“I’m in the US – what if I just ignore the EU VAT changes?”
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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?”
#2It 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 ( fastspring / saasy ) which allows us to reduce accounting ( only major payments are being sent from reseller ), and at a comparable rate to stripe ( 1-2% higher )
Since they specialise in regulations and payments, it's really a big headache off our shoulders - plus you reduce the invoices you have to handle. Also it removed that whole merchant account setup process etc, which was a bigger pain for a Hong Kong based company.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#3It 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.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#4What does the "Reverse Charge" refer to?
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#5If 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.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#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.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#7What does the "Reverse Charge" refer to?
This: http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs14100.ht... I think. Essentially you can push the responsibility for paying the VAT from the vendor to the consumer in B2B transactions if I understand things correctly.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#8" 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."
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#9What does the "Reverse Charge" refer to?
Some basic examples.
My British corporation pays an American company for Web hosting. However, the US company does not charge us VAT, so we have to charge ourselves ("reverse charge") the VAT at UK rates and then immediately claim back the VAT as it is used in our VATable supplies. The net result is zero but reverse charging means they get VAT revenue for situations where VAT is not reclaimable (many exist).
Another example is that my British corporation sells services to a, say, French corporation. We charge no VAT on this sale but the French corporation has to then "reverse charge" French VAT on the sale within France (and then claim it back, if valid). We then also have to file this transaction on an "EC Sales List" so that the various authorities can check that the reverse charge did occur.
Re: “I’m in the US – what if I just ignore the EU VAT changes?”
#10What does the "Reverse Charge" refer to?
I explain that in this other post for EU guys: http://www.happybootstrapper.com/2014/eu-vat-changes-online-...
Reverse charge moves the VAT-paying responsibility from you to your customer in another EU country. The responsibility can only be moved from business to business.
You’ll write an invoice/receipt without VAT (or 0% VAT) and include a text “Reverse charge, VAT directive art. 44” and you are done. In practice the text is often missing, as people re-use the same invoice format they use for non-EU sales.