The “place of supply” refers to the location where a supply of goods or services is considered to have taken place for the purpose of determining the applicable tax jurisdiction and tax rates. In the context of sales of goods to unregistered persons, the place of supply is important for determining the appropriate tax liability, especially in the case of Value Added Tax (VAT) or Goods and Services Tax (GST) systems.
When goods are sold to an unregistered person (i.e., a person who is not registered for VAT/GST), the place of supply is generally determined based on the location of the goods at the time of supply and may vary depending on the specific tax laws of a country.
Here are a few common scenarios:
Domestic Sales: If both the supplier and the customer are located within the same country, the place of supply is typically the location of the customer. This is usually where the goods are delivered to the customer.
Cross-Border Sales: If the supplier and the customer are located in different countries, the rules for determining the place of supply might differ. In many cases, the place of supply could be the location of the goods when they cross the border, which could be the location of the customer or the location where the goods are imported.
Distance Selling: Some countries have specific rules for distance selling, which refers to the sale of goods to customers located in a different jurisdiction within the same country. There may be thresholds beyond which the supplier is required to register for VAT/GST in the customer’s jurisdiction.
Online Sales: For e-commerce and online sales, the place of supply might be determined based on the location of the customer as well. However, rules can vary widely between jurisdictions.
It’s important to note that tax laws and regulations differ from country to country, and the rules for determining the place of supply can be complex. Businesses engaging in cross-border sales or sales to unregistered persons should consult the specific VAT/GST regulations of the relevant country or jurisdiction to accurately determine the correct place of supply and applicable tax liabilities.
Since tax laws can change and vary by location, it’s recommended to seek advice from a tax professional or authority in your jurisdiction for the most up-to-date and accurate information related to the place of supply for sales of goods to unregistered persons.
