New VAT decision – Interpretation of the place of supply rules for letting of storage space / warehousing services

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In a recent decision Nr. ET 124.412 of 2 June 2014 the VAT authorities have clarified the rules applicable on the place of supply of the letting of storage space.

Old position

Until now the VAT authorities basically accepted that in a situation of storage, the supply could either take place where the immovable property was situated or where the customer is established pursuant to the general place of supply rule in B2B situations, irrespective of the passive (without additional services) or active (with additional services) nature of the storage services.

What changed

According to article 31a of Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 the storage service is necessarily connected with immovable property if a specific part of the property is assigned for the exclusive use of the customer. In that case, the place of supply will be deemed to be the place where the storage place is situated excluding the option to apply the general B2B place of supply rule. If not, the general place of supply rules will be applicable (i.e. B2B: place where the customer is established; B2C place where the supplier is established).

The decision nr. ET 124.412 interprets the place of supply rules regarding the letting of storage place in line with regulation nr. 1042/2013. In that respect, it makes a distinction based on the assignment of exclusive rights upon the storage place and defines the conditions when the exclusive rights are deemed to be assigned exclusively to the customer.

The decision will be applicable on transactions performed after the 31st of May 2014.

New position: consequences

The new position will mainly have important consequences for storage services where a specific part of an immovable property is assigned for the exclusive use of the customer. Whereas the Belgian VAT authorities previously allowed the application of the general place of supply rules in B2B situations, this is no longer possible, which will likely entail a prefinancing of Belgian VAT by foreign customers.

For the other types of storage services (e.g. situations where the customer does not have exclusive rights to a specific location or where the service provider also provides additional services linked with the storage such as packaging, weighing, cleaning, sorting of the goods, etc), the impact of the new position seems to be rather limited. Whereas previously, such services could also fall under the place of supply rule where the immovable property is located (as long as there would be a sufficient link with the immovable property), this is no longer the case and the general place of supply rules always apply.

It is strongly recommended to review your storage contracts and check by which place of supply rules they are governed as from June 1, 2014.