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Show HN: A REST API for Calculating VAT in the EU

vatmossapi.com

81–90 of 118 posts

Re: Show HN: A REST API for Calculating VAT in the EU

#81
post #75

Earlier quoted context omitted.

> if they have any EU customers they must either VAT register in the UK (which adds 20% to their UK prices) While I'm sympathetic to the fact that this will increase your administrative burdens, in terms of your bottom line this really won't make much of a difference, because once you register for VAT you can also deduct it for all the costs you make – you only pay tax on the value you add, hence the name. Thanks for…

the variable costs for digital services are essentially zero (make once, sell many times), so having an extra 20% tax makes a phenomenal difference to either profit or competitiveness

The VAT for all costs you incur can be deducted, regardless of whether they're fixed or variable. If you're operating at a loss or if you do a lot of business with places where you don't have to charge VAT, it's not impossible to have VAT owed to you rather than the other way around.

Might it affect your profitability? Definitely possible. But it won't eat up 20% of your revenue or require you to charge 20% more to break even.

Re: Show HN: A REST API for Calculating VAT in the EU

#83

Is there any reason to ask for the country of the business/seller? As far as I know it's irrelevant and the VAT only depends on the buyer's country (for digital goods/services).

The GitHub page [1] of the project this API is based on says it is required for calculating tax when selling in one's own country. I don't know in which exact case though.

[1]: https://github.com/mpociot/vat-calculator

Re: Show HN: A REST API for Calculating VAT in the EU

#84

Earlier quoted context omitted.

I simply shut down. The VATMOSS nonsense ate up all the profits turning a 350 euro VAT filing into a quarterly mess costing upwards of 1000 euros. The API could be useful if it is guaranteed to be always up-to-date, but there is no such guarantee, and it makes it impossible as it is coded right now to do anything else but to compute a sale that has just happened rather than a sale which happened at a specific point i…

I simply shut down. The VATMOSS nonsense ate up all the profits I'm sorry to hear that, though sadly not surprised. It's also scary how much misinformation or simple ignorance is out there about this issue, and I'm talking generally here not just about parts of this HN discussion. I saw a discussion on another forum recently, and someone there was stubbornly maintaining that compliance was easy and they'd done it and…

To avoid adding to the misinformation and ignorance out there, what are some of these edge cases and minor details?

Re: Show HN: A REST API for Calculating VAT in the EU

#85
post #6

Earlier quoted context omitted.

im not sure. i refuse to do business with anyone in the EU simply because Im not interested in negotiating tax rates with 27 different tax authorities. not worth all the bureaucracy.

That's what the 'MOSS' part of VATMOSS is all about: "Mini One Stop Shop", a way to take all your business across the various EU countries allowing you to specify which country you had how much turnover in and then paying this to a single account which will take care of disbursement. I used this system for as long as it has been active and it works but is still ridiculously labor intensive for small amounts. The bigg…

Would you mind explaining how these companies work around the rule? These services are all payments with credit card, it shouldn't be so hard to trace them.

Re: Show HN: A REST API for Calculating VAT in the EU

#86
post #75

Earlier quoted context omitted.

the variable costs for digital services are essentially zero (make once, sell many times), so having an extra 20% tax makes a phenomenal difference to either profit or competitiveness

The VAT for all costs you incur can be deducted, regardless of whether they're fixed or variable. If you're operating at a loss or if you do a lot of business with places where you don't have to charge VAT, it's not impossible to have VAT owed to you rather than the other way around. Might it affect your profitability? Definitely possible. But it won't eat up 20% of your revenue or require you to charge 20% more to b…

no VAT:

   - £10,000 to produce a infinitely reproducible widget -> costs of £10,000
   - sell 5,000 times for £10 -> income £50,000
profit of £40,000

with VAT:

   - £10,000 to produce a infinitely reproducible widget, all allowable, 20% VAT back -> costs of £8,000
   - sell 5,000 times for £10 - (approx) £2 VAT -> income of £40,000
now I have a profit of £32,000 instead

if I'm selling mostly domestically the logical conclusion is to no longer sell to non-domestic EU customers

Re: Show HN: A REST API for Calculating VAT in the EU

#87

VAT just sounds like a huge, overcomplicated mistake by the EU. Why do you guys continue to live with it instead of repealing or fixing it?

"VAT" (the idea) is certainly not a mistake, it's one of the best way to do taxes, because it's, if not painless, at least almost invisible to the taxpayer (but it's considered by many to be unjust, because the poor spend a much larger part of their income in taxable goods than the rich, and so pay a bigger share of VAT).

The complexity of VAT in Europe is recent.

(I think) it used to be the case that if you sold something from one European country to another, then you weren't subject to VAT because it was considered an "export". Foreign companies (esp. US-based ones like Amazon) exploited this loophole so much, it became a problem. All they had to do was set up shop in a small, low-tax country [1] (Luxembourg / Ireland) and sell in every other country tax-free.

So the EU created this rule that the VAT that should be paid, is the VAT of the country where the customer resides -- it had to be, because if it was the VAT of the seller's country then companies would have again clustered in the country with the lowest VAT in order to evade the new rule.

It's not a bad rule; if you're a huge corporation, well, maybe you don't like it but you can hire the necessary lawyers and accountants to implement it.

If you're an SMB that sells across Europe, it's absolutely horrible. I guess the bureaucrats who wrote the rule didn't care much about SMBs or thought there were few who sold internationally.

It would be simple to exonerate SMBs based on their revenue (and I think it's the case, but the triggers are very low and different in every country); it would be even simpler to have just one tax rate but that's politically impossible.

In practice it doesn't seem to be very much enforced for small companies.

- - -

[1] Low corporate tax, to optimize taxes even further; no need to be based in a low-tax country to free oneself from VAT; the smaller the country the better, because you want to have as few of your customers in the same country as you, as possible.

Re: Show HN: A REST API for Calculating VAT in the EU

#88

While the effort in general should be appreciated (especially open sourcing the code!), I'm doubtful that the REST API has practical use. "I calculated the VAT for the products I'm selling using that one website" is just too much of a liability risk for a business to take. Who do you hold liable in the event that the calculation was wrong?

The data for the API comes from the most widely used open source library on the subject [1]. It has 418 stars, is used by lots of people and is continually receiving pull requests / input from users. I bet you that it is not easy to find another entity (be it a person, an organisation or a piece of software) that knows as much about the problem. Of course, you are right about liability. You can sue your accountant. B…

That's the problem: even with top-notch data, unless you continuously audit the source code, you're still blindly trusting a third-party website regarding tax advice. In the event that something goes wrong, that could be construed as negligent.

Hence why I appreciate that yours and the other project are open source! Because even though I might not be able to use the REST API, I can certainly download the code and integrate locally after auditing it, or having it audited by my accountant, or tax attorney, or whatever.

Re: Show HN: A REST API for Calculating VAT in the EU

#89

Earlier quoted context omitted.

It is only for calculating tax when selling to consumers.

It's rare to find a business that only sells to consumers. You really should make the limitations and the targeted audience for the service absolutely clear or you're going to create a world of hurt for the people that use your service thinking you are solving a problem for them. Essentially you are giving tax advice, that's not an arena you should walk into without professional guidance to make sure you get this 100…

Hmm, are you sure there is a difference between consumers and businesses when it comes to VATMOSS? Google, for example, charges VAT for digital services such as Google Suite even when you provide a valid European VAT number. (As a business customer, this doesn't affect me, as I simply get to deduct this on my own return.)

Re: Show HN: A REST API for Calculating VAT in the EU

#90

Earlier quoted context omitted.

I simply shut down. The VATMOSS nonsense ate up all the profits I'm sorry to hear that, though sadly not surprised. It's also scary how much misinformation or simple ignorance is out there about this issue, and I'm talking generally here not just about parts of this HN discussion. I saw a discussion on another forum recently, and someone there was stubbornly maintaining that compliance was easy and they'd done it and…

To avoid adding to the misinformation and ignorance out there, what are some of these edge cases and minor details?

Changes without notice, processing transactions around the time of such changes, exceptions for locality not typically reflected in anything as simple as the country code and so on.
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