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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

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.
- camdenre 11y ago
  desert* A good way to remember is a dessert (the post-meal treat) is so good you want 2 (hence 2 's' characters)!
  - PythonicAlpha 11y ago
    Thanks, as non-native speaker, I always fall in those traps ...
    - tekromancr 11y ago
      Haha, and as a native English speaker, I also fall for these traps. English is a silly language, sometimes.
      - PythonicAlpha 11y ago
        Thanks! I don't feel so silly any more! ;)
pjlegato 11y ago
> I guess they think typical business is like Google or Amazon or something. Exactly. Many in the EU imagine that "business owner" is a synonym for "evil capitalist plutocrat." For them, if you are not someone's employee, you are by definition rich. Questions of scale are ignored.
- PythonicAlpha 11y ago
  I don't think, that so many (at least educated) people in the EU believe that ... but the problem is (and I saw evidence for that again and again), that the politicians like to talk about the "Founder culture" or that they want to aid smaller businesses ... but in fact, they do the absolute opposite. I see that, because at least in Germany (where it is very chic in the political class to talk how to aid smaller businesses and startups ...!) the tax rules are in favor of the big corporations (they have been changed in the last decades, so the corporations got better and better conditions) ... but of course this relieves for the big ones must be compensated somehow -- so the smaller companies have to pay even more taxes. The current VATMOSS legislation is also a good example: It was announced to be a means to counter the fact that bigger corporations like Amazon avoid VAT by having subsidiaries in Luxembourg. But the biggest problems with the new rulings have now the smaller companies, that never had the chance to open subsidiaries in Luxembourg. For Amazon it is a small drawback and they may have to raise some prices -- but the troubles of other companies are tremendous. So: The politicians are talking much about smaller companies -- but are only thinking about the bigger ones. And in Germany, many laws are even written by people from the bigger corporations.
  - wobbleblob 11y ago
    I know two people who tried to start a business in Germany and failed, not because of the EU but because of domestic, German rules. One tried to start some kind of innovative form of pharmacy (the details weren't clear to me), but found himself unable to join the pharmacy guild, and apparently it is illegal to start a business without joining the guild. The other tried to start a bed & breakfast business, but the 'breakfast' part was closed down indefinitely when the food safety inspection found he didn't have the right license for a Sandwichtoaster. Apparently there are different regulations for serving a hot breakfast.
Lawtonfogle 11y ago
>It's a hostile piece of regulation which very severely disincentivize you from starting a business Would this fall under regulatory capture? I'm not sure to what extent existing international businesses worked to get this established.
- wobbleblob 11y ago
  The intention with EU regulations like these is usually to prevent a 'race to the bottom' as they call it. They're turning the EU into a common market without internal trade barriers, but when you do that, what happens when one country has a VAT of 15% and another of 25%? Businesses that can move, will move (administratively) to the 15% country, forcing all countries to lower their VAT to the lowest level. You can argue that this measure isn't working, or that the cost outweighs the benefits, but I don't think it is regulatory capture. Brussels is really trying to minimize the impact of the common market on member states' domestic policies.
  - Lawtonfogle 11y ago
    >The intention with EU regulations like these is Regulatory capture is almost always given some reason behind it. As such when determining if something was regulatory capture, the stated reasoning behind it is ignored, which is why I was asking to what extent did multinational organizations influence this decision.
    - wobbleblob 11y ago
      It's difficult to see why the EU would try to favor large, usually American and Asian tech giants like Amazon, Samsung and Google versus local startups through tax regulation. The most likely explanation if you ask me is that the motivation behind VATMOSS is exactly what it says on the tin: harmonization of the common market without forcing every member state to adopt the same domestic policies. The dynamics are different in the decision making processes in the EU. None of the commissioners are elected, they don't have campaign funds to worry about, so there is no legal veneer for corporate 'lobbying' as you would call it. I can't tell you for sure that it doesn't happen, but it can't happen out in the open as it would be considered corruption, and illegal. The problem instead is that the commissioners are put forward by the (elected) governments of member states, so there is always the danger of them either deliberately or unwittingly favoring their national interests, and it makes them potentially vulnerable to domestic political pressure.
Asbostos 11y ago
Can't you just assume the highest tax rate and pay that on every sale so you don't have to guess the country? Seems like it would save everyone money for a small business like this.

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.

camdenre 11y ago
desert* A good way to remember is a dessert (the post-meal treat) is so good you want 2 (hence 2 's' characters)!
- PythonicAlpha 11y ago
  Thanks, as non-native speaker, I always fall in those traps ...
  - tekromancr 11y ago
    Haha, and as a native English speaker, I also fall for these traps. English is a silly language, sometimes.
    - PythonicAlpha 11y ago
      Thanks! I don't feel so silly any more! ;)

pjlegato 11y ago

> I guess they think typical business is like Google or Amazon or something. Exactly. Many in the EU imagine that "business owner" is a synonym for "evil capitalist plutocrat." For them, if you are not someone's employee, you are by definition rich. Questions of scale are ignored.

PythonicAlpha 11y ago
I don't think, that so many (at least educated) people in the EU believe that ... but the problem is (and I saw evidence for that again and again), that the politicians like to talk about the "Founder culture" or that they want to aid smaller businesses ... but in fact, they do the absolute opposite. I see that, because at least in Germany (where it is very chic in the political class to talk how to aid smaller businesses and startups ...!) the tax rules are in favor of the big corporations (they have been changed in the last decades, so the corporations got better and better conditions) ... but of course this relieves for the big ones must be compensated somehow -- so the smaller companies have to pay even more taxes. The current VATMOSS legislation is also a good example: It was announced to be a means to counter the fact that bigger corporations like Amazon avoid VAT by having subsidiaries in Luxembourg. But the biggest problems with the new rulings have now the smaller companies, that never had the chance to open subsidiaries in Luxembourg. For Amazon it is a small drawback and they may have to raise some prices -- but the troubles of other companies are tremendous. So: The politicians are talking much about smaller companies -- but are only thinking about the bigger ones. And in Germany, many laws are even written by people from the bigger corporations.
- wobbleblob 11y ago
  I know two people who tried to start a business in Germany and failed, not because of the EU but because of domestic, German rules. One tried to start some kind of innovative form of pharmacy (the details weren't clear to me), but found himself unable to join the pharmacy guild, and apparently it is illegal to start a business without joining the guild. The other tried to start a bed & breakfast business, but the 'breakfast' part was closed down indefinitely when the food safety inspection found he didn't have the right license for a Sandwichtoaster. Apparently there are different regulations for serving a hot breakfast.

Lawtonfogle 11y ago

>It's a hostile piece of regulation which very severely disincentivize you from starting a business Would this fall under regulatory capture? I'm not sure to what extent existing international businesses worked to get this established.

wobbleblob 11y ago
The intention with EU regulations like these is usually to prevent a 'race to the bottom' as they call it. They're turning the EU into a common market without internal trade barriers, but when you do that, what happens when one country has a VAT of 15% and another of 25%? Businesses that can move, will move (administratively) to the 15% country, forcing all countries to lower their VAT to the lowest level. You can argue that this measure isn't working, or that the cost outweighs the benefits, but I don't think it is regulatory capture. Brussels is really trying to minimize the impact of the common market on member states' domestic policies.
- Lawtonfogle 11y ago
  >The intention with EU regulations like these is Regulatory capture is almost always given some reason behind it. As such when determining if something was regulatory capture, the stated reasoning behind it is ignored, which is why I was asking to what extent did multinational organizations influence this decision.
  - wobbleblob 11y ago
    It's difficult to see why the EU would try to favor large, usually American and Asian tech giants like Amazon, Samsung and Google versus local startups through tax regulation. The most likely explanation if you ask me is that the motivation behind VATMOSS is exactly what it says on the tin: harmonization of the common market without forcing every member state to adopt the same domestic policies. The dynamics are different in the decision making processes in the EU. None of the commissioners are elected, they don't have campaign funds to worry about, so there is no legal veneer for corporate 'lobbying' as you would call it. I can't tell you for sure that it doesn't happen, but it can't happen out in the open as it would be considered corruption, and illegal. The problem instead is that the commissioners are put forward by the (elected) governments of member states, so there is always the danger of them either deliberately or unwittingly favoring their national interests, and it makes them potentially vulnerable to domestic political pressure.

Asbostos 11y ago

Can't you just assume the highest tax rate and pay that on every sale so you don't have to guess the country? Seems like it would save everyone money for a small business like this.