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EU’s New VAT Rules Could Create a Mess for Startups

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Re: EU’s New VAT Rules Could Create a Mess for Startups

#121

Post by rmc »

Silhouette wrote: post #120
rmc wrote: post #114

Earlier quoted context omitted.

> except when it doesn't, as with our current coalition administration More than 50% of MPs have voted for the current UK Government. Yes, they aren't all in the same party. Many countries have coalition governments, and we have no problem with them. A minority government sounds very undemocratic

More than 50% of MPs have voted for the current UK Government. Right. But that means there is already an average of averages problem, even leaving aside the well documented criticisms of how those MPs are themselves elected. And literally everything beyond that is a matter of political dealing, not representative democracy, so the idea that there is any meaningful democratic accountability at all for the European Com…

By that logic the UK isn't democratic. Is any country democratic?

Re: EU’s New VAT Rules Could Create a Mess for Startups

#122

Post by shit_parade »

wbond wrote: post #118
shit_parade wrote: post #108

Earlier quoted context omitted.

Why don't you just charge more? Let them have their welfare state, just make sure they are ones paying for it.

I thought about that issue, but then I would need to detect the country a user is coming from before I show them a price. So now I am into geo-ip for basic web visitors, and even then sometimes the price will be wrong. If I do it at checkout time, I am performing sort of a bait-and-switch with customers, which would leave a sour taste in my mouth. I thought about the idea of adding a surcharge for EU customers since…

>It seems the EU is stacking the deck against small companies and instead favoring larger organizations that can afford full-time accountants. Or favoring large companies that then sell VAT services to the individual.

This is a common effect and often an intended one when it comes to regulatory capture and the raising of trade barriers to protect those in power.

Charge more at checkout, EU citizens will either understand or they won't, but they are the ones that need to confront their own laws passed by their politicians.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#123

Post by Silhouette »

rmc wrote: post #121
Silhouette wrote: post #120

Earlier quoted context omitted.

More than 50% of MPs have voted for the current UK Government. Right. But that means there is already an average of averages problem, even leaving aside the well documented criticisms of how those MPs are themselves elected. And literally everything beyond that is a matter of political dealing, not representative democracy, so the idea that there is any meaningful democratic accountability at all for the European Com…

By that logic the UK isn't democratic. Is any country democratic?

No, the UK isn't really very democratic in a literal sense, and nor is anywhere else. That isn't really the point, though, because as far as I know, no-one here is claiming that pure democracy is somehow the idealised form of government. The point was merely that the European Commission doesn't have much of a democratic mandate to impose these kinds of burdens on everyone.

In any case, we're drifting well off the original topic now and I'm not sure this discussion is going anywhere constructive, so I'm going to stop there.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#124

Post by honzzz »

nawitus wrote: post #75
honzzz wrote: post #42

Earlier quoted context omitted.

Maybe I am missing something but how could you be subject to collecting taxes for a country that you have nothing to do with? AFAIK, EU laws apply to EU entities. If you are not EU citizen and do not own any EU-registered company, how could they have jurisdiction over you?

There are no EU laws. Member states create laws from EU directives. These laws often apply to everyone outside the member country. In practise these laws generally don't matter outside the member state, as it would be nearly impossible to enforce them. But the principle does exist, and the laws sometimes are enforced.

I was using the simplification "EU laws" as a set of laws of the member states (as a citizen of one of those states I know there are no EU laws per se) and what I was asking was how could anyone who has nothing to do with any of the EU states be forced to comply with any of their laws? Why would anyone outside care about them any more than they care about sharia laws enforced in some countries?

Re: EU’s New VAT Rules Could Create a Mess for Startups

#125

Post by ahomescu1 »

rmc wrote: post #116
adventured wrote: post #64

Earlier quoted context omitted.

I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split. Can you provide examples of that?

The EU can force the EU company to be split.

What would that achieve? Most of the Google engineering is done in the US, and its main offices in Europe are Zurich and Dublin (I think). Worst case, Google will also move their datacenters out of EU countries.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#126

Post by ahomescu1 »

mootothemax wrote: post #34
shedside wrote: post #25

Earlier quoted context omitted.

I’m afraid it looks like you’re wrong. https://twitter.com/HMRCgovuk/status/537214398855913472 (see the green box at the very bottom of the flowchart)

I’m afraid it looks like you’re wrong Yes and no. Yes the EU authorities would love for the entire world to collect VAT from its citizens. No because the EU has absolutely no way to enforce this worldwide. However, the big fun is coming on Thursday, when the EU is due to rule over Google and politely requesting that Google splits off search from the rest of its business. I believe this decision will be indicative of…

> However, the big fun is coming on Thursday, when the EU is due to rule over Google and politely requesting that Google splits off search from the rest of its business.

This doesn't seem to me the same as "splitting up Google", more like unbundling or splitting up products. For example, I can see them mandating that Android support other search engines in the launcher/Google Now.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#127

Post by raverbashing »

wbond wrote: post #118
shit_parade wrote: post #108

Earlier quoted context omitted.

Why don't you just charge more? Let them have their welfare state, just make sure they are ones paying for it.

I thought about that issue, but then I would need to detect the country a user is coming from before I show them a price. So now I am into geo-ip for basic web visitors, and even then sometimes the price will be wrong. If I do it at checkout time, I am performing sort of a bait-and-switch with customers, which would leave a sour taste in my mouth. I thought about the idea of adding a surcharge for EU customers since…

" I would need to detect the country a user is coming from before I show them a price"

You mean, like anywhere in the US where the price shown is without tax and you calculate it afterwards?

Re: EU’s New VAT Rules Could Create a Mess for Startups

#128

Post by AverageBanana »

MistahKoala wrote: post #43
wbond wrote: post #16

As someone who sells digital software licenses, this is quite an baffling situation to experience. Currently, I live in Massachusetts, which does not require collecting sales tax on digital goods. According to these new laws, even though I live in the USA, and don't collect any address information for my customers, I now need to: 1. Collect address and IP address information 2. Register with a MOSS somewhere in the E…

Whilst I don't know the ins and outs of your business or the implications of non-EU/EEA businesses selling to member state consumers... I'm wondering how such a requirement would be enforceable, given that you are outside the EU? I've yet to see anything that declares a requirement that you must collect VAT - but I have seen HMRC guidance saying that member state businesses selling outside the EU are not affected and…

These rules only affect cross-border sales within the EU. Any non-EU business supplying digital services direct to a customer in the EU will be affected. B2B supplies do not come under the scope of these rules. There's a lot of chatter on Twitter (#VATMOSS) about the new rules (mostly micro-businesses). The thing to remember is that EU member states with a high number of digital service customers will see a boost in VAT take as the VAT is accountable at the place of consumption. EDIT: I've have noticed these guys mentioned in the conversation: https://www.taxamo.com/#solution - they have developed an EU VAT compliance solution. HMRC have also released further information about the new rule changes, more details here: https://www.gov.uk/government/publications/vat-supplying-dig.... The UK, by the way, has estimated that they will gain a VAT windfall of £1.2 billion between 2015 and 2019. It is now in the interests of EU member states to enforce collection of this VAT, as they will be the ones to benefit. The old (2003) rules meant a non-EU business could just set up in a low-tax jurisdiction and route all supplies via that establishment. Not possible with new rules, that's the key change.

Re: EU’s New VAT Rules Could Create a Mess for Startups

#129

Post by Taxamo »

wbond wrote: post #80
rmc wrote: post #49

Earlier quoted context omitted.

You're not in the EU. So EU law doesn't apply to you.

I wish it was that simple, but everywhere I look for advice, I get told the opposite: http://www.aicpa.org/publications/taxadviser/2013/june/pages... http://www.taxamo.com/digital-eu-vat-myths/ http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices... Even if I were to presume that I could just ignore it since I am small, if I were to become more successful then I could owe back taxes and fines. I'm no expert o…

Hey guys, JP here from Taxamo. Many thanks for linking to our content. The new rules affect all suppliers of digital services to customers in the EU, only B2C supplies are affected. We have developed an EU VAT compliance solution designed around these new rules: http://www.taxamo.com/#solution We have also created a knowledge base explaining the new rules and why they have been introduced: http://support.taxamo.com/

Re: EU’s New VAT Rules Could Create a Mess for Startups

#130

Post by pbhjpbhj »

Hermel wrote: post #83
wbond wrote: post #16

As someone who sells digital software licenses, this is quite an baffling situation to experience. Currently, I live in Massachusetts, which does not require collecting sales tax on digital goods. According to these new laws, even though I live in the USA, and don't collect any address information for my customers, I now need to: 1. Collect address and IP address information 2. Register with a MOSS somewhere in the E…

I went through all of this with my previous startup. It is tedious, but feasible. Note that in practice, you probably won't have to fear much as long as your revenue does not exceed a certain threshold. In Germany, for example, the "Bemessungsgrenze" is 17'500€, but I'm not sure if that also applies to your case. Furthermore, you should also see the positive side: when for example renting dedicated servers from a Ger…

In the UK HMRC (Her Majesty's Revenue & Customs) are stating that VAT on digital services [and so e-goods too by their definitions] is payable from the first transaction, there is no threshold you can hide under as their is for local UK VAT (~£80k turnover IIRC). Apparently a threshold couldn't be agreed and so there isn't one!

This means that if you sell £50 a year of knitting patterns you now have a liability to document the geography of your customers and prove that non are in other EU countries, OR pay tax to each country you sell to individually. HMRC are saying that companies (who may be individuals [sole traders in local parlance]) can not legally refuse to sell across EU borders to avoid this either. Along with that as you're now holding personal information on your customers there is a whole raft of new laws to attend including apparently a £35 registration with the UK Information Commissioners Office (ICO).

Foreigners already don't pay local VAT in the EU do they? This change is about sales to customers in the EU, there is no change AFAICT to transactions with customers not in the EU the VAT laws relevant to that are unaltered.

It's totally bonkers. The people involved have described "micro businesses" as selling < £2million GBP of digital services. They clearly haven't considered the impact on the many small businesses (now being termed nano businesses) that sell maybe a few thousand GBP of e-books or a few hundred pounds of knitting patterns or similar.

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