Place of performance in case of transfer of rights of use via online platform B2C
May 20, 2020 | 50,00 EUR | answered by Steuerberater Knut Christiansen
As a VAT-registered composer, I want to offer my compositions on online marketplaces (beat platforms). This involves granting rights of use for the editing of the compositions. It is explicitly not about selling digital music for simple listening pleasure. Although private consumers receive various music tracks with individual instrument recordings of my composition via download through the platform, the key economic performance is the granting of rights of use and editing. Customers are then allowed to edit and publish my composition.
In terms of VAT, what kind of service is this granting of rights and where is the place of supply if my customers live both in the European Community and in other countries?
Background to the question: I am looking for a way to pay the entire VAT here in my country, so that I do not have to potentially register for MOSS and in numerous third countries. I am aware of the 10,000 euro threshold.
Good day and thank you for your inquiry, which I would like to comment on as part of an initial consultation.
Basically, you are saying that it is not a service provided electronically ("music download"), but the granting of usage rights is the essential feature or should be.
The service is provided to private customers.
In this case, the place of supply is governed by § 3a (4) No. 1 UStG. Accordingly, the place of supply for customers from third countries is the registered office or domicile of the recipient of the service.
§ 3a (4) UStG generally applies to recipients of services from third countries. If the recipient of the service is from the Community area (EU), the principle of § 3a (1) UStG would apply: the place of supply is where the entrepreneur operates his business. In this case, Germany.
Therefore, you would generally need to differentiate and prove where the customer is based. In this case, sales outside the EU would generally be subject to tax in the third country. All other sales would be delineated in Germany.
I would recommend that you request a binding ruling from the tax office to determine whether your services may fall under § 3a (5) sentence 2 No. 3 UStG. Because fundamentally, there is already an electronic service in the form of downloads, so there could be delineation issues.
I am available for any further questions.
Please note that this forum cannot replace personal advice and only allows for an initial tax assessment. Therefore, no liability can be assumed.
Kind regards,
Knut Christiansen
Tax consultant
