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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?”

#171

Post by mastef »

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.

With 'step in the proper direction' I was referring to the table showcasing how calculations from 2014 to 2015 are now even further simplified.

VAT in itself is another debate. However, as many others have commented on this in this thread already, I don't have to go into specifics too much.

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

#172

Post by toyg »

iopq wrote: post #164
toyg wrote: post #143

Earlier quoted context omitted.

I'm a State actor. I can hire detectives that will go through the blockchain and monitor your traffic, and I'll likely get a fair approximation of how many bitcoins you have. Or you can just tell me when asked, as a good law-obeying citizen should do. This is how all tax works, btw. Income tax is nothing but a wealth tax limited to wealth accumulated over a certain period. There is nothing impossible about it.

What traffic? They're stored on my hard drive. I don't fire up the client. I don't buy things with them. I just sit on them.

Ok, I'll make it easy then and just sequester your hard drive. Oh, it's encrypted and you won't give me the key? I'll throw you in jail.

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

#173

Post by dagw »

joosters wrote: post #154
toyg wrote: post #142

Earlier quoted context omitted.

> For a start, I'd say that just about every EU citizen is aware of it. They know it exists, they don't know how it works or why (unless they run a business). > Plus, prices in shops have to show VAT-inclusive prices to end customers ... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is c…

They know it exists, they don't know how it works or why (unless they run a business). What? It's just a percentage. You don't need to be a business to understand that. ...which is exactly what I mean by "hiding it". [...] That's not hiding it. Companies can (broadly speaking) also show ex-VAT prices, should they choose, they are just obliged to show the inc-VAT ones more prominently. People care about the end cost,…

if you are running a business, and so have business purchases, then obviously you need to be aware of tax regulations.

It's very common among people who have their own company to buy things like TVs and computers as business purchases and then just kind of end up keeping them in their living room.

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

#174

Post by toyg »

joosters wrote: post #154
toyg wrote: post #142

Earlier quoted context omitted.

> For a start, I'd say that just about every EU citizen is aware of it. They know it exists, they don't know how it works or why (unless they run a business). > Plus, prices in shops have to show VAT-inclusive prices to end customers ... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is c…

They know it exists, they don't know how it works or why (unless they run a business). What? It's just a percentage. You don't need to be a business to understand that. ...which is exactly what I mean by "hiding it". [...] That's not hiding it. Companies can (broadly speaking) also show ex-VAT prices, should they choose, they are just obliged to show the inc-VAT ones more prominently. People care about the end cost,…

> It's just a percentage. You don't need to be a business to understand that.

What you have to understand is the process to claim it back, i.e. the fact that businesses and business owners effectively don't pay it.

> the actual costs are the ones that consumers want to see

Of course, which is why VAT is so clever: effectively, it's so easy to ignore that most people do just that and don't realise that they're paying a tax that businesses and rich people simply don't pay. It's the best type of hiding: in plain sight.

The American approach is more annoying, yes, but it's also more transparent: the consumer is forced to feel the full weight of tax, and can perceive how businesses are completely unaffected by it.

> 'flat rate' or 'proportional tax' is _not_ regressive

In practice, it is. If I pay the exact absolute amount of tax on a transaction for the same good, regardless of my wealth, then in practice it's regressive because it will weight more on the less wealthy. A flat rate is less regressive when transactions differ (the same percentage of a bigger transaction will result in more tax), but this is not the case with VAT. As I said, the theory that this is compensated by rich people buying more expensive goods is just that, a theory; in practice, this does not happen n any significant scale.

> End customers have no VAT to claim back. [...] Now if you are running a business

Of course. My point is, most wealthy people will be running businesses, and hence will not pay tax on pretty much anything except the most outrageous items. Most of those Porsches and BMWs you see on the streets of London are not bought by individuals, but rather by (shell) companies such people run. They're still managed exactly like they were an individual's private property, but on paper they're not and so there won't be any VAT paid by such "end customers".

> If you are a 'n00b' employee then you pay it.

yup. And that's my point: it's a tax on n00b employees who cannot afford good accountants and shell companies. They're the only ones who really pay it all.

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

#175

Post by toyg »

BerislavLopac wrote: post #162
toyg wrote: post #147

Earlier quoted context omitted.

This suggestion, in practice, would not stop Amazon and Google siphoning VAT money form around the EU through Luxembourg, Jersey or Ireland. If I settle in a country with low "digital VAT rate", I'll still hold an advantage over EU companies based elsewhere: I can charge lower prices, or I can charge regular prices and pocket the difference. This is exactly what happens today.

Nope -- what happens today is paying Luxembourg VAT for physical goods delivered from UK to UK, which would be prevented this way. Digital goods have no "location", so the only way to charge VAT is to assume it was a "local" purchase. And what is wrong with countries competing with VAT rates? Alternatively, a pan-EU VAT rate for digital goods only might be a better approach, and probably easier to implement than a un…

> what is wrong with countries competing with VAT rates?

it's a race to the bottom that destroys tax revenues. It benefits small "pirate" countries to the disadvantage of large ones that are actually responsible for creating the large markets where real profits are generated. Tax-rate competition has always existed, but globalisation and technology now make it too easy to exploit it in a way that only benefits big business and screws entire populations.

> pan-EU VAT rate for digital goods only might be a better approach

Pan-EU rates for most things would be a better approach. VAT is just the most egregious example. If we have a single market, we should have a real level playing field, including things like taxation, workers rights and environmental standards. We're getting there in a number of areas, but it's hard to make progress on tax because of political implications (and because of pressure from businesses who benefit from the current state of affairs).

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

#176

Post by toyg »

laurencerowe wrote: post #166
toyg wrote: post #144

Earlier quoted context omitted.

I believe it often happens here in the UK as well, although it does not involve 100% of businesses like in some other countries. It's also a one-off, whereas elsewhere it can, in some circumstances, become a recurring request.

Can you point me to any examples? I ran a small business in the UK for several years and never heard of anything like it. The closest would be the Windfall Tax, but that targeted a small number of privatised utilities that were sold off on the cheap by a previous government. http://en.wikipedia.org/wiki/Windfall_Tax_%28United_Kingdom%...

Apologies, I got slightly confused with the "payments on account" scheme, which does not involve VAT in the UK. Elsewhere (I believe in Italy and France), the same approach is used for VAT as well.

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

#177

Post by iopq »

toyg wrote: post #172
iopq wrote: post #164

Earlier quoted context omitted.

What traffic? They're stored on my hard drive. I don't fire up the client. I don't buy things with them. I just sit on them.

Ok, I'll make it easy then and just sequester your hard drive. Oh, it's encrypted and you won't give me the key? I'll throw you in jail.

How do you know to target me?

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

#178

Post by toyg »

iopq wrote: post #177
toyg wrote: post #172

Earlier quoted context omitted.

Ok, I'll make it easy then and just sequester your hard drive. Oh, it's encrypted and you won't give me the key? I'll throw you in jail.

How do you know to target me?

Yeah man, ninjas don't pay taxes, sure. Have fun.

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

#179

Post by Silhouette »

speleding wrote: post #168
Silhouette wrote: post #161

Earlier quoted context omitted.

- If you register for a MOSS then you pay VAT in euros, but you may have charged your customer in a local currency (GBP, DKK, CZK or SEK). You need to use the exchange rate at the day of the sale I'm not sure this is exactly correct. For the UK, the guidance[1] at the moment says: "If you charge or invoice customers in a currency other than the one used by the MSI and you record that price in your accounts in the for…

Interesting. I got my information from calling the tax authorities and ask, but I'm based in the Netherlands so their guidance may be different from that in the UK.

Doesn't the Netherlands use the Euro? If so, then I think the information we have been given is consistent. For you, the MSI currency would be Euro, while for me in the UK, it would be GBP. Each of us would pay any tax due to foreign tax authorities via our own country's MOSS in our local currency, but if we charged a customer in a different currency then we would have to convert it in one of the two ways I mentioned before.

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

#180

Post by lotsofmangos »

Jongseong wrote: post #169
lotsofmangos wrote: post #163

Earlier quoted context omitted.

Or annually with your other tax affairs if your income is less than £1.3 million. Which means that while it has to be taken into consideration it does not really affect stuff that much. It is a cost of doing business in the EU and it does make things more complex, but nowhere near as complex as before the EU came into effect.

No, VAT MOSS Return periods are calendar quarters, so you need to submit quarterly statements: https://www.gov.uk/government/publications/revenue-and-custo... This has nothing to do with income. This is because anyone who supplies digital services to other EU countries is considered a business. Registering with a couple of government bureaucracies (as an aside, let's see how well they can handle about a million new r…

I got the annual thing from here, I got it a bit wrong as the threshold is turnover, not income - https://www.gov.uk/vat-annual-accounting-scheme/overview

VAT Annual Accounting Scheme

You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less.

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