32 Pages Posted: 10 Dec 2007
Date Written: January 1, 2008
Inconsistencies in the design of cross-border jurisdictional rules in different VAT models have come under increasing scrutiny in recent years. The rules for services have attracted particular attention because of the rapid growth in the volumes of cross-border services transactions. Just as competing jurisdictional principles make it difficult for businesses to understand their obligations, revenue administrators also face significant obstacles to collecting VAT on cross-border services. This paper outlines the legal design principles underlying the two main models of VAT, The European VAT Directive and the New Zealand GST, notes some of the variations on those models, and explains how and why cross-border conflicts can arise. A simple example illustrates the complexities that can arise even when applying what appear to be commonly agreed VAT rules to what should be a comparatively simple transaction: the supply of real estate agent's services in relation to a sale of land.
Keywords: VAT, GST, tax, consumption tax, value added tax, goods and services tax, cross-border conflicts, destination principle, jurisdiction, place of supply, place of taxation, exported services
JEL Classification: K34
Suggested Citation: Suggested Citation
Millar, Rebecca, Sources of Conflict in Cross-Border Services Rules for VAT (January 1, 2008). Sydney Law School Research Paper No. 08/14. Available at SSRN: https://ssrn.com/abstract=1068542 or http://dx.doi.org/10.2139/ssrn.1068542