Where equipment is hosted in a “data-centre” or a “tele-house” one could say this gives rise to co-location services. The equipment could be housed in racking space, shelving or in an entire room reserved for a particular customer and would basically require space and therefore consuming capacity.
The sale of co-location space is often accompanied by the sale of capacity and if regarded as ancillary to the supply of telecoms services it would be treated as a telecoms service itself. However, some tax authorities question this view and do not regard the supply of co-location services as involving the transmission of data which is the essential ingredient in the definition of “telecoms” services. Co-locations services could be viewed as the granting of the right to use a certain space in the network and therefore linked to “granting of access” to a network which is included in the definition. However, when a supplier grants access to a network, he normally ensures the transfer of data to, through, or from this network. In the case of co-location services, the supplier merely puts space aside for the client rather than involvement in the transmission of data.
The VAT treatment of co-location services is very complex and advance planning should be undertaken.