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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

#71

Post by wbond »

kybernetyk wrote: post #68
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…

>As someone who sells digital software licenses, this is quite an baffling situation to experience. >I'm almost considering shutting down sales to EU customers. Do you have a payment processor (like Fastspring)? If so then they're handling all that ugly mess.

I looked into them when I first started trying to figure this all out. They take a big chunk of money (9%), and would require a bunch of new custom integration. I would end up making less money, or having to raise prices, and still having to do a bunch of custom integration work.

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

#72

Post by nawitus »

adventured wrote: post #64
rmc wrote: post #48

Earlier quoted context omitted.

The USA has ordered that big companies be split in the past. It's just the "crazy EU lawmakers".

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?

There are "Google companies" inside the EU. Of course, they often officially state that there's no connection to the "American Google" to evade certain legislation.

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

#73

Post by kybernetyk »

pjc50 wrote: post #24
noelwelsh wrote: post #15

Let me just cut and paste from HMRC's advice page: If you supply digital services to consumers through an online portal, gateway or marketplace then it’s important to determine whether you’re making the supply to the customer or to the platform operator. Where the platform operator sets the general terms and conditions, authorises payment or delivery, or doesn’t clearly state the name of the supplier on the receipt o…

Indeed; if you're happy to pay a large chunk of your sales to an intermediary you can have them handle the compliance. If you want to disintermediate your sales then you have a lot of hassle.

Well, it's a simple business decision. For me the "large chunk" (which isn't that large at all) was far less than what it would cost me doing it myself at a conservative hourly rate.

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

#74

Post by dragonwriter »

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.

That's not accurate. What the European Parliament is due to vote on is a non-binding resolution that would recommend that the European Commission consider proposals that would include unbundling Google's search from other commercial features.

> I believe this decision will be indicative of how crazy the EU lawmakers might be prepared to go.

Or it might be an indicator of what people in general are willing to do when their actions have no direct effect (non-binding resolution) and therefore don't actually have to address the details of substantive concerns.

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

#75

Post by nawitus »

honzzz wrote: post #42
wbond wrote: post #33

Earlier quoted context omitted.

The issue is that I am now subject to collecting taxes for a country that I have nothing to do with. I have never set foot in an EU country, I don't choose to sell to EU customers, they just come to my US-based website and pay in USD. I comply with all of my local tax laws. I can be involved with my local government and affect change. I can't do that in the EU. The way this is all written, I'll actually have to do wo…

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.

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

#76

Post by kybernetyk »

jasonkester wrote: post #29

Another early xmas present from the EU to all of us US-based businesses. Thanks, I guess. I've noticed several things like this come down the pipe since I moved to Europe and started paying attention. It seems that they just really like to pass legislation to make it harder to run software businesses over here. Not that I'm complaining, mind you. Anything that removes more potential competition from my businesses can…

>It seems that they just really like to pass legislation to make it harder to run software businesses over here.

Please elaborate. I have quite a few friends who run "traditional brick and mortar" businesses and compared to the shit they have to put up with my "virtual" business is like a walk in the park.

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

#77

Post by nmcfarl »

rmc wrote: post #54
fivedogit wrote: post #11

Earlier quoted context omitted.

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.

I for one am not against regulation, but rather the overhead of large amounts of required documentation. These are burdens that hit small companies the hardest.

And the are burdens that are generally not imposed by the regulations passed by our representatives, but are rather imposed by the bureaucracies tasked with enforcing those regulations. Bureaucracies are pretty much about documentation, and most see little harm in more. And this mismatch of understanding slowly stifles small businesses.

This is not a problem with regulations, it’s a problem with bureaucracies and empathy.

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

#78

Post by michaelt »

kuschku wrote: post #57
AhtiK wrote: post #35

Earlier quoted context omitted.

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.

Well, GB is consistent if the rule you're following is "Use the ISO country code" as "GB" is the ISO country code for the UK [1].

[1] http://en.wikipedia.org/wiki/ISO_3166-1

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

#79

Post by dragonwriter »

adventured wrote: post #64
rmc wrote: post #48

Earlier quoted context omitted.

The USA has ordered that big companies be split in the past. It's just the "crazy EU lawmakers".

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?

> I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split.

The European Parliament passing a non-binding resolution recommending that the European Commission take seek a certain goal as part of a remedy if its concerns aren't otherwise resolved in an ongoing proceeding is not analogous to the US DOJ actually seeking a particular remedy in a proceeding.

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

#80

Post by wbond »

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.

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 on international law, but I presume there could be issues if I were running a company avoiding EU taxes and I ever decide to visit the EU.

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