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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

#51

Post by rmc »

MistahKoala wrote: post #39
mahouse wrote: post #23

Earlier quoted context omitted.

> I'm almost considering shutting down sales to EU customers. Then someone will launch a business that will do the same you do, but complying with regulations. Taxes must be collected; without taxes, the welfare state collapses. You should know that, to be able to sell something in a market, you must understand its regulations first, and respect the decisions the citizens have taken (in this case, regarding taxes) th…

> respect the decisions the citizens have taken (in this case, regarding taxes) through democratic ways Except the citizens haven't taken that decision: the unelected European Commission has. We could probably go down the reductio ad absurdum road of highlighting their appointment by someone who got elected somewhere along the way, but this powerful body is in no way directly accountable to citizens. Some of the Brit…

The citizens voted for national parliaments who appointed the EC, and support the EC.

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

#52

Post by maljx »

rmc wrote: post #49
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…

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

These rules apply to anyone selling to EU customers.

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

#53

Post by mahouse »

MistahKoala wrote: post #39
mahouse wrote: post #23

Earlier quoted context omitted.

> I'm almost considering shutting down sales to EU customers. Then someone will launch a business that will do the same you do, but complying with regulations. Taxes must be collected; without taxes, the welfare state collapses. You should know that, to be able to sell something in a market, you must understand its regulations first, and respect the decisions the citizens have taken (in this case, regarding taxes) th…

> respect the decisions the citizens have taken (in this case, regarding taxes) through democratic ways Except the citizens haven't taken that decision: the unelected European Commission has. We could probably go down the reductio ad absurdum road of highlighting their appointment by someone who got elected somewhere along the way, but this powerful body is in no way directly accountable to citizens. Some of the Brit…

The EC is unelected? Please, educate yourself.

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

#54

Post by rmc »

fivedogit wrote: post #11
CalRobert wrote: post #8

Earlier quoted context omitted.

How does hiring someone in Kentucky become more difficult due to European Union VAT documentation rules?

My point is that increased business documentation rules, no matter the jurisdiction, do have a real impact on the ability of startups to take root and grow.

Conversely, no regulation tends to be literally Dickensian.

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

#55

Post by flexie »

MistahKoala wrote: post #47
flexie wrote: post #36

Best solution would be to have a common EU VAT-rate applying to all goods and services. It's going to be terrible situation for tech start ups but it's been bad for everyone for a while who sells across borders in EU. You have to find out what strange box defined by eurocrats that your business fits into (if any). It's not that easy. I'm a lawyer selling most of my services across borders. Some of my revenue is purel…

> Best solution would be to have a common EU VAT-rate applying to all goods and services. That would appear to fulfil a long-term aspiration of the European project.

Indeed. And if they then put the VAT rate at 0 it would hurt businesses even less ;-)

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

#57

Post by kuschku »

AhtiK wrote: post #35
bartkappenburg wrote: post #28

Luckily we've found this: "Super simple (static) web service to grab VAT rates for all EU Member States, in preparation of the new 2015 VAT regulation." See: https://github.com/modmore/euvatrates.com We've used this (for http://www.voyando.com ) to change our software (ie. replaced a static VAT-variable for EU countries to a dynamic one based on what customers filled in during sign up). It was no more than 4 hours of…

The suggested http://euvatrates.com/rates.json and pretty much any EU taxation document uses country code "EL" for Greece while ISO standard and most geolocation APIs use "GR". Just make sure your code doesn't crash because of this :) "GB" vs "UK" for United Kingdom is another one to pay attention to.

It’s about consistence.

Name of the Country in it’s own language, abbreviated to 2 letters. Results in EL for Greece, UK for the United Kingdom, etc.

GB is an island and has nothing to do with the UK, it’s as if you’d call Japan now Hokkaido, it makes no sense.

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

#58

Post by pjc50 »

MistahKoala wrote: post #32

I'm unfamiliar with the nuances of sales tax rules in relation to the Crown dependencies (IoM; Channel Islands), but would one way around this be for sole traders and micro enterprises (or even SMEs, if they wish) to incorporate their trading entity in one of the Crown dependencies, allowing them to disregard this messy requirement?

This was the old loophole used by Amazon to sell CDs from Jersey without paying VAT. It got closed somehow.

Incorporating in Delaware, or having a subsidiary/reseller in the US front the actual sales, seems like a better option.

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

#59

Post by scribu »

michah wrote: post #45

Actually this is not really new. Since 2003 Businesses outside the EU that sell to private (not business) customers in the EU need to pay VAT to an EU member country. This is called VAT on e-Services. Most App Stores (except Google Play) took care of this already but if you did direct sales (e.g. via Paypal, direct payments etc) you need to calculate the tax every quarter and pay it to a member state (which will then…

Isn't the lack of VAT exemption for small businesses also new?

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

#60

Post by paulhauggis »

fivedogit wrote: post #11
CalRobert wrote: post #8

Earlier quoted context omitted.

How does hiring someone in Kentucky become more difficult due to European Union VAT documentation rules?

My point is that increased business documentation rules, no matter the jurisdiction, do have a real impact on the ability of startups to take root and grow.

The end result will be a few large companies and no smaller companies in the marketplace. Barrier to entry will also be difficult. Is less competition and more large companies what we really want?
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