Use & Enjoyment in European VAT law (Directive 2006/112/EC)
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”.
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.
- 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
U&E Rules in Belgium
- As of November 23, 2017
- Belgium inplemented U&E rules on B2B freight transport and related services
On 31 October 2017, (previous) Royal Decree No 57, which deals with the freight transport services and related services, was replaced by a new Royal Decree which came into force on 23 November 2017.
In order to clarify and discuss the (new) rules, the tax authorities published an administrative circular in this regard on 31 May 2018.
Based on the “use and enjoyment” rules, the place of freight transport services and related services will be as follows:
- When the entire freight transport service process takes place outside the EU, the place of service will be outside the EU;
- When the entire freight transport service process takes place within Belgium, the place of service will be in Belgium. This is a new rule that did not appear in the previous Royal Decree.
Royal Decree no. 57
Circular 2018 / C / 68 on the place of freight transport services and related services according to their actual use (use and enjoyment rule)