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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?”

#61

Post by fargolime »

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…

> The last three have some form of nationalised healthcare though, which the US does not.

Plus a much better retirement plan. In the US you can wake up in a hospital after someone rear-ended you, to find you are bankrupt and going to become homeless, even when you had the best insurance. And unless the stock market returns 8% most people are going to have a rough retirement.

In the US you're lucky to get 3 weeks vacation a year. More than that, you need to quit your job. In EU countries it's generally 6 weeks by gov't mandate.

The greater taxes are probably a good deal.

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

#62

Post by danmaz74 »

lultimouomo wrote: post #20
smackfu wrote: post #8

Earlier quoted context omitted.

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 co…

I agree that the proper way would be unification, but that's impossible - the UK would be the first one to say no.

They should "just" add a size limit or at least make it much simpler for companies to comply with the law.

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

#63

Post by Major_Grooves »

k-mcgrady wrote: post #60
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)?

Yes - if you sell these digital goods.

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

#65

Post by Major_Grooves »

coob wrote: post #55
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.

In fact lots of people assumed that the marketplaces would take the heavy lifting here. However most of them are US-based and have said they won't be the ones to take care of this.

However, part of the problem is the authorities assuming that everyone sells through marketplaces, and that marketplaces would be the ones to tackle the issue. You'd be surprised how many people this is going to affect who are just selling a few items with PayPal - and PayPal cannot supply the required data to comply.

The people that got most vocal about this were mom solo entrepreneurs. I wrote a follow-up blog post about this: http://blog.satago.co.uk/2014/11/when-the-crafting-community...

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

#66

Post by fargolime »

toomuchtodo wrote: post #46
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…

> 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. As a US citizen, I'm happy to have an increased tax burden for legislated vacation/holiday days and 20% of the population not having medical bills they can't pay for.

It's more like 80% of the population, when considering expenses not covered by insurance. A hospital can charge you for anything and you're legally obligated to pay it.

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

#67

Post by dghf »

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…

> food, books, children's clothes are untaxed

Some food is untaxed. For example, cakes are untaxed but biscuits are taxed (or maybe it's the other way round). There was a court case to decide whether Jaffa Cakes were cakes or biscuits for the purposes of VAT: the court ultimately applied the principle that cakes were soft when fresh but hard when stale, while biscuits started off hard and then went soft; hence Jaffa Cakes were officially cakes.

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

#68

Post by cstross »

danmaz74 wrote: post #62
lultimouomo wrote: post #20

Earlier quoted context omitted.

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 co…

I agree that the proper way would be unification, but that's impossible - the UK would be the first one to say no. They should "just" add a size limit or at least make it much simpler for companies to comply with the law.

Hitherto, the UK has had a threshold for mandatory VAT registration: if your VAT-able turnover (sales within the EU) exceed the threshold, you must file a VAT-1 and register, but if your VAT-able sales are below the threshold (e.g. you do B2B sales to customers outside the EU -- which aren't VAT-able -- or your turnover is just plain low) you aren't required to register. As of the current time, the threshold is £81,000 per annum turnover: arguably, if you're turning over that much, you can bloody well afford the bookkeeping costs.

Unfortunately not all EU countries have a lower threshold and the new arrangements have a lower threshold for mandatory VAT registration of any amount -- a single €0.99 sale in Estonia and whoops, you need to be registered to collect and pay VAT in Estonia or via your own tax authority's One Stop Shop.

If the £81,000 threshold applied to the new arrangement, nobody would be shouting. But as it is, this will kill a huge number of spare bedroom businesses and start-ups.

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

#69

Post by teamonkey »

cstross wrote: post #68
danmaz74 wrote: post #62

Earlier quoted context omitted.

I agree that the proper way would be unification, but that's impossible - the UK would be the first one to say no. They should "just" add a size limit or at least make it much simpler for companies to comply with the law.

Hitherto, the UK has had a threshold for mandatory VAT registration: if your VAT-able turnover (sales within the EU) exceed the threshold, you must file a VAT-1 and register, but if your VAT-able sales are below the threshold (e.g. you do B2B sales to customers outside the EU -- which aren't VAT-able -- or your turnover is just plain low) you aren't required to register. As of the current time, the threshold is £81,0…

In the UK at least it's not difficult or expensive to register for VAT, but it is yet another barrier. Bear in mind that registering a company is trivial in the UK compared to some other countries.

I registered my small business for VAT voluntarily when I was bringing in much less than 81k since I found that larger companies wouldn't deal with me if I wasn't VAT registered. Since I already had an accountant and used software for my bookkeeping the effort and increase in costs was negligible.

What is difficult is charging a different VAT rate for every non-VAT registered individual in every country you sell to.

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

#70

Post by boracay »

cstross wrote: post #68
danmaz74 wrote: post #62

Earlier quoted context omitted.

I agree that the proper way would be unification, but that's impossible - the UK would be the first one to say no. They should "just" add a size limit or at least make it much simpler for companies to comply with the law.

Hitherto, the UK has had a threshold for mandatory VAT registration: if your VAT-able turnover (sales within the EU) exceed the threshold, you must file a VAT-1 and register, but if your VAT-able sales are below the threshold (e.g. you do B2B sales to customers outside the EU -- which aren't VAT-able -- or your turnover is just plain low) you aren't required to register. As of the current time, the threshold is £81,0…

"a single €0.99 sale in Estonia"

Would of course be done through a service. Maybe it's time for these "innovative" payment processor to actually be innovative and provide this service.

"£81,000 threshold applied to the new arrangement"

It can't apply to the new arrangement since you are now paying taxes in the customers country.

It seems that you would just either do your local sales as before and your international sales through a service or start two companies. That why you should be able to keep your threshold for domestic business. (Don't quote me on this though since I'm not in the UK)

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