Tax Alert - New VAT rules for places of supply of services and services provided electronically
07/03/23
March 7th, 2023
There are proposed amendments to the Law on Value Added Tax currently in Parliamentary procedure that introduce significant changes in the place of supply rules for services.
The status of the recipient will become important when determining the place of supply of services, specifically, whether the service is provided to a taxpayer (a Business) or to a non-taxpayer (a Consumer). Taxpayers will need to familiarize themselves in depth with the new rules in order to correctly calculate the VAT liability on their service invoices. The new rules will also have effect on the taxpayer’s obligation to self-charge VAT in cases where they receive services from abroad.
According to the new general rules:
the place of supply of services when performed towards a taxpayer (Business) is the place where the recipient of the service has its actual seat.
the place of supply of services performed to a non-taxpayer (Consumer) is the place where the supplier of services has its actual seat.
There are numerous exceptions to the general rules for determining the place of supply of services, which depend on the type of service, such as, services related to real estate, passenger transport, rent of vehicles, catering services, services in the area of culture, art, sport, education, science and entertainment, etc.
In addition, services provided electronically are defined as a new type of service for VAT purposes.
The definition of these services includes:
creation of websites, hosting of websites, maintenance of programs and equipment remotely,
software and its updates,
images, text and information, and databases access,
music, movies and games, including games of chance, as well as, political, cultural, artistic, sporting, scientific, and entertainment broadcasts and events, and
distance learning.
The place of supply of these services will be the place of headquarters or residence of the recipient of the service, regardless of whether the service is provided to a taxpayer (business) or to a consumer.
The amendments related to the place of supply of services are expected to take effect as of 1 July 2023.
How can we help you?
PwC North Macedonia can help you with:
Assistance and advice in relation to the new rules on the place of supply of services for VAT purposes.
Assistance in determining the status of the recipient of the supply of services for VAT purposes.
Specialized training courses for employees on the changes in the VAT regulation.
For more details please refer to your usual contact within PwC or the persons indicated below:
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Miroslav Marchev
Partner, Tax and Legal Services
Mobile: +389 70 270 177
E-mail: miroslav.marchev@pwc.com
Eli Bocevska Grueska
Senior Tax Manager
Mob: + 389 72 307 510
E-mail: eli.bocevska.grueska@pwc.com
Ana Shajnoska Georgijevska
Senior Tax Manager
Mobile: + 389 72 307 509
E-mail: ana.shajnoska@pwc.com
