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> Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... w
by Xylakant 10y ago
> Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... woebetide you if you don't speak Hungarian or Croatian. You're gonna have to find someone who does and get them to file a tax return for you.
This is a consequence of amazon and apple (and probably others) all "shipping" their digital goods from Luxembourg or Ireland and paying basically no tax at all - the Luxembourg government is accused of actually helping companies to exploit that loophole. This worked for Luxembourg or Ireland because they leverage that a little tax on many sales translates to still fairly high earnings per capita if you just have a small enough population. Basically both countries were siphoning off taxes from the higher population countries (france, germany, poland, GB, ...) in the EU. This used to be legal, but was clearly a loophole - and one that unfairly was only available to larger companies. So that one was closed - rightfully so - by stating that the sale for digital-only goods takes place in the country of the buyer. (as it's always been for services rendered to companies btw, look up reverse charge).
Things are now a bit harder for everybody that sells digital goods to Hungary obviously, but there's no need to speak Hungarian or pay somebody that does. Any company will have some sort of tax accountant and cross border tax affairs are their bread and butter. Small-scale businesses can register their foreign tax at their home tax/revenue service. It's certainly a nuisance, but please blame the ones that are responsible: The larger corporations that try and exploit every possible angle to save money.
- mike_hearn 10y agoCountries charging different tax rates is not a loophole and that's the entire problem the EU has: some countries can't compete with the lower tax areas for cultural reasons. Unless you think Luxembourg is some sort of anarchist hellhole, of course.
- Xylakant 10y agoArtificially changing the point of sales for digital goods is a loophole. It used to be legal, no question, but there's no particular reason why sales for digital goods should be treated differently from sales of physical goods. That was clearly not intended. It's also not only about cultural reasons: It's the size of the population that matters. Luxembourg has about 500k inhabitants. If they collect all sales digital good in the european union and charge a mere percent of vat on it, they'll increase their tax base significantly. In contrast, if Germany does so it has a more than two orders of magnitude less gain on that. That's why it pays of for Luxembourg, even if they damage the rest of the EU in the process. It's like Washington DC collecting all sales tax for digital goods in the US. Basically some small countries are freeloading at cost for the whole community. (See also the British Tax Havens, or Canal Islands)
- pbhjpbhj 10y agoThey don't want to compete for the chance to give businesses the best tax conditions for the business. They apparently want companies selling to their citizens to pay taxes there, so that the people can choose the way of life - including tax laws - instead of companies dictating them. Seems like democracy to me; non-EU companies are free to not do business there if they don't want to pay such taxes.