Section 1

Alicia Starts is a taxable person based on article 9 VAT Directive. She is any person who independently
exercises an economic activity at any place. Her activities could be classified as a supply of services based
on article 24 VAT Directive, the supply of services is a taxable transaction based on article 2 (1) (c) VAT
Directive. Alicia Stars is established in the Netherlands. Hence, based on article 45 VAT Directive the
place of supply of her service is the Netherlands, regardless of the nationality of her clients. According to
article 193 VAT Directive, the VAT is payable by the person carrying out the taxable supply of goods or
services. Based on article 168 VAT Directive, there is a right of deduction for acquisitions that Alicia
made in regard to her business.

Section 2

Alicia Stars continues to be a taxable person based on article 9 VAT Directive. Her activities are classified
as services as well as taxable transactions pursuant to articles 24 and 2(1) (c) VAT Directive, respectively.
Alicia provides her services to other taxable persons, which means that article 44 VAT Directive will be
applicable. According to article 44 VAT Directive, the place of supply of the service will be the place
where the recipient of the service has been established (the place of the business). If the customer is from
outside the EU, then the tax will be due outside the EU, and VAT will depend on the national law.
According to article 193 VAT Directive, the VAT is payable by the person carrying out the taxable supply
(within NL). Article 196 VAT Directive if the business consumer is in the EU outside the Netherlands and
the reverse charge mechanism will apply. Based on article 168 VAT Directive, there is a right of
deduction.

Section 3

In regard to her online activities, Alicia is still a taxable person based on article 9 VAT Directive. She
provides a service which is a taxable transaction, articles 24 and 2(1) (c) VAT Directive. She provides her
services to non-taxable persons over the internet. Hence, the main rule for B2C is applicable – article 45
VAT Directive – the place of supply is the place where the service provider is established provided both
the supplier and the customer are in the EU. Based on 58 VD and 7 VR we can establish that the service is
not an electronic service. In the case of the hand-written horoscopes we can say that they do not constitute
a separate supply. So, when these are provided to consumers from the EU, article 45 VAT Directive is
applicable – the place of supply is the place where provider is established.

According to article 193 VAT Directive, it is Alicia who is liable to pay VAT.

Section 4

Here Alicia who is a taxable person (article 9 VAT Directive) hires another taxable person, a software
developer, to provide services for her. In order to establish if Alicia is indeed a taxable person, the
software developer needs to apply article 17 and 18 VAT Regulation. Article 17 VAT Regulation refers to
the general criteria in the VAT Directive for establishing a taxable person status. Article 18 and 55 VAT
Regulation provide that a VAT id number needs to be provided by Alicia to the software developer. Alicia
fulfils the requirements of article 9 VAT Directive. The taxable transaction can be qualified as supply of
services – article 24 VAT Directive. The services are taxable transactions – article 2 (1) (c) VAT
Directive. If we assume that Alicia supplies her VAT id, she can prove her status of a taxable person. In
determining the place of supply, the main rule for B2B found in article 44 VAT Directive will apply.
According to this, the place of supply should be the place where the recipient has established their
business. If the provider of the service is in the Netherlands, article 193 VAT Directive applies.
Furthermore, there is a right of deduction in article 168 VAT Directive. If the software developer is not
established in the Netherlands, then the reverse charge will apply – article 194 VAT Directive.

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If Alicia would not be considered as a taxable person, which is unlikely, then article 58 VAT Directive
would apply and the place of supply would be the place where she is established – the Netherlands.

With the new software she will continue to provide services to her clients who are not taxable persons. In
these cases the place of supply will be determined based on article 45 VAT Directive and the place of
supply will be the place where the customers are established.

Section 5

The app developer can be considered as a taxable person based on article 9 VAT Directive. The supply of
the App can be regarded as a supply of service as the nature of the good is not consistent with the
definition of a good. It is not a tangible object and its features are dominated by functions which constitute
a service. Article 24 VAT Directive provides a definition of a service which is any transaction which is
not a good. Furthermore, from Levob it follows that a software supply will be a supply of services. The
supply of services is a taxable transaction based on article 2 (1) (c) VAT Directive.

If we consider the development of the App, we will have a service provided to Alicia. Since she is a
taxable person (article 9 VAT Directive), the B2B main rule will apply – article 44 VD, the place of
supply will be the place where the recipient is established – the Netherlands. Here, article 193 VAT
Directive will apply in terms of liability. Article 168 VAT Directive provides a right to deduction.

In the present case, there is an intermediary involved. Its activities are covered by article 24 VAT
Directive. Such transactions are covered by article 46 VAT Directive. However, within the scope of the
article only intermediaries that act as agents of the principle are covered. It is likely that this is the case
here. Based on article 46 VAT Directive, the place of supply is the place where the transaction is supplied
according to the general rules. Hence, we should look at article 45 VAT Directive which deals with B2C
transactions. Based on this article, the place of supply is the place where the supplier is established.
Article 30 VAT Regulation provides clarification in regard the scope of the intermediary activities which
could be covered by the Directive – intermediary acting in its own name on behalf of a principal.

Section 6

Alicia is a taxable person based on article 9 VAT Directive. She provides an e-book to her customers via
e-mail. This is considered as a supply of a service pursuant to article 24 VAT Directive. In turn, this is
also a taxable transaction – article 2 (1) (a) VAT Directive. Digital books are regarded as services based
on the Commission v France and Luxemburg. In the cases it was stated that the e-books possess functions
which distinguish them from the paper books and therefore, the two products cannot be compared to each
other. In terms of place of supply, the transaction constitutes electronically supplied services, so article
45 VAT Directive applies. According to this article, the place of supply is the place where the supplier of
the service is established – the Netherlands. If the recipient is established in a non EU country, it is article
59 VAT Directive that applies and the place of supply is the country of the recipient. Another issue is the
fact that the supply of the e-book is made under a reduced VAT rate. Alicia is not able to apply such a
reduced VAT rate pursuant to article 98 (2) VAT Directive. The article refers to Annex 3 of the VAT
Directive where a list of supplies which could be subjected to a reduced rate is published. The supply of
digital books is not in the list.

Section 7

Here a few issues can be identified. Firstly, the flight can be considered as a supply of services in B2B
setting. Both parties fulfill article 9 VAT Directive. Supply of services is described in article 24 VAT
Directive and constitutes a taxable transaction – article 2 (1c) VAT Directive. The place of supply is
determined in accordance with article 48 VAT Directive. According to the TRR case if a taxable person
undertakes non-taxable activities, those will still be regarded as part of the taxable activities of the person,

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and the status of taxable person will not be altered. This is also covered by article 43 (1) VAT Directive.
Article 193 applies in terms of liability to pay VAT – the airway company is liable to pay. Article 168
VAT provides a right of deduction.

Secondly, Alicia supplies a service to the Maltese company. She acts in her capacity as a taxable person
(article 9 VAT). She supplies a service based on article 24 VAT Directive which constitutes a taxable
transaction for VAT purposes (article 2 VAT Directive). The place of supply is determined based on
article 44 VAT Directive which deals with B2B transactions. Based on this article, the place of supply is
the place where the recipient of the service is established – Malta. The taxable person liable to pay VAT is
the person receiving the service – article 196 VAT Directive. However, there is a right of deduction in
article 168 VAT Directive.

Thirdly, on her way to way to Malta, Alicia orders a sandwich on the plane. For goods supplied on board
of airplanes during a section of a passenger transport operation within the EU, the place of supply will be
determined based on article 37 (1) VAT Directive which provides that the place of supply will be deemed
to be at the point of departure of the passenger transport operation. This means the first scheduled point of
passenger embarkation within the EU. Article 15 VAT Regulation provides that the section of the
passenger transport operation will be determined by the journey of the means of transport. This means that
the applicable VAT will be the VAT of the country from which Alicia’s flight embarked. Since she is
Dutch and lives in the Netherlands, perhaps she took her flight to Malta from the Netherlands, if so –
Dutch VAT should apply to the sandwich. According to article 193 VAT Directive, the air line is liable to
pay the VAT. Many states exempt from VAT goods supplied on board, so based on Dutch national law,
the supply may be exempt from VAT (article 37 (3) VAT Directive).

Fourthly, on arrival in Malta, Alicia rents a car for 20 days. It is a service based on article 24 VAT
Directive. This is a taxable transaction based on article 2 (1c) VAT Directive. 20 days is classified as a
short-term rent (article 56 (3) VAT Directive). According to article 56 (1) VAT Directive and article 40
VAT Regulation, the place of supply will be the place where the means of transport is actually put into
disposal of the customer - Malta. Article 38 VAT Regulation provides that means of transport shall
include vehicles capable of being used for transport. Article 39 VAT Regulation provides that the duration
of the rental period will be determined based on the contract between the parties involved. Article 193
VAT Directive – the supplier of the services will be liable to pay VAT.

Section 8

Alicia is a taxable person based on article 9 VAT Directive. She is any person who independently
exercises an economic activity at any place. Her activities could be classified as a supply of services based
on article 24 VAT Directive, the supply of services is a taxable transaction based on article 2 (1) (c) VAT
Directive. The place of supply will follow from the main rule for B2B established in article 44 VAT
Directive – the place of establishment of the recipient of the service and if the service is provided to a
fixed establishment, it is the place of the fixed establishment that is the place of supply. According to
article 10 VAT Regulation, the place where a business is established is the place where the main activities
of its central administration are. The requirements of a fixed establishment have been provided for in the
case of Berkholz. In the case at hand, the US parent is merely a holding company. Based on the facts and
article 59a (b) VAT Directive, the effective enjoyment of the service is in the Netherlands as the only
representatives of the US company have been people from the Dutch subsidiaries, so we can say that the
place of supply would be the Netherlands, as it is the Dutch subsidiaries which benefit from the service.
Based on article 193 VAT Directive, it is the person carrying out the taxable supply that is liable to pay
VAT. However, there is a right to deduction in article 168 VAT Directive.

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Question 2

1. What is the place of supply of the services to Irish clients?

a. Private individuals – article 45 VAT Directive – Ireland – the place where the supplier or his fixed
establishment providing the service is established
b. Businesses – article 44 VAT Directive – Ireland – the place where the business or its fixed
establishment receiving the service is established

2. What is the place of supply of the services to UK clients?

a. Private individuals – article 45 VAT Directive - the place where the supplier or his fixed establishment
providing the service is established- Ireland
b. Businesses - article 44 VAT Directive - the place where the business or its fixed establishment
receiving the service is established – the UK

3. What is the place of supply of the services to French clients?

a. Private individuals- article 45 VAT Directive – France – the place where the supplier or his fixed
establishment providing the service is established
b. Businesses - article 44 VAT Directive - the place where the business or its fixed establishment
receiving the service is established – France

4. What is the place of supply of the services to Belgian clients?

a. Private individuals - article 45 VAT Directive – France – the place where the supplier or his fixed
establishment providing the service is established
b. Businesses article 44 VAT Directive - the place where the business or its fixed establishment receiving
the service is established – Belgium

5. According to article 44 VAT Directive, the place of supply will be the place where the recipient of the
service has established their business or if the service is provided to a fixed establishment, the place of the
fixed establishment. In this case France will be the place of supply of the service.

6. According to article 196 VAT Directive the person liable to pay VAT is the recipient of the services.