- The use and enjoyment principle for VAT purposes determines where a service is used and should be taxed.
- It aims to prevent tax avoidance and double taxation. It states that the location of the supply of goods is where the service is consumed, meaning the destination country should tax the service.
- This principle applies differently to business supplies (B2B) and end customer supplies (B2C).
- Some services to which this principle might apply include advertising, consultancy, financial, transportation, telecommunication, and copyright transfers.
- It generally does not apply to services provided to non-taxable persons. In the EU, some countries apply negative use and enjoyment, while others apply positive use and enjoyment.
Source Fonoa
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