Cloud Platform Place of Supply and Reseller Commission
Nova SaaS Ltd, established in Country M, provides a cloud collaboration platform to the Helios group. Helios's registered office in Country N signs a single €240,000 annual contract with Nova. Helios employees access the platform from Country M, Country N, Country P, and Country Q; 60% of users are in Country P. Nova invoices Helios's Country N company, and Helios affiliates reimburse the N company under a group allocation. A Country M reseller introduces the contract and receives a 10% commission from Nova. Country M applies the general B2B place-of-supply rule based on the customer's business establishment and has a use-and-enjoyment override for services effectively used outside Country M. Country N applies the reverse charge to imported services. Country P and Country Q have local VAT registration thresholds for foreign suppliers but no special rule for business customers. Assume Helios is in business and the N company is the contracting party.
1. Determine the place of supply for the €240,000 platform fee and who must account for VAT. Address the multi-country use and the group allocation.
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The supply is B2B. Under the general rule, the place of supply is where the customer's business establishment is located, which is Country N. The N company is the contracting party and is in business, so Country N should apply the reverse charge. Nova should not charge Country M VAT on the €240,000. Country M's use-and-enjoyment override confirms that outcome because the service is effectively used outside Country M; even if the override were broader, the primary B2B rule points to Country N.
The fact that 60% of users are in Country P does not split a single B2B supply into local consumer supplies. Helios is a business customer and the N company contracts for the group. The group allocation is a reimbursement arrangement; it does not by itself make each affiliate the supplier's customer. The contract and invoicing should clearly identify the N company as the recipient and state that the fee covers group access. If the affiliates contract directly with Nova, or if the N company is merely an agent, each affiliate's establishment could become the place of supply and local registrations might be required. On these facts, Nova should invoice the N company without Country M VAT and obtain the N company's VAT identification and reverse-charge confirmation.
2. Explain the VAT treatment of the 10% reseller commission and identify the invoicing and registration risks if Nova also opens a support office in Country P.
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The reseller supplies introduction or marketing services to Nova. Nova is a business established in Country M, so the place of supply is Country M under the B2B rule. The reseller should charge Country M VAT on the commission, and Nova may recover that VAT if it uses the service for taxable business purposes. The commission does not change the place of supply of the platform fee. The reseller is not the customer for the platform; it is a supplier of services to Nova.
If Nova opens a support office in Country P, the key question is whether that office is a fixed establishment that receives or provides services. A support office that only assists users and cannot conclude contracts or receive services for its own account is less likely to change the place of supply. If the office becomes the establishment receiving the platform services, or if Nova contracts locally with Country P customers, Country P VAT registration and invoicing may be required. Nova should keep the contract with Helios in Country N, document the support office's limited role, and monitor Country P and Country Q thresholds. Invoicing must show the correct customer, VAT identification number, and reverse-charge reference; otherwise the N company may be unable to self-assess, and Nova may face assessments for failing to charge VAT.