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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?”

#31

Post by toyg »

Luc wrote: post #16
bad_user wrote: post #11

Earlier quoted context omitted.

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.

I think parent is referring to the classic "VAT advance": in most countries, after a business registers for VAT, after 12 to 24 months the State will calculate your "expected VAT turnout" for the following 1 or 2 years, and demand advance payment. This is because some 80% of businesses don't survive the first 24 months anyway, so the State tries to collect every penny before they go bust. Ironically, that advance payment (which is invariably too high) is often a nail in the coffin...

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

#32

Post by nagrom »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

You're comparing income tax with sales tax.

In the UK, on a salary of £40k (i.e. professional mid-career engineer), before you touch the money, the government takes about 25% for income tax and national insurance. Then, they take 20% of everything else that you spend unless it's non-luxurious foodstuffs, children's clothes or paper books. And, of course, if what you're buying is fuel, they actually take 85% of the price.

In addition, you'll pay approximately 2% of the purchase price of a house to the government, and you'll pay approx. one day a month in after-tax income to the local council as a property tax.

US has a 30% tax burden, UK has a 40% tax burden. France and Germany have >50% tax burdens. The last three have some form of nationalised healthcare though, which the US does not.

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

#33

Post by TheCoelacanth »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

VAT is essentially a sales tax. Sales taxes in the US are usually 5-10%.

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

#34

Post by nagrom »

hackerboos wrote: post #19
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.

That's said rather often, but I'm not at all certain that it's true.

http://blogs.telegraph.co.uk/news/danielhannan/100194407/out...

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

#35

Post by aragot »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

VAT varies from 10% to 25% in most countries of the world [1]. There is an income tax in _addition_ to it. I've calculated a total of net income/turnover rate as low as 34% in my country (France), albeit including all mandatory spending and not only taxes, and the detail is in my blog post [2].

[1] http://en.m.wikipedia.org/wiki/Value-added_tax

[2] http://adrien-ragot.me/why-i-say-70-percent-tax-in-france/

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

#36

Post by [deleted] »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

[deleted]

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

#37

Post by Kiro »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

> Are there also high property and income taxes?

Isn't that usually the case? High VAT, high income taxes.

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

#38

Post by Nitramp »

humanrebar wrote: post #21
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.

> it's an astronomical 24% That's lower than the income tax rate for a middle class American. Why is this rate astronomical? Are there also high property and income taxes? EDIT: It's an honest question. I know what a VAT is, but I have no frame of reference for how the overall tax scheme is especially egregious for the individual taxpayer. Some other tax rates (income, property, etc.) are surely relevant. A 24% VAT w…

That's the VAT tax, comparable to the sales tax in the US, so this compares as 24% vs ~6% or so in most of the US. Income tax is separate from that, and depends on country to, but seems to work out to quite similar percentages, at least between Germany and the US.

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

#39

Post by tormeh »

bad_user wrote: post #26
tormeh wrote: post #18

Earlier quoted context omitted.

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 dumbes…

> Tax rate and tax evasion aren't really linked. It's about culture and enforcement And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion? Of course they are linked - especially in countries in which the private sector is underrepresented and overwhelmed compared to the retired, the unemployed and the ones in the public sector, all of them assisted socially. In a c…

>And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion?

No, they get brought up by their parents to do it, usually. The justification is that the government will just waste it anyway, which can be true. Of course, the culture that breeds tax evasion is the same one that breeds poor government. Happily I don't have to deal with it.

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

#40

Post by refurb »

tormeh wrote: post #18
bad_user wrote: post #11

Earlier quoted context omitted.

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 dumbes…

Tax rate and tax evasion aren't really linked.

Do you have any sources that support that assertion? Increasing tax rates increase the incentive to avoid said taxes. If I'm going to go to jail for tax fraud, I'm not going to that if the rate is 2%, but I might if it's 50%.

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