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EU’s New VAT Rules Could Create a Mess for Startups

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Re: EU’s New VAT Rules Could Create a Mess for Startups

#101

Post by icebraining »

rmc wrote: post #50
wbond wrote: post #33

Earlier quoted context omitted.

The issue is that I am now subject to collecting taxes for a country that I have nothing to do with. I have never set foot in an EU country, I don't choose to sell to EU customers, they just come to my US-based website and pay in USD. I comply with all of my local tax laws. I can be involved with my local government and affect change. I can't do that in the EU. The way this is all written, I'll actually have to do wo…

What legal issues? Will the EU take you to court? Will they direct the (say) UK police force to come to your business and sieze property to pay back debts? This isn't going to happen.

They could prevent payment services from allowing EU customers to pay you.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#102

Post by dragonwriter »

adventured wrote: post #95
dragonwriter wrote: post #79

Earlier quoted context omitted.

> I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split. The European Parliament passing a non-binding resolution recommending that the European Commission take seek a certain goal as part of a remedy if its concerns aren't otherwise resolved in an ongoing proceeding is not analogous to the US DOJ actually seeking a particular remedy in a proceeding.

If the European Commission is seeking as an end goal to force Google to split its business, on anti-competitive concerns, then that is similar to what the DOJ does with anti-trust enforcement. The intent is the same: to see business X split. The DOJ's domestic powers are far greater than the EU Commission's ability to impact Google, but that's not for lack of wanting to. My point stands regardless. Show me where the…

> If the European Commission is seeking as an end goal to force Google to split its business, on anti-competitive concerns, then that is similar to what the DOJ does with anti-trust enforcement.

Yes, but the issue isn't the EC seeking to do that as part of any enforcement action, the issue is the European Parliament passing a non-binding resolution recommending that the EC should do that (and, as I understand it, that it should do that if its issues with Google aren't satisfactorily resolved otherwise.)

So, the US DOJ actually attempting to do that in a concrete enforcement action wouldn't be a parallel comparison, it would be a much more significant action than what is actually happening in Europe right now.

> The DOJ's domestic powers are far greater than the EU Commission's ability to impact Google, but that's not for lack of wanting to.

More relevantly, either the DOJ or the EU Commission, within their respective jurisdiction, actually do substantive antitrust enforcement actions, and actual enforcement actions by those entities are categorically quite different than non-binding resolutions recommending elements that should be sought in such action by the respective legislative bodies.

> My point stands regardless. Show me where the United States Government attempts to force major European or Asian companies to split into pieces.

A non-binding resolution by a legislative body isn't really much of an effort to force anything. Its more of an effort to be seen as engaged without actually doing anything substantive.

> I'd love to see numerous examples of the US Government doing what the EU Commission is doing.

The European Commission isn't actually doing anything here. There are lots of examples of the US Government not breaking up foreign companies.

Conflating the European Commission with the European Parliament is kind of like confusing the US White House -- or the whole of the Executive Branch -- with the US Congress -- and what you are doing here goes another step further, and proposes an equivalence between non-binding action by the legislature and concrete enforcement action by the executive.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#103

Post by icebraining »

nichol4s wrote: post #86
bliker wrote: post #56

So this means I can just change my IP (And possibly use some random physical address) to get lower prices when in EU?

And or the location attached to your creditcard.

Assuming you pay by credit card and not, say, Paypal.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#104

Post by adventured »

raverbashing wrote: post #82
flexie wrote: post #55

Earlier quoted context omitted.

Indeed. And if they then put the VAT rate at 0 it would hurt businesses even less ;-)

Consumers pay VAT, not business. Similar to the sales tax in the US/Canada

It would hurt businesses even less, because the less you tax a consumer on sales, the more disposable income they have to purchase even more goods (and or businesses can charge more for the same items). The parent didn't say businesses pay VAT, they said it would hurt businesses less if you lower the VAT.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#106

Post by dragonwriter »

adventured wrote: post #100
lmm wrote: post #91

Earlier quoted context omitted.

The EC is appointed by elected national governments, no different from how the US President is appointed by the elected Electoral College. Governments who have chosen unpopular candidates have suffered for it in their national elections. Accountability may be indirect, but it is there.

In fact it is different from how the US President is elected. The electoral college doesn't get to choose any person for President. It's a direct correlation vote: do this, get that result. Such is not true with EC appointments. You vote for a national government, then you pray they appointment an EC that you favor, but there is no legally required direct correlation that says they have to appoint X person. You make…

> The electoral college doesn't get to choose any person for President.

Yes, in fact, they do.

> It's a direct correlation vote: do this, get that result.

A lot of people look at it that way, and that's approximately what happens (especially currently), but not because there are any enforced constraints, just because the way electors are chosen gives a very strong likelihood of that effect; historically unpledged electors were a thing [0], and faithless electors remain a thing [1].

[0] http://en.wikipedia.org/wiki/Unpledged_elector

[1] http://en.wikipedia.org/wiki/Faithless_elector

Re: EU’s New VAT Rules Could Create a Mess for Startups

#107

Post by Silhouette »

lmm wrote: post #91
MistahKoala wrote: post #39

Earlier quoted context omitted.

> respect the decisions the citizens have taken (in this case, regarding taxes) through democratic ways Except the citizens haven't taken that decision: the unelected European Commission has. We could probably go down the reductio ad absurdum road of highlighting their appointment by someone who got elected somewhere along the way, but this powerful body is in no way directly accountable to citizens. Some of the Brit…

The EC is appointed by elected national governments, no different from how the US President is appointed by the elected Electoral College. Governments who have chosen unpopular candidates have suffered for it in their national elections. Accountability may be indirect, but it is there.

The EC is appointed by elected national governments, no different from how the US President is appointed by the elected Electoral College.

No, it really isn't.

When the US people go to the polls to vote for a president, they are voting for the President. There might be some oddities in how the votes are counted, as with any electoral system, but there is no doubt about what position you're voting for or who your vote a certain way will help the most.

The number of levels of indirection involved in the election of European Commissioners and the mandates they receive within the Commission is such that there is really no significant accountability to the general public at all. The reality is that the Commission is often full of failed national politicians who have been given a cushy job as a thank-you from political colleagues when they can no longer credibly run for office in their own country. The "we have to do this, it's a European directive that all national governments must implement" technique has become a standard political tool for introducing unpopular legislation that would cause serious political damage if anyone whose job actually depended on being directly elected were to propose it back home.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#108

Post by shit_parade »

wbond wrote: post #33
mahouse wrote: post #23

Earlier quoted context omitted.

> I'm almost considering shutting down sales to EU customers. Then someone will launch a business that will do the same you do, but complying with regulations. Taxes must be collected; without taxes, the welfare state collapses. You should know that, to be able to sell something in a market, you must understand its regulations first, and respect the decisions the citizens have taken (in this case, regarding taxes) th…

The issue is that I am now subject to collecting taxes for a country that I have nothing to do with. I have never set foot in an EU country, I don't choose to sell to EU customers, they just come to my US-based website and pay in USD. I comply with all of my local tax laws. I can be involved with my local government and affect change. I can't do that in the EU. The way this is all written, I'll actually have to do wo…

Why don't you just charge more? Let them have their welfare state, just make sure they are ones paying for it.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#109

Post by Silhouette »

e98cuenc wrote: post #26
mahouse wrote: post #23

Earlier quoted context omitted.

> I'm almost considering shutting down sales to EU customers. Then someone will launch a business that will do the same you do, but complying with regulations. Taxes must be collected; without taxes, the welfare state collapses. You should know that, to be able to sell something in a market, you must understand its regulations first, and respect the decisions the citizens have taken (in this case, regarding taxes) th…

He understands that. His problem is that the bureaucracy to comply with the rules is too high, and I agree. I have a SaaS service in the EU. I have always paid my taxes and I'm not against them. But I want to have a reliable and hopefully simple process to know how to process payments. The proposed changes are a bit PITA to everybody. I hope they will come with a simpler process, as it's scary all that I will have to…

There is a simpler (not simple) mechanism that is being set up to help administer this scheme. Here in the UK, it's the government's Mini One Stop Shop:

https://www.gov.uk/register-and-use-the-vat-mini-one-stop-sh...

I gather similar schemes are being set up elsewhere in the EU, though I don't know if it's universal.

It appears that as a business that is already VAT registered and filing quarterly returns in the UK, the key points for us will be that:

1. we have to charge VAT to customers elsewhere in the EU at their local rates, which we will be responsible for monitoring in all 28 states;

2. we have to submit all of the VAT to the UK tax authority (HMRC) as we do at present;

3. we have to file an additional quarterly return via MOSS breaking down exactly where our customers/revenues come from, so HMRC can distribute the funds to their counterparts around the EU;

4. we will be required to collect a completely impractical standard of evidence for the location of those customers and will be entirely responsible if and when we fail to do the impossible and it turns out someone lied to us about where they live; and

5. we will be subject to arbitrary audit/investigation by 28 tax authorities instead of just our own, at our own expense naturally (though there is some suggestion that the UK authorities will at least try to co-ordinate this to prevent what they consider an unreasonable burden being imposed).

The real sting in the tail, if I've understood the announcements so far correctly, will be for those who have a low volume of trade and so currently do not have to register for VAT at all. In order to use MOSS, you have to be VAT registered within the UK, and thus either add the current VAT rate onto all your prices when charging customers or take a hit of the equivalent fraction of your existing revenues if you choose to keep prices the same. I really hope I'm wrong about this, but I haven't yet seen anything suggesting that just because you're under the threshold for VAT registration in any/all EU states you'll be exempt from the new funds transfer arrangements, meaning a single foreign customer could suddenly put your entire business within the range of requiring VAT registration.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#110

Post by raverbashing »

bjelkeman-again wrote: post #89
raverbashing wrote: post #82

Earlier quoted context omitted.

Consumers pay VAT, not business. Similar to the sales tax in the US/Canada

Actually VAT is paid by every business (with a few exceptions) on the extra value it creates. http://en.wikipedia.org/wiki/Value-added_tax#Comparison_with...

Yep, you're right. It's a more complicated calculation

But there's VAT to be paid on the sale, which is kind of similar.

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