ExpertMedium2 marksMultiple Choice
ACCA · Question 16 · Value added tax (VAT)
Section B - Case 1: Nimbus SaaS Ltd
Nimbus SaaS Ltd is a UK-based tech startup providing cloud software subscriptions. The company supplies digital services to both B2B (business) and B2C (consumer) clients globally.
Regarding Nimbus's B2C digital service sales to consumers located in the European Union (EU), what is the place of supply for VAT purposes?
Section B - Case 1: Nimbus SaaS Ltd
Nimbus SaaS Ltd is a UK-based tech startup providing cloud software subscriptions. The company supplies digital services to both B2B (business) and B2C (consumer) clients globally.
Regarding Nimbus's B2C digital service sales to consumers located in the European Union (EU), what is the place of supply for VAT purposes?
Answer options:
A.
The UK, as Nimbus SaaS Ltd is established there.
B.
Where the consumer is located.
C.
Outside the scope of VAT entirely.
D.
The EU country with the lowest VAT rate.
How to approach this question
Apply the special place of supply rules for digital services (telecommunications, broadcasting, and electronic services) supplied to non-business customers.
Full Answer
B.Where the consumer is located.✓ Correct
Under the place of supply rules for digital services (B2C), the supply is deemed to take place where the consumer is located, has their permanent address, or usually resides. Nimbus SaaS Ltd may need to register for VAT in those EU countries or use the Non-Union OSS (One Stop Shop) scheme.
Common mistakes
Applying the general B2C rule (where the supplier belongs) instead of the specific digital services rule.
Practice the full ACCA TX — Taxation Practice Exam 4
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