151–160 of 163 posts
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No, you must pay VAT on intra-EU B2B transactions too. The accounting is more complicated because the buyer pays rather than the seller, but it is still there.
You don't pay VAT on intra-EU B2B transactions; the buyer adds the VAT amount at their country's rate to both the amount to pay and the amount to claim back, cancelling it out.
Rather silly question - perhaps someone can help: I get a mechanic to repair my car; he charges me for labour, and VAT (20%) on top. The VAT he charges me, he pays that to the Government. I render my services as a software engineer, and I must pay income tax (~40%), and not VAT. How's my income different to the mechanic's income w.r.t. the kind of tax we pay? Or does the mechanic also pays income tax additionally?
Also the company you work for as a software engineer pays VAT on the products or services it sells to clients or customers.
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You don't pay VAT on intra-EU B2B transactions; the buyer adds the VAT amount at their country's rate to both the amount to pay and the amount to claim back, cancelling it out.
The reverse charge is still VAT being paid, just differently.
If I have misinterpreted it, I would very much like to know so I can inform my accountant. VAT is enough of a hairy mess as it is.
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If it works the same as in Germany you only pay no VAT if you buy from a company in another EU country as a company. Therefore the EU has both a sales tax and a VAT depending on if you look at individual countries or the EU as a whole.
No, you must pay VAT on intra-EU B2B transactions too. The accounting is more complicated because the buyer pays rather than the seller, but it is still there.
And the accounting is there because of tax fraud, I guess. And I also guess that the US has a similar accounting system where they have to report the amount purchased per tax bracket and the IDs of the companies they bought from.
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> What is also great: all products targeted at consumers must contain VAT price. Took this far through the comments to get there. There’s a lot of competition for “the worst thing about America”, but it tops my personal list.
(Also @int_19h) The mandatory tipping culture is another one. If it is mandatory, add it in the price. Tips should be earned. At least in Europe I know what to expect upfront. The imperial system is another. Makes it unnecessary difficult to convert units. Its difficult to change such illogical customs though. They're deeply ingrained in the culture, which is in many ways a dominant culture.
Any taxes add unnecessary pain. Welcome to the libertarian club. Lets keep taxes to the minimum
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
There are a number of goods that do have associated sales taxes that apply on any transfer, including some of the most expensive goods Americans buy. Particularly, in many jurisdictions, there are transfer taxes on houses and cars.
1. Dealers (who are buying cars for resale) do not pay sales tax on cars. When you sell a used car to a dealer, the dealer doesn't pay sales tax on it. When you sell a used car to an auto recycler / scrapyard, they don't pay sales tax. If you know of any states that are exceptions, I'd love to learn what those are.
2. A quick Google search (by no means comprehensive, so I could be wrong) suggests that most countries with VAT also charge a land transfer tax.
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I think your VAT Regime illustration has a mistake. The $2.40 should be $3.60?
It looks OK to me. Do you mean the $2.40 in the text or in the table?
I'm going to take a wild guess and say the author isn't from the US. He includes sales tax on items purchased for resale.... which is an exception in every state that I know of. Even if you purchase an item at retail with sales tax, you can file to receive the money back from the state. Additionally sales tax has nothing to do with whether your supply chain is fully integrated, and hiring all of your suppliers as emp…
I’m going to bookmark this as an example of how to clearly and specifically point out a bunch of issues with a source while maintaining a constructive tone. This type of comment makes HN the best forum for discussion on the Internet.
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VAT is more complicated than sales tax. Far, far more complicated. (I deal with VAT, sales tax, GST, CST, HST, and other consumption taxes as part of job.) The simplest form of consumption tax is the (Australian) GST: a flat 10% on almost all goods and services.
> VAT is more complicated than sales tax. I'm curious - do you think this extra complexity is necessary (e.g. extra rules to reduce unintended effects), or is it implementation-specific? > The simplest form of consumption tax is the > (Australian) GST: a flat 10% on almost > all goods and services. But isn't Australian GST just a specific example of a VAT system? The Australian government says[0]: "Generally, busines…
2) To say GST is exactly like VAT is to say that an abacus is exactly like a supercomputer because they both calculate things.
A GST is not a VAT. A GST is a goods and services tax, not a "value added tax." The GST only taxes the final value of the product or service sold, similar to a sales tax, not the value added at every step. This is important, because it means that a GST does not try to capture the value delta provided by middlemen, while a VAT does and is deliberately designed to do so. Thus, a VAT impairs the value proposition of utilizing middleman. This makes a GST (or sales tax) significantly more efficient from the perspective of taxpayers, though from a governmental revenue perspective, this also means that GST raises less revenue than a VAT would.
A big issue with sales tax is that reseller exemptions only apply to products acquired with the intent to resell, which means the supplier has to know (or be told) if the products acquired in a transaction will be resold, and this creates complexity for every transaction. So instead, the simple way to do it is that every transaction is subject to GST.
To get legitimate resellers and middlemen back to the economic position of not paying GST, they get to offset the GST paid for goods or services acquired to produce their own products or services against the GST they collect for their goods or services. This is superficially similar to the VAT, except that with GST you're done (yes, it's really that simple), whereas with VAT you've still got way more work to do.
(Note that I have spent the last several years handling both GST and VAT compliance. You will not convince me or any other tax professional that a GST is anything like a VAT except in the most superficial ways.)