Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

happybootstrapper.com

Post reply on HN
Print view View original

51–60 of 182 posts

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

#51

Post by gst »

So how would this enforcement look in practice if a US company does not have any business location within the EU? Up until now I was under the impression that this wouldn't matter as long as you don't violate US law.

Also why should the EU be treated differently than any other of the approx. 200 other foreign countries? I'm sure lots of them have similar tax codes that require tax payment at the location of the customer. Are those countries able to enforce any tax payments from US businesses?

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

#52

Post by tim333 »

I'd imagine for small companies in the US, if they ignore VAT nothing will happen. There is no way the US courts will get involved with enforcing EU taxes and EU enforcement is fairly laid back in that they are not going to arrest you if you go on hols. If the company has assets in the EU however the courts can go after them so Google, Amazon etc will have to pay. I fear Digital Ocean are going to start charging me VAT which they have not so far.

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

#53

Post by legulere »

nagrom wrote: post #32
humanrebar wrote: post #21

Earlier quoted context omitted.

> 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 pr…

Germany doesn't have nationalised healthcare. It's just mandatory for most of the population and the health maintenance organizations are extremely regulated (how much money they should take, in what cases they have to pay how much, ...)

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

#54

Post by tim333 »

gst wrote: post #51

So how would this enforcement look in practice if a US company does not have any business location within the EU? Up until now I was under the impression that this wouldn't matter as long as you don't violate US law. Also why should the EU be treated differently than any other of the approx. 200 other foreign countries? I'm sure lots of them have similar tax codes that require tax payment at the location of the custo…

>Are those countries able to enforce any tax payments from US businesses?

Basically no unless the companies has assets where the tax is due.

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

#55

Post by coob »

Major_Grooves wrote: post #43

Yes, this has been quite an amazing f-up by the tax authorities in the EU. I wrote a blogpost about it the other day: http://blog.satago.co.uk/2014/11/what-is-this-vatmoss-mess/ imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now.

It's going to force people to use marketplaces/providers. Probably a startup opportunity.

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

#56

Post by arethuza »

pja wrote: post #27
humanrebar wrote: post #21

Earlier quoted context omitted.

> 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 will be in addition to income and property taxes. By way of example, UK taxes look like: * ~40% income tax, first £10k untaxed. * 20% VAT on most goods (food, books, children's clothes are untaxed, heating fuel is taxed at 5%) * Annual property tax of around £1000 on the typical dwelling. * 28% capital gains tax, first £10k untaxed in any 1 year. Dividends are effectively taxed as additional income. In reality U…

Worth noting that if you sell shares in your own company (e.g. your start-up is acquired) you probably won't pay 28% CGT as you will qualify for some kind of tax relief - I paid 10% CGT on the sale of our company ~12 years ago because of Taper Relief, this has apparently been replaced by Entrepreneurs' Relief:

https://www.gov.uk/entrepreneurs-relief/eligibility

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

#57

Post by TimSAstro »

pja wrote: post #27
humanrebar wrote: post #21

Earlier quoted context omitted.

> 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 will be in addition to income and property taxes. By way of example, UK taxes look like: * ~40% income tax, first £10k untaxed. * 20% VAT on most goods (food, books, children's clothes are untaxed, heating fuel is taxed at 5%) * Annual property tax of around £1000 on the typical dwelling. * 28% capital gains tax, first £10k untaxed in any 1 year. Dividends are effectively taxed as additional income. In reality U…

Minor correction on income tax: 0-10K: Untaxed, 10-40K: 20%, 40K+: 40%,

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

#58

Post by joosters »

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.

How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill.

Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. Same tax rate despite the increased bill.

Now, rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT...

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

#59

Post by praptak »

Retric wrote: post #47
nagrom wrote: post #32

Earlier quoted context omitted.

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 pr…

The only important number is government spending as % of GDP. US ~38%, UK ~42%. However the UK has universal heathcare where US simply mandates health insurance making the effective tax burden lower in the UK. In either case the US tax burden is close enough to EU levels not to make a significant difference.

> The only important number is government spending as % of GDP.

Globally. Still here might be cases where a particular group funds an unproportionally high part of the spending. And you might be the edge case where you earn the money in country A to save and retire on it in country B, so A's sales tax doesn't affect you this much.

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

#60

Post by k-mcgrady »

Major_Grooves wrote: post #43

Yes, this has been quite an amazing f-up by the tax authorities in the EU. I wrote a blogpost about it the other day: http://blog.satago.co.uk/2014/11/what-is-this-vatmoss-mess/ imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now.

>> "imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now."

You mean you have to pay VAT even if you earn under £69,000 (I think that was the threshold last I checked)?

Post reply on HN