10 ms·

Okay, say you're a US citizen building some digi service like JS Bin, and VATMOSS starts fling threats at you, for how long can you go about ignoring them? I me

by ffn 11y ago

Okay, say you're a US citizen building some digi service like JS Bin, and VATMOSS starts fling threats at you, for how long can you go about ignoring them? I mean 3.5k GBP and however many weekdays it took isn't exactly affordable for every small business, and if you don't even have many Euro pro-users, I don't see the cost-benefit justification of giving VATMOSS priority unless they can reach across the Atlantic.

nkozyra 11y ago
I think the obligation to pay customers' VAT goes back way before VATMOSS. That said, I think you've answered your own question. Unless you're at a size that would be drawing attention, it would be logical to ignore this if you're not in the EU.
- masklinn 11y ago
  > I think the obligation to pay customers' VAT goes back way before VATMOSS. Yep, VOES was put in place in 2003 and that was a simplification, before that businesses were supposed to register themselves with each country's tax office and fill VAT everywhere. For non-EU businesses VATMOSS mostly updates the scheme: register yourself in any member state and use their MOSS portal as a non-EU business, the tax office is supposed to redistribute VAT based on your fillings. The business also has the option to forego MOSS/VOES and register itself in each country of course.
  - bluecalm 11y ago
    You only needed to register in different countries once your sells to them are above a quite hefty limit though so when you started you just paid VAT in your country and that was it. (I am talking from EU citizen perspective)
    - masklinn 11y ago
      My comment is about businesses from outside the EU, sorry if that wasn't clear.
  - JoshTriplett 11y ago
    A business outside the EU has no obligation to do anything, unless it makes itself subject to EU jurisdiction. Just as you don't have to collect US state sales taxes for any US state unless your company has a legal presence in that state. That doesn't help you if you're in an EU country, of course.
    - mingabunga 11y ago
      This is correct. Our payment provider GlobalCollect has passed us on a court ruling from Netherlands to state we don't need to pay any VAT since we're not physically there, even though we do sell there. A lot of payment processors like FastSpring, Avangate and Cleverbridge act as resellers for your products and are therefore obligated to charge and pass on VAT even if your company is not located there.
    - zmmmmm 11y ago
      I have a complex notice written entirely in Spanish that I can't understand, but which with the help of Google translate I have decoded to indicate that some 100 odd euros is being withheld from me as the customer paid for my services and has voluntarily paid some kind of tax on my behalf. I am sure with sufficient effort I can probably find a way to get that 100 euros refunded, but boy, it sure aint worth my time. But I mention it because while you may have no obligation to do anything, you can find oneself in this "withholding" situation if you don't.
      - jfoster 11y ago
        How do you distinguish between that and some form of scam/fraud?
        zmmmmm 11y ago
        I suppose that's a good point - it would be a remarkably well executed scam, since it had all the account numbers, and details that I use with that client, as well as the actual amount from the invoice I sent them, printed on it. I didn't hesitate to believe it at the time.
matheweis 11y ago
Depending on the kind of service, a good solution is to use a third party provider that handles VAT payments for you; FastSpring, for example: http://www.fastspring.com/vat http://www.fastspring.com/vat (disclaimer, I am a happy FastSpring customer in the US, but have no other relationship with them)
- matheweis 11y ago
  I should also add a point relevant to this article; that outsourcing to a provider like FastSpring can also give you the benefit of real-time fraud detection/risk analysis. https://support.fastspring.com/entries/64433830-Understanding-the-Risk-Analysis-Fraud-Prevention-Screening https://support.fastspring.com/entries/64433830-Understandin... I've had maybe one or two chargebacks that made it past their filter in the ~three years I've been with them, and I don't remember having to pay any extra fees for it. It sounds like a part of OPs issue was not the "cost" so much as trying to do to much himself, which ended up being costly.
- SyneRyder 11y ago
  Another +1 for FastSpring (happy customer from Australia here). This is exactly why you would use such a service, even though it takes a higher percentage cut. It's worth it for reduced tax hassle & improved fraud screening. If they detect fraud on one customer's site, they can block the card for all their customers. I love Fastspring but they're not the only game in town. I used to use Kagi, and Avangate & Cleverbridge are two other companies I've heard of. There's lots of them out there.
- emilburzo 11y ago
  Does this work if I am in the EU?
bluecalm 11y ago
VATMOSS is a nightmare for small businesses. I am lucky that authorities in my country decide that I can avoid it with my project (because it doesn't fit exact definition of electronic service so I can pay VAT in my country as it's a place the service is provided in according one interpretation of the new law) but they have plans to extend it and I may be forced to go through accounting hell to comply with this regulation in the future. It's one of the most ridiculous regulations there could be. As a small business founder you are not really in position to do the accounting for it properly and most accountants here have very little idea how to prepare all the documents either. You are required to keep 2 pieces of evidence of customer's location (IP, address etc.) which you often just don't have access to in the first place (if you payment gateway provider doesn't make this information available to you). So not only you need to find someone who knows what to do (already very hard), pay them significantly more than you would for normal accounting (big burden for small business owners and especially people who start), keep accounting information you often don't have access to, then prepare this accounting information as well (which means you spend resources for writing the scripts yourself as most tools accountants use don't track needed info). Additionally to all of this there is no more VAT free quota for people who just start (usually there is for business who don't qualify for VATMOSS, size of the quota depends on the country). When I've learnt about it (I started my business in 2015, the regulations started to be law Jan 1th 2015) I was really depressed about the whole thing. I was spending my days reading some contrived law and various interpretations of it instead of doing the actual programming. Nobody had answers for me (I've got different opinions from 2 tax advisors, different one from our tax office and yet different one from national tax information line) and I was just close to giving up altogether (I didn't expect my project getting as much traffic as it did and I wasn't really in position to spend significant resources for accounting when I didn't even know I would make enough to cover it). It's a hostile piece of regulation which very severely disincentivize you from starting a business or paying your taxes properly. It only shows how out of touch EU bureaucrats are. I guess they think typical business is like Google or Amazon or something.
- PythonicAlpha 11y ago
  Thank you for sharing! >I guess they think typical business is like Google or Amazon or something. I guess, that is all they want -- and it very likely could be, that this is all they will get, when they are not stopping this. The EU is about to kill inventions in the online business. With this kind of regulations, the EU will become a dessert with the Amazon's and Googles ruling over it. But I think, many big systems tend to go in this direction: The dinosaur corporations are going to win, because after the day, they can change the rules to their favor and the small businesses are going downhill, because they are to small to be recognized -- but those are those that innovate. And remember: Google and Amazon once also started small, but those where the days, where the focus of the big players where mostly elsewhere.

by ffn 11y ago

nkozyra 11y ago

I think the obligation to pay customers' VAT goes back way before VATMOSS. That said, I think you've answered your own question. Unless you're at a size that would be drawing attention, it would be logical to ignore this if you're not in the EU.

masklinn 11y ago
> I think the obligation to pay customers' VAT goes back way before VATMOSS. Yep, VOES was put in place in 2003 and that was a simplification, before that businesses were supposed to register themselves with each country's tax office and fill VAT everywhere. For non-EU businesses VATMOSS mostly updates the scheme: register yourself in any member state and use their MOSS portal as a non-EU business, the tax office is supposed to redistribute VAT based on your fillings. The business also has the option to forego MOSS/VOES and register itself in each country of course.
- bluecalm 11y ago
  You only needed to register in different countries once your sells to them are above a quite hefty limit though so when you started you just paid VAT in your country and that was it. (I am talking from EU citizen perspective)
  - masklinn 11y ago
    My comment is about businesses from outside the EU, sorry if that wasn't clear.
- JoshTriplett 11y ago
  A business outside the EU has no obligation to do anything, unless it makes itself subject to EU jurisdiction. Just as you don't have to collect US state sales taxes for any US state unless your company has a legal presence in that state. That doesn't help you if you're in an EU country, of course.
  - mingabunga 11y ago
    This is correct. Our payment provider GlobalCollect has passed us on a court ruling from Netherlands to state we don't need to pay any VAT since we're not physically there, even though we do sell there. A lot of payment processors like FastSpring, Avangate and Cleverbridge act as resellers for your products and are therefore obligated to charge and pass on VAT even if your company is not located there.
  - zmmmmm 11y ago
    I have a complex notice written entirely in Spanish that I can't understand, but which with the help of Google translate I have decoded to indicate that some 100 odd euros is being withheld from me as the customer paid for my services and has voluntarily paid some kind of tax on my behalf. I am sure with sufficient effort I can probably find a way to get that 100 euros refunded, but boy, it sure aint worth my time. But I mention it because while you may have no obligation to do anything, you can find oneself in this "withholding" situation if you don't.
    - jfoster 11y ago
      How do you distinguish between that and some form of scam/fraud?
      - zmmmmm 11y ago
        I suppose that's a good point - it would be a remarkably well executed scam, since it had all the account numbers, and details that I use with that client, as well as the actual amount from the invoice I sent them, printed on it. I didn't hesitate to believe it at the time.

matheweis 11y ago

Depending on the kind of service, a good solution is to use a third party provider that handles VAT payments for you; FastSpring, for example: http://www.fastspring.com/vat http://www.fastspring.com/vat (disclaimer, I am a happy FastSpring customer in the US, but have no other relationship with them)

matheweis 11y ago
I should also add a point relevant to this article; that outsourcing to a provider like FastSpring can also give you the benefit of real-time fraud detection/risk analysis. https://support.fastspring.com/entries/64433830-Understanding-the-Risk-Analysis-Fraud-Prevention-Screening https://support.fastspring.com/entries/64433830-Understandin... I've had maybe one or two chargebacks that made it past their filter in the ~three years I've been with them, and I don't remember having to pay any extra fees for it. It sounds like a part of OPs issue was not the "cost" so much as trying to do to much himself, which ended up being costly.
SyneRyder 11y ago
Another +1 for FastSpring (happy customer from Australia here). This is exactly why you would use such a service, even though it takes a higher percentage cut. It's worth it for reduced tax hassle & improved fraud screening. If they detect fraud on one customer's site, they can block the card for all their customers. I love Fastspring but they're not the only game in town. I used to use Kagi, and Avangate & Cleverbridge are two other companies I've heard of. There's lots of them out there.
emilburzo 11y ago
Does this work if I am in the EU?

bluecalm 11y ago

VATMOSS is a nightmare for small businesses. I am lucky that authorities in my country decide that I can avoid it with my project (because it doesn't fit exact definition of electronic service so I can pay VAT in my country as it's a place the service is provided in according one interpretation of the new law) but they have plans to extend it and I may be forced to go through accounting hell to comply with this regulation in the future. It's one of the most ridiculous regulations there could be. As a small business founder you are not really in position to do the accounting for it properly and most accountants here have very little idea how to prepare all the documents either. You are required to keep 2 pieces of evidence of customer's location (IP, address etc.) which you often just don't have access to in the first place (if you payment gateway provider doesn't make this information available to you). So not only you need to find someone who knows what to do (already very hard), pay them significantly more than you would for normal accounting (big burden for small business owners and especially people who start), keep accounting information you often don't have access to, then prepare this accounting information as well (which means you spend resources for writing the scripts yourself as most tools accountants use don't track needed info). Additionally to all of this there is no more VAT free quota for people who just start (usually there is for business who don't qualify for VATMOSS, size of the quota depends on the country). When I've learnt about it (I started my business in 2015, the regulations started to be law Jan 1th 2015) I was really depressed about the whole thing. I was spending my days reading some contrived law and various interpretations of it instead of doing the actual programming. Nobody had answers for me (I've got different opinions from 2 tax advisors, different one from our tax office and yet different one from national tax information line) and I was just close to giving up altogether (I didn't expect my project getting as much traffic as it did and I wasn't really in position to spend significant resources for accounting when I didn't even know I would make enough to cover it). It's a hostile piece of regulation which very severely disincentivize you from starting a business or paying your taxes properly. It only shows how out of touch EU bureaucrats are. I guess they think typical business is like Google or Amazon or something.

PythonicAlpha 11y ago
Thank you for sharing! >I guess they think typical business is like Google or Amazon or something. I guess, that is all they want -- and it very likely could be, that this is all they will get, when they are not stopping this. The EU is about to kill inventions in the online business. With this kind of regulations, the EU will become a dessert with the Amazon's and Googles ruling over it. But I think, many big systems tend to go in this direction: The dinosaur corporations are going to win, because after the day, they can change the rules to their favor and the small businesses are going downhill, because they are to small to be recognized -- but those are those that innovate. And remember: Google and Amazon once also started small, but those where the days, where the focus of the big players where mostly elsewhere.