OECD Publishes Guidelines on Taxation of Services and Intangible Goods

Sovos
April 13, 2017

The Organization for Economic Cooperation and Development (OECD), in newly-published 2017 Guidelines for VAT/GST, has opined on how they believe VAT should be assessed on services and intangibles. Their primary recommendations are that countries adopt regimes which:

1. Tax services and intangibles at the place of consumption;

2. Tax business-to-business (B2B) transactions at the location where the service/intangible is used;

3. Apply a “reverse charge” for cross-border B2B transactions, shifting liability to the purchaser;

4. Tax business-to-consumer (B2C) transactions at the place where the consumer resides; and

5. Adopt simplified registration requirements for non-resident suppliers of B2C services and intangibles.

These guidelines are part of a continuing conversation on VAT and the digital economy, which was kick-started in 2013 by the OECD’s publication of its Action Plan on Base Erosion and Profit Shifting.

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