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EU VAT rules make EU startups uncompetitive in a global market

rachelandrew.co.uk

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Re: EU VAT rules make EU startups uncompetitive in a global market

#11

Post by johansch »

rachelandrew wrote: post #7
johansch wrote: post #5

Sure, looks like there will be some pain and confusion in the short term, but in the long term, how does this really hurt EU startups in the global market? Presumably the various payment solutions are going to adapt to this, simply because it costs a lot less to to implement whatever is necessary than to just give up the EU market.

Creating a smooth path to checkout and removing obstacles is really important in terms of conversion rates. Having to ask for information that people are going to see as very intrusive during that checkout flow is highly likely to cause cart abandonment. We get people already complaining that we make them create an account to buy software - and we use the accounts for other things such as support and license manageme…

Stripe/Paypal already have the billing address of the (credit-card based) customer. They would need to adapt their APIs/checkout flows to enable a nice UX. If they don't they expose themselves to increased competition from other solutions that do manage to solve this.

Re: EU VAT rules make EU startups uncompetitive in a global market

#12

Post by justincormack »

We need a flat VAT rate for digital services over the whole EU. Or indeed all services. The whole process of converging VAT rates has been too slow, which for physical goods was kind of ok, but for cross border services it matters. If they did this, then I would not care about VAT registration being compulsory.

Re: EU VAT rules make EU startups uncompetitive in a global market

#13

Post by yc1010 »

moomin wrote: post #2

This is hugely important. The rules themselves are designed to stop people like Amazon abusing the system (and believe me, they abuse it), but there's no provision for smaller companies, no one stop shop for dealing with the VAT authorities. It's going to be a disaster for SaaS startups.

Amazon do not abuse it, they just run shop from an EU country with low VAT rate (Luxembourg) last I checked.

And yes the VAT rules really do add alot of overheads on a business and bloat, which companies elsewhere are not subjected to.

I have raised this with Revenue in Ireland (pointing at competitors in US, China etc not held back by paperwork) they ignored it and clarified (I wanted it in writing, I recommend every business has a clarification in writing if they are not sure about the VAT position, to cover their asses) that YES we have to charge 23% VAT to ANYONE from EU29 countries, and 0% VAT for outside.

Tho' nothing was said about how this is to be measured, So I am keeping timestamps, ip addresses and billing addresses when accepting payment for our hosting products.

All in all its just a pain in the rear having to jump thru' this loops with no benefit to my company and plenty of downside :(

Re: EU VAT rules make EU startups uncompetitive in a global market

#15

Post by pja »

rachelandrew wrote: post #7
johansch wrote: post #5

Sure, looks like there will be some pain and confusion in the short term, but in the long term, how does this really hurt EU startups in the global market? Presumably the various payment solutions are going to adapt to this, simply because it costs a lot less to to implement whatever is necessary than to just give up the EU market.

Creating a smooth path to checkout and removing obstacles is really important in terms of conversion rates. Having to ask for information that people are going to see as very intrusive during that checkout flow is highly likely to cause cart abandonment. We get people already complaining that we make them create an account to buy software - and we use the accounts for other things such as support and license manageme…

Yeah, this is really going to entrench the big players (Amazon, Google, Apple et al) who already have your contact details for a myriad other reasons.

Re: EU VAT rules make EU startups uncompetitive in a global market

#17

Post by johansch »

pja wrote: post #15
rachelandrew wrote: post #7

Earlier quoted context omitted.

Creating a smooth path to checkout and removing obstacles is really important in terms of conversion rates. Having to ask for information that people are going to see as very intrusive during that checkout flow is highly likely to cause cart abandonment. We get people already complaining that we make them create an account to buy software - and we use the accounts for other things such as support and license manageme…

Yeah, this is really going to entrench the big players (Amazon, Google, Apple et al) who already have your contact details for a myriad other reasons.

Any payment solution that is based on credit cards would have the same contact details. How does size matter here?

Re: EU VAT rules make EU startups uncompetitive in a global market

#18

Post by derickr »

yc1010 wrote: post #13
moomin wrote: post #2

This is hugely important. The rules themselves are designed to stop people like Amazon abusing the system (and believe me, they abuse it), but there's no provision for smaller companies, no one stop shop for dealing with the VAT authorities. It's going to be a disaster for SaaS startups.

Amazon do not abuse it, they just run shop from an EU country with low VAT rate (Luxembourg) last I checked. And yes the VAT rules really do add alot of overheads on a business and bloat, which companies elsewhere are not subjected to. I have raised this with Revenue in Ireland (pointing at competitors in US, China etc not held back by paperwork) they ignored it and clarified (I wanted it in writing, I recommend ever…

"Amazon do not abuse it, they just run shop from an EU country with low VAT rate (Luxembourg) last I checked."

They "abuse" it from the point of view from the countries where they don't pay the VAT.... f.e. the UK would like Amazon to pay VAT in the UK, and not in Luxembourg. So this new law is meant to prevent that, but at the same time waltz over small companies.

Re: EU VAT rules make EU startups uncompetitive in a global market

#19

Post by derickr »

dan1234 wrote: post #6
moomin wrote: post #2

This is hugely important. The rules themselves are designed to stop people like Amazon abusing the system (and believe me, they abuse it), but there's no provision for smaller companies, no one stop shop for dealing with the VAT authorities. It's going to be a disaster for SaaS startups.

There is a one stop shop[0]. The main problem is that there's no longer any VAT threshold for smaller companies (atm you can avoid VAT registration if you're earning less than £81,000) https://www.gov.uk/register-and-use-the-vat-mini-one-stop-sh...

MOSS doesn't solve the difficult requirements for proving in which country a customer lives - providing they don't have a VAT number of course.

Re: EU VAT rules make EU startups uncompetitive in a global market

#20

Post by dublinclontarf »

acd wrote: post #10

The problem is that some countries are within the European union but are tax havens. Luxemburg is such a country with 15% VAT but most other countries have 20%+ VAT. The solution should be to have one VAT level which is higher than 15% and the same in the whole union.

Is tax haven another term for tax competition?
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