Telecoms B2B: use and enjoyment


BerlinTelecom (a EU telecoms supplier) provides WashingtonTelecom (a US telco) access to its EU telecoms network.  Is VAT chargeable to the clients of the US telco when they use their mobile phones on European business trips?

VAT analysis

As WashingtonTelecom is established in the US the normal place of supply would be in the US – outside the scope of EU VAT.  However, it could be said that WT’s customers “use and enjoy” the service in the EU, therefore should EU VAT be charged under the Telecoms Directive?  If so, how is the EU supplier going to find out where WT’s customers use or enjoy the service in order that BT can apply the VAT charge? 

The above illustrates the difficulties regarding the application of VAT to telecoms transactions when there is a chain of supplies.  You can contact us to find out the answer.