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“I’m in the US – what if I just ignore the EU VAT changes?”

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Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#11

Post by bad_user »

toyg wrote: post #3
mastef wrote: post #2

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards 'VAT in buyers country' Now after talking with other SaaS owners it seems we're one of the 'few' non-EU companies that actually complies with this - however that choice is rather due to the provider we use. We comply with the rules by using a payment reseller…

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

Also, the higher the VAT, the higher the tax evasion in those countries. One reason this happens is because many businesses are at the limit of survival and cannot afford to pay.

One would think that somebody would get a clue that reducing the VAT would make it more affordable to more companies, but unfortunately law makers are clueless.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#12

Post by pja »

bad_user wrote: post #6

" The change was made because EU wants to get more money from American companies " That is not true - VAT is and has always been a tax for the buyer, not the seller. Of course, having VAT is awful for us - in my country it's an astronomical 24%. But that's besides the point.

The point of the changes is to prevent large non-EU companies from going "VAT-shopping": like a certain well known advertising company claiming to sell all their services from a low VAT country when in fact all the business dealings are done in a tower block in the centre of London.

Now they have to charge whatever VAT rate each country within the EU thinks is appropriate for their citizens & there's no "race to the bottom" effect where Google, Apple, Amazon et al try to play different countries off against each other to get the lowest possible VAT rate.

The next stage is going to be tax changes to try and eliminate the profit shifting that all the non-EU companies do by setting up subsidiaries in different EU countries and "licensing" their IP to them at prices that just happen to match the profits made in that country.

Unfortunately, small online businesses are collateral damage in this particular fight.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#13

Post by jkulmala »

smackfu wrote: post #8
bad_user wrote: post #6

" The change was made because EU wants to get more money from American companies " That is not true - VAT is and has always been a tax for the buyer, not the seller. Of course, having VAT is awful for us - in my country it's an astronomical 24%. But that's besides the point.

True, it should say: "EU wants to get more money from transaction for American companies."

Thanks for the correction, I updated the blog post.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#14

Post by fulafel »

toyg wrote: post #3
mastef wrote: post #2

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards 'VAT in buyers country' Now after talking with other SaaS owners it seems we're one of the 'few' non-EU companies that actually complies with this - however that choice is rather due to the provider we use. We comply with the rules by using a payment reseller…

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

Many essentials like food and bus tickets have lowered (or zero) tax rates, and it's printed on every receipt you get. Not really regressive or hidden.

Taxing wealth has big problems with transparency and evasion.

Progressive taxation is not a means to an end, just one mechanism to implement income redistribution. See eg basic income proposals with flat income tax.

But a worrying trend in EU lately has been to cut payroll taxes and raise VAT and other consumption taxes without compensating them in transfers, a combination which does hurt income equality.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#15

Post by tormeh »

toyg wrote: post #3
mastef wrote: post #2

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards 'VAT in buyers country' Now after talking with other SaaS owners it seems we're one of the 'few' non-EU companies that actually complies with this - however that choice is rather due to the provider we use. We comply with the rules by using a payment reseller…

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

VAT is pretty dumb, but at least now it's applied fairly.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#16

Post by Luc »

bad_user wrote: post #11
toyg wrote: post #3

Earlier quoted context omitted.

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

Also, the higher the VAT, the higher the tax evasion in those countries. One reason this happens is because many businesses are at the limit of survival and cannot afford to pay. One would think that somebody would get a clue that reducing the VAT would make it more affordable to more companies, but unfortunately law makers are clueless.

Companies don't pay VAT.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#17

Post by humanrebar »

toyg wrote: post #3
mastef wrote: post #2

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards 'VAT in buyers country' Now after talking with other SaaS owners it seems we're one of the 'few' non-EU companies that actually complies with this - however that choice is rather due to the provider we use. We comply with the rules by using a payment reseller…

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

If you're worried about regressive taxation, offset it with standard deductions, minimum income, or earned income tax credits. Distorting tax codes to accommodate social goals creates information disparities and, indirectly, justice issues.

It's like the discussions people have around here about how keeping salaries secret only helps employers. Keeping tax codes byzantine is good for corrupt politicians and special interest groups.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#18

Post by tormeh »

bad_user wrote: post #11
toyg wrote: post #3

Earlier quoted context omitted.

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

Also, the higher the VAT, the higher the tax evasion in those countries. One reason this happens is because many businesses are at the limit of survival and cannot afford to pay. One would think that somebody would get a clue that reducing the VAT would make it more affordable to more companies, but unfortunately law makers are clueless.

That's not really how it works. Tax rate and tax evasion aren't really linked. It's about culture and enforcement.

Anyway, if your business can't pay tax it should close and you should find something more profitable to do. I guess you can argue that some businesses of cultural or otherwise non-monetary worth should have some subsidies, but as long as the company goal is to "bring in the dough", then that's the dumbest excuse I've heard. On par with "just because".

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#19

Post by hackerboos »

jmnicolas wrote: post #5

If you are concerned with this, you may want to investigate if basing your company in Switzerland offers more advantage than in EU : its at the center of Europe but doesn't belong to EU.

Yet it's forced to implement most of the EUs rulings whilst having no say on said rulings. Same for Norway and Iceland.

Re: “I’m in the US – what if I just ignore the EU VAT changes?”

#20

Post by lultimouomo »

smackfu wrote: post #8
bad_user wrote: post #6

" The change was made because EU wants to get more money from American companies " That is not true - VAT is and has always been a tax for the buyer, not the seller. Of course, having VAT is awful for us - in my country it's an astronomical 24%. But that's besides the point.

True, it should say: "EU wants to get more money from transaction for American companies."

I would say it's something different yet:

EU wants to hinder rascal states that make money at the expense of the rest of the union taking advantage of their small size: they won't be able to collect VAT for business made in the whole EU just because they offer a lower rate. (I mention the size because the deal is convenient for the state only if its economy would be otherwise very small).

It does not matter if the company is American or European, I could have made a Luxembourg subsidiary of an Italian company and paid Luxembourg VAT rates.

Of course, this is a very stupid way of doing it: it works only for VAT, while the countries can still be fiscal havens for any other tax, and moreover it makes life hell for small B2C business.

The proper way would just agree on a uniform tax policy. Never going to happen.

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