4 ms·

To avoid adding to the misinformation and ignorance out there, what are some of these edge cases and minor details?

jacquesm 10y ago
Changes without notice, processing transactions around the time of such changes, exceptions for locality not typically reflected in anything as simple as the country code and so on.
Silhouette 10y ago
A few that come to mind immediately are the record-keeping requirements (need to keep two acceptable and non-conflicting sources of evidence for each place of supply, for a long time), geolocation inaccuracy (geo-IP databases typically have about 5-10% error rate in country identification according to most reports I've seen), regional variations (dependent territories might have different tax rules to their parent member state, so the country alone isn't sufficient to determine the correct tax rate), and dealing with refunds/returns/replacements/etc (where unlike most VAT returns as I understand it, for a MOSS return you're supposed to retrospectively update things once you've already filed them and then deal with how to adjust for any tax now over/underpaid originally). As people have noted in various other comments here, you also have to keep up with any changes in the rates themselves and understand any local rules in each member state on which rate applies, possibly deal with just plain incorrect demands from foreign tax authorities or more reasonable but still onerous tax audits if your number comes up, and of course there are the basic overheads for operating a second tax scheme on top of your national one in the first place, including some slightly eccentric rules for dealing with exchange rates if they affect you. Also, the VAT rules don't override consumer protection rules about advertising VAT-inclusive prices for B2C sales, which creates some interesting dilemmas if you're running a web site where you want to show correct prices based on a visitor's location but you don't have sufficient evidence until you get to the payment step to actually verify that location to a satisfactory standard. The only completely safe solution to this that I know is to advertise a fixed price to everyone, which means you're taking the VAT hit directly from your revenues and if nations change their VAT rates then it's your business that wins/loses, not the customer, which is entirely not how VAT is supposed to work.
- jacquesm 10y ago
  HN should have a 'reference' comments section, this is a good one.
- zigzigzag 10y ago
  Don't forget the special rules that apply if the person buying your digital goods is on a ship at the time!

Changes without notice, processing transactions around the time of such changes, exceptions for locality not typically reflected in anything as simple as the country code and so on.

Silhouette 10y ago

A few that come to mind immediately are the record-keeping requirements (need to keep two acceptable and non-conflicting sources of evidence for each place of supply, for a long time), geolocation inaccuracy (geo-IP databases typically have about 5-10% error rate in country identification according to most reports I've seen), regional variations (dependent territories might have different tax rules to their parent member state, so the country alone isn't sufficient to determine the correct tax rate), and dealing with refunds/returns/replacements/etc (where unlike most VAT returns as I understand it, for a MOSS return you're supposed to retrospectively update things once you've already filed them and then deal with how to adjust for any tax now over/underpaid originally). As people have noted in various other comments here, you also have to keep up with any changes in the rates themselves and understand any local rules in each member state on which rate applies, possibly deal with just plain incorrect demands from foreign tax authorities or more reasonable but still onerous tax audits if your number comes up, and of course there are the basic overheads for operating a second tax scheme on top of your national one in the first place, including some slightly eccentric rules for dealing with exchange rates if they affect you. Also, the VAT rules don't override consumer protection rules about advertising VAT-inclusive prices for B2C sales, which creates some interesting dilemmas if you're running a web site where you want to show correct prices based on a visitor's location but you don't have sufficient evidence until you get to the payment step to actually verify that location to a satisfactory standard. The only completely safe solution to this that I know is to advertise a fixed price to everyone, which means you're taking the VAT hit directly from your revenues and if nations change their VAT rates then it's your business that wins/loses, not the customer, which is entirely not how VAT is supposed to work.

jacquesm 10y ago
HN should have a 'reference' comments section, this is a good one.
zigzigzag 10y ago
Don't forget the special rules that apply if the person buying your digital goods is on a ship at the time!