This lesson focuses on the critical administrative function of determining the place of supply for cross-border supplies of goods, services, and intangibles. It covers the rules for business-to-business (B2B) and business-to-consumer (B2C) transactions, as articulated in the OECD International VAT/GST Guidelines .

• The Destination Principle in Practice: The place of taxation must be determined to apply the destination principle. The OECD Guidelines provide a comprehensive framework for making this determination, aiming to provide certainty and minimize double taxation and unintended non-taxation .

• B2B Supplies – The General Rule: For B2B supplies of services and intangibles, the OECD recommends a general rule based on the location of the customer’s business establishment. If the customer is a legal entity with a single location, the place of taxation is the jurisdiction where that entity is established. This determination is not affected by the location of the supplier, the direction of payment flows, or any onward supply by the customer .

• B2B Supplies – Multiple Location Entities (MLEs): Where a customer has multiple establishments, the OECD provides guidance on how to determine the place of supply. The supply is generally taxed in the jurisdiction where the business establishment that uses or benefits from the supply is located. This requires a two-step analysis: first, identifying the supply to the MLE as a whole, and second, the “recharge” to the establishment(s) of use .

• B2C Supplies: For B2C supplies, the general rule is that the place of taxation is the jurisdiction where the customer has their usual residence. To determine this, suppliers may use a combination of customer-provided information and other reliable indicators (e.g., IP address, billing address, financial institution details) .

• Simplified Registration and Compliance Regimes: Recognizing that foreign suppliers may find it burdensome to register in every jurisdiction where they have customers, the OECD advocates for simplified registration regimes. These include electronic registration, reduced reporting requirements, and less stringent invoicing standards. The EU’s One-Stop Shop (OSS) is a leading example of such a regime .