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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?”

#161

Post by Silhouette »

speleding wrote: post #149
adwf wrote: post #138

Earlier quoted context omitted.

>if those affected had just bothered to try. How about: If those affected had even known that this change was happening. I'd certainly heard that they were changing the VAT rules to crack down on the likes of Amazon. That I'd now need to charge VAT based on country of consumer. That's not the crappy part of the legislation as I currently don't need to charge any VAT at all in the UK. I hadn't heard that my VAT thresh…

Good points, awareness certainly is an issue. I found out a few months ago and just finished updating the payment system for my site. I have learned a few more interesting gotchas: - You are responsible for verifying the location of your buyer (how? who knows!) - It is not enough to know the country code of your buyer. For example the Canary Islands have country code ES but have a different VAT rate from mainland Spa…

- 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 foreign currency, you must:

- convert it into the MSI currency at the end of each quarter

- use the conversion rate published by the European Central Bank (ECB) on the last working day of the quarter

However, if to meet VAT invoicing or other accounting requirements you convert the foreign currency into the MSI currency using an agreed published daily or monthly conversion rate, you can use this converted figure when completing your quarterly VAT MOSS return."

In the above, "Member State of Identification (MSI) is the state in which you’ve registered for VAT MOSS."

So it looks as though there are three possibilities here:

1. If you charge customers in your own native currency, then you just have to apply their location's tax rate on the transaction, instead of applying your local tax rate as at present.

2. If you charge customers in their own currency (or any other that isn't your native one) then you have two options:

2a. You convert the amount charged to your native currency at the time of the charge, and use that figure and the customer location's tax rate to calculate the tax due.

2b. You record the transaction in its actual currency at the time of the charge, and then later you convert to your native currency according to the standardised exchange rate published by the ECB at the end of each quarter, use that figure to calculate the tax due, and use these figures when you file your MOSS return for the quarter that just finished.

But I'm not an accountant, and like many here I've spent too much time in recent weeks just trying to get straight answers and figure out what all the "guidance" really means, not to mention trying to find out minor details like what the current tax rates to use for each location actually are (including variations within individual member states) and how we're supposed to keep up with any changes in the future. So don't take my word for anything, I'm just trying to interpret some official guidance like everyone else...

[1] https://www.gov.uk/government/publications/vat-supplying-dig...

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

#162

Post by BerislavLopac »

toyg wrote: post #147
BerislavLopac wrote: post #71

The main problem with these changes is that they require the seller to collect information about the buyer's location. It makes all the sense for physical goods, but it is nigh impossible for digital ones, and pretty much misses the whole point of online economy. In my opinion, the VAT should be charged based on the delivery address; for digital goods, it would be ideal that all purchases are considered local, and th…

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 universal VAT rate.

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

#163

Post by lotsofmangos »

Jongseong wrote: post #158
lotsofmangos wrote: post #148

Earlier quoted context omitted.

If you are selling crafts online, you have to take a purchasers location in order to deliver stuff. If you are doing this through your own shop, then all the decent ecommerce backends have plugins for eu vat stuff and if you are doing it through an existing marketplace the same applies. And I don't think whether they are women really affects this.

What you are overlooking is that the vast majority of these people (and women are disproportionately represented, including many stay-at-home mums doing this in their spare time) did not have to deal with VAT _at all_ previously because they never came anywhere near the VAT threshold. They have never had to apply for it. Suddenly, they have to register and comply with not one but two government bureaucracies, and sub…

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.

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

#164

Post by iopq »

toyg wrote: post #143
iopq wrote: post #126

Earlier quoted context omitted.

It's not possible to tax wealth. Unless you want to tell me how many Bitcoins I own.

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.

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

#165

Post by maaku »

acveilleux wrote: post #105
maaku wrote: post #48

Earlier quoted context omitted.

Nationalized health insurance, which is a little different.

I live in Quebec and technically I don't have nationalized healthcare but rather health insurance. It doesn't change the fact that I don have to pay anything out of pocket at any hospital I go to here. An itemized and detailed claim will be made on my behalf to the insurance agency to get everything paid. From a user pov it makes no difference how the system works.

Quite the contrary, the level of service can vary wildly in nationalized health care, where the state runs the hospitals. There are pluses and minuses -- you can get much better health care at a much cheaper price to the tax payer, but with all the problems you see in any government bureaucracy.

Nationalized insurance on the other hand is pretty much the system any American would be used to, except the government pays and you have long queues.

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

#166

Post by laurencerowe »

toyg wrote: post #144
laurencerowe wrote: post #109

Earlier quoted context omitted.

That sounds nuts, but it's nothing like how the system works in the UK. As a small business you complete your VAT return and pay your balance at the end of each quarter. A large business (turnover > £2M) will make payments on account more frequently so they don't get to keep hold of the VAT that has been paid to them as long.

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%...

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

#167

Post by laurencerowe »

cbd1984 wrote: post #151
laurencerowe wrote: post #113

Earlier quoted context omitted.

Yes. But at least its not as bad as the US where each city seems to have its own VAT rate...

There is no VAT in the US. Even if you mean sales tax, that's set on a state-by-state basis, and you only have to collect sales tax in a state if you have a physical presence there: https://www.sba.gov/content/collecting-sales-tax-over-intern...

Sorry, I did mean sales tax. Here in CA it is set per city: http://www.boe.ca.gov/sutax/pam71.htm

In the US it seems the onus is put on the consumer rather than the business. We should all be declaring our out of state purchases on our tax returns... http://en.wikipedia.org/wiki/Use_tax

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

#168

Post by speleding »

Silhouette wrote: post #161
speleding wrote: post #149

Earlier quoted context omitted.

Good points, awareness certainly is an issue. I found out a few months ago and just finished updating the payment system for my site. I have learned a few more interesting gotchas: - You are responsible for verifying the location of your buyer (how? who knows!) - It is not enough to know the country code of your buyer. For example the Canary Islands have country code ES but have a different VAT rate from mainland Spa…

- 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.

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

#169

Post by Jongseong »

lotsofmangos wrote: post #163
Jongseong wrote: post #158

Earlier quoted context omitted.

What you are overlooking is that the vast majority of these people (and women are disproportionately represented, including many stay-at-home mums doing this in their spare time) did not have to deal with VAT _at all_ previously because they never came anywhere near the VAT threshold. They have never had to apply for it. Suddenly, they have to register and comply with not one but two government bureaucracies, and sub…

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 registrants in 2015 assuming everyone tries to follow the new rules) and completing quarterly VAT returns might be completely normal for small businesses of more than a few people, but for the millions of self-employed people who have never had to deal with any of this (and who are finding out about the rule change only in the last few weeks) this is a nightmare.

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

#170

Post by mastef »

djrogers wrote: post #73
joosters wrote: post #58

Earlier quoted context omitted.

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 V…

I'd argue that showing pre-tax prices and charging tax at checkout makes the tax burden much more obvious to most consumers. Showing only the post-tax price on the tag hides the proportions of the tax vs item cost.

I was super-annoyed when first time in USA to find out I had to pay more at the cashier. Also it makes products seem cheaper than they really are - it's a cop-out to display pre-tax prices if you're billing more at the counter.

Are people shopping with a calculator?

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