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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

#111

Post by Silhouette »

rmc wrote: post #51
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 citizens voted for national parliaments who appointed the EC, and support the EC.

Or, if you live in the UK:

1. The citizens vote for a local Member of Parliament to be their representative (the winning MP actually being chosen via the statistically dubious First Past The Post system).

2. The party with the largest group of MPs probably forms the government (except when it doesn't, as with our current coalition administration).

3. The leader of the winning party becomes Prime Minister (except when that leader changes after the election, even if there was an explicit promise before the election that this wasn't what people would be voting for, as with Gordon Brown in the previous administration).

4. The senior executive roles within the government and indirect representatives such as European Commissioners are effectively appointed by the PM and their possibly entirely unelected political advisors.

The idea that European Commissioners have any meaningful electoral accountability at all is crazy. If you don't think so, try this simple test: When our citizens cast their only relevant vote on this matter at the last election in their constituency, was it even possible for them to know the name of the person who would ultimately become the European Commissioner for our country?

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

#112

Post by Silhouette »

fivedogit wrote: post #3

This is no joke. When I hired my business's first employee here in Kentucky, the crush of fees, rules and paperwork that came along with her were jaw-dropping. All of a sudden, the government - especially the school board and local agencies - were mailing us with their hands out. Having that first employee triggered things like sales tax forms, quarterly filing requirements, payroll questionnaires, etc. I began to fe…

Fortunately for those of us in the UK, the current administration has been making employing anyone such a business-hostile process that some of us have already decided not to take on our first employee as a direct result.

It's sad, really. Literally everyone loses, except for our sanity.

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

#113

Post by salemh »

Hermel wrote: post #83
wbond wrote: post #16

As someone who sells digital software licenses, this is quite an baffling situation to experience. Currently, I live in Massachusetts, which does not require collecting sales tax on digital goods. According to these new laws, even though I live in the USA, and don't collect any address information for my customers, I now need to: 1. Collect address and IP address information 2. Register with a MOSS somewhere in the E…

I went through all of this with my previous startup. It is tedious, but feasible. Note that in practice, you probably won't have to fear much as long as your revenue does not exceed a certain threshold. In Germany, for example, the "Bemessungsgrenze" is 17'500€, but I'm not sure if that also applies to your case. Furthermore, you should also see the positive side: when for example renting dedicated servers from a Ger…

Hm, are there postentially "outsourced" consultancies that manage things of this nature for a % of gross?

If it becomes feasible ($ wise), perhaps this then can be a new process implementation with lower (but feasible) margins.

If not feasible, then sales stop to the EU.

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

#114

Post by rmc »

Silhouette wrote: post #111
rmc wrote: post #51

Earlier quoted context omitted.

The citizens voted for national parliaments who appointed the EC, and support the EC.

Or, if you live in the UK: 1. The citizens vote for a local Member of Parliament to be their representative (the winning MP actually being chosen via the statistically dubious First Past The Post system). 2. The party with the largest group of MPs probably forms the government (except when it doesn't, as with our current coalition administration). 3. The leader of the winning party becomes Prime Minister (except when…

> except when it doesn't, as with our current coalition administration

More than 50% of MPs have voted for the current UK Government. Yes, they aren't all in the same party. Many countries have coalition governments, and we have no problem with them. A minority government sounds very undemocratic

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

#115

Post by syntern »

kuschku wrote: post #57
AhtiK wrote: post #35

Earlier quoted context omitted.

The suggested http://euvatrates.com/rates.json and pretty much any EU taxation document uses country code "EL" for Greece while ISO standard and most geolocation APIs use "GR". Just make sure your code doesn't crash because of this :) "GB" vs "UK" for United Kingdom is another one to pay attention to.

It’s about consistence. Name of the Country in it’s own language, abbreviated to 2 letters. Results in EL for Greece, UK for the United Kingdom, etc. GB is an island and has nothing to do with the UK, it’s as if you’d call Japan now Hokkaido, it makes no sense.

Hungary does not start with "HU" in Hungarian (Magyarország). This logic is certainly flawed. We have standard international abbreviations for a reason, please use them.

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

#116

Post by rmc »

adventured wrote: post #64
rmc wrote: post #48

Earlier quoted context omitted.

The USA has ordered that big companies be split in the past. It's just the "crazy EU lawmakers".

I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split. Can you provide examples of that?

The EU can force the EU company to be split.

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

#118

Post by wbond »

shit_parade wrote: post #108
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…

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

I thought about that issue, but then I would need to detect the country a user is coming from before I show them a price. So now I am into geo-ip for basic web visitors, and even then sometimes the price will be wrong.

If I do it at checkout time, I am performing sort of a bait-and-switch with customers, which would leave a sour taste in my mouth.

I thought about the idea of adding a surcharge for EU customers since I need to deal with all of this. I don't know enough about international tax law to know if this is ok.

However, the issue is really that it is taking up time from providing a product. Sure, I could charge more, but unlikely enough to hire someone to deal with the issues. Instead it would more likely negatively affect the number of licenses I sell, which would again lead to me probably not being able to afford to pay someone to deal with it for me.

In the end it comes down to the fact that the EU is making it significantly harder for small companies or individuals to sell digital goods. In the end we are talking about every person who writes an ebook, sells some piece of software or sells digital music having to deal with these issues.

It seems the EU is stacking the deck against small companies and instead favoring larger organizations that can afford full-time accountants. Or favoring large companies that then sell VAT services to the individual.

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

#119

Post by chestnut-tree »

flexie wrote: post #36

Best solution would be to have a common EU VAT-rate applying to all goods and services. It's going to be terrible situation for tech start ups but it's been bad for everyone for a while who sells across borders in EU. You have to find out what strange box defined by eurocrats that your business fits into (if any). It's not that easy. I'm a lawyer selling most of my services across borders. Some of my revenue is purel…

"Best solution would be to have a common EU VAT-rate applying to all goods and services."

There are politicians and policymakers in the EU who would like to see that happen. However, every country in the EU has different VAT exemptions for goods and services - harmonising that across EU nations would be extremely difficult. Politicians will have an impossible task persuading the public that goods and services that were never subject to VAT will now be taxed.

What the EU should have proposed is a common VAT rate across the EU for digital goods. (This could still include exemptions or reduced rates for certain goods such as e-books.) I suspect this would have faced less opposition from member countries and it would eliminate much of the bureaucratic and administrative burden these new laws introduce.

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

#120

Post by Silhouette »

rmc wrote: post #114
Silhouette wrote: post #111

Earlier quoted context omitted.

Or, if you live in the UK: 1. The citizens vote for a local Member of Parliament to be their representative (the winning MP actually being chosen via the statistically dubious First Past The Post system). 2. The party with the largest group of MPs probably forms the government (except when it doesn't, as with our current coalition administration). 3. The leader of the winning party becomes Prime Minister (except when…

> except when it doesn't, as with our current coalition administration More than 50% of MPs have voted for the current UK Government. Yes, they aren't all in the same party. Many countries have coalition governments, and we have no problem with them. A minority government sounds very undemocratic

More than 50% of MPs have voted for the current UK Government.

Right. But that means there is already an average of averages problem, even leaving aside the well documented criticisms of how those MPs are themselves elected. And literally everything beyond that is a matter of political dealing, not representative democracy, so the idea that there is any meaningful democratic accountability at all for the European Commission is still silly.

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