competition, Member States may, with regard to services the place of supply of which is governed by Articles 44 (Main rule B2B), 45 (Main rule B2C), 56 (Hiring of means of transport) and 59 (Supply of services to non-taxable persons outside the Community):
(a) consider the place of supply of any or all of those services, if situated within their territory, as being situated outside the Community if the effective use and enjoyment of the services takes place outside the Community;
(b) consider the place of supply of any or all of those services, if situated outside the Community, as being situated within their territory if the effective use and enjoyment of the services takes place within their territory.
However, this provision shall not apply to the electronically supplied services where those services are rendered to non-taxable persons not established within the Community.
In summary:
- EU Member states have the option to implement ”Use & Enjoyment” (U&E) rules
- For selected services
- Place of supply of services shifts
- from inside the EU territory to outside the EU if U&E outside the EU
- from outside the EU to EU territory if U&E in that territory
Use & Enjoyment in Austria
Article in the Austrian VAT legislation
Art. 3a(16) of the Austrian VAT law
In order to avoid double taxation, non-taxation or distortion of competition, the Federal Finance Minister may issue a directive that the place of the supply of a miscellaneous service referred to in paragraph 6, 7, 12, 13 or 14 shall be considered to take place where the miscellaneous service is used or enjoyed. In accordance herewith, the place of supply of the service may be:
- treated as if they were situated in Austria instead of a third territory, and
- situated in a third territory instead of in Austria.
U&E regulation in Austria
Services taxed at the place where the services are effectively used and enjoyed.
- Telecommunications, radio, TV broadcasting services
- Hiring of means of transport
- Hiring out of movable tangible property (except for all means of transport)
- Services related to sports betting and gambling.
Place of supply of services shifts from inside AT to outside the EU if U&E outside the EU
- Staff employed in a third country is deemed to be the third country (Regulation 1998/218).
Place of supply of services shifts from outside the EU to AT territory if U&E in AT
- Movable tangible property (except for all means of transport) (Regulation 2010/173).
- Sports betting and gambling services, except
- if services provided electronically to a non-taxable person outisde the EU
- if provided by intermediaries to a (deemed) entrepreneur resident in a third country, is deemed to be in Austria (Regulation 2010/173).
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