4 ms·

They think you should pay VAT on imported services? That sounds very fishy to me. I've never heard of such a thing (and I have been exporting into the EU for ma

by KayEss 9y ago

They think you should pay VAT on imported services? That sounds very fishy to me. I've never heard of such a thing (and I have been exporting into the EU for many years).

boudewijnrempt 9y ago
Yes... It's no wonder that my first accountant never realized that this could be possible.
- Michielvv 9y ago
  Seems if you click enough, the tax site does mention it in some obscure tool. I always thought it only applied to goods. For the dutch: https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_uit_het_buitenland/ https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_ui...
- ralfn 9y ago
  Honestly, your accountant sucked. All the rules are about making sure value produced is taxed exactly once. No more no less. If you find a loophole out of that, you better triple check that, because it is definitely not the spirit these tax laws are written in. Not to blame you - i too would trust a professional. Also, in Holland, accountancy is a protected profession. You can report them, because at the end of the day he/she took a risk that you would likely personally not have taken if you were aware of it.
varjag 9y ago
You should, in most places of the world that have VAT. E.g. you pay VAT on inbound courier services like UPS, FedEx, atop of the duty on the goods they carry. (but not on outbound ones).
- Kiro 9y ago
  What do you mean? You pay VAT on imported goods. Not on imported services.
  - KayEss 9y ago
    You might pay a customs duty on imported goods, but you don't pay VAT.
    - gcp 9y ago
      It depends. Goods from inside the EU: you'll pay VAT (and recover it). Goods outside EU: you pay import duty (which might include VAT - but you don't actually pay that VAT as a company, because it's VAT) If this wouldn't apply to services, it would give non-EU suppliers an unfair advantage.
    - _Codemonkeyism 9y ago
      You need to pay VAT on imported goods into the EU. In Germany it is called "Einfuhrumsatzsteuer".
    - DanBC 9y ago
      https://www.gov.uk/goods-sent-from-abroad/overview https://www.gov.uk/goods-sent-from-abroad/overview https://www.gov.uk/goods-sent-from-abroad/tax-and-duty https://www.gov.uk/goods-sent-from-abroad/tax-and-duty > You pay VAT on goods sent from non-European Union (EU) countries and EU special territories (eg the Canary Islands) if they’re: > gifts worth more than £39 > other goods worth more than £15 > alcohol, tobacco products and fragrances (eg perfume, eau de toilette and cologne) of any value Customs duty is different. > You’ll be charged Customs Duty on gifts and other goods sent from outside the EU if they’re above a certain value. > The value includes: > the price paid for the goods > postage, packaging and insurance Type and value of good Customs Duty Anything under £135 No charge Gifts worth £135-£630 2.5%, but rates are lower for some goods - call the helpline Gifts above £630 and other goods above £135 The rate depends on the type of goods and where they came from - call the helpline
  - ralfn 9y ago
    If that distinction would exist (it doesn't) it would be another huge loophole. Ill sell you a car for 1 cent if you also take the car care service where we email you a magazine for 60k. Tax avoided. And companies within the country that would have to pay tax couldnt compete with that. So soon everybody in the country would be unemployed.
DangerousPie 9y ago
Really? I always need to charge/pay VAT on services. The only exception is if both are VAT-registered businesses in the EU (but in different member states), in which case you can charge 0% VAT.
- KayEss 9y ago
  We're talking about things imported to the EU from outside the EU. Do you really pay VAT in europe on services you buy in the US? Or in Asia?
  - gcp 9y ago
    Yes? You have to declare this. You don't physically pay of course, it's just taken into account for the VAT balance.
  - mikekchar 9y ago
    The problem (at leas in Japan) is the other way around. If I export an service from Japan to another country, I have to pay the Japanese equivalent of VAT. The importer does not generally have to pay (but I guess it depends on the place) because it has already been paid. The problem for the Krita foundation was that their employee (who was outside of the EU) was doing consulting work through Krita. It didn't matter that he resided outside of the EU, because he was working as an employee. I presume if he were an arms-length contractor, he could have invoiced the work personally (and that's how they really should have set it up -- I assume he was trying to avoid Russian tax by invoicing through Krita, but I'm speculating). So it was an EU service done in the EU (even though the employee was physically outside of the EU). VAT has to be paid for that. What I don't quite understand (and what seems to also mystify the Krita people) is why they have to also pay VAT on their donations. That's a pretty crazy law.
    - kgwgk 9y ago
      I think you got it completely wrong. He was not an employee. He was providing a service to the foundation and sending them an invoice. I guess that if he had been in the EU instead of Russia, they would have noticed earlier that they were required to pay also the VAT. As he was in Russia, they had to account for the VAT owed to the tax authorities for this imported service themselves but they didn't.
ralfn 9y ago
Are you selling to consumers or companies? If companies: they need to pay taxes: not your legal risks but you be wise to warn them. If consumers they need to declare it or the service or good can be confiscated. None of this is fishy.. it works like this between all Western nations and all other modern economies. And if you find a country that is an exception that that would be a huge bussiness opportunity for every one just moving profits that way. There was actually a way to do this. Cheat your way out of VAT. But its a complicated trick only companies like Apple and IKEA use and that trick is under full attack by both the US and EU government.

by KayEss 9y ago

They think you should pay VAT on imported services? That sounds very fishy to me. I've never heard of such a thing (and I have been exporting into the EU for many years).

boudewijnrempt 9y ago

Yes... It's no wonder that my first accountant never realized that this could be possible.

Michielvv 9y ago
Seems if you click enough, the tax site does mention it in some obscure tool. I always thought it only applied to goods. For the dutch: https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_uit_het_buitenland/ https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_ui...
ralfn 9y ago
Honestly, your accountant sucked. All the rules are about making sure value produced is taxed exactly once. No more no less. If you find a loophole out of that, you better triple check that, because it is definitely not the spirit these tax laws are written in. Not to blame you - i too would trust a professional. Also, in Holland, accountancy is a protected profession. You can report them, because at the end of the day he/she took a risk that you would likely personally not have taken if you were aware of it.

varjag 9y ago

You should, in most places of the world that have VAT. E.g. you pay VAT on inbound courier services like UPS, FedEx, atop of the duty on the goods they carry. (but not on outbound ones).

Kiro 9y ago
What do you mean? You pay VAT on imported goods. Not on imported services.
- KayEss 9y ago
  You might pay a customs duty on imported goods, but you don't pay VAT.
  - gcp 9y ago
    It depends. Goods from inside the EU: you'll pay VAT (and recover it). Goods outside EU: you pay import duty (which might include VAT - but you don't actually pay that VAT as a company, because it's VAT) If this wouldn't apply to services, it would give non-EU suppliers an unfair advantage.
  - _Codemonkeyism 9y ago
    You need to pay VAT on imported goods into the EU. In Germany it is called "Einfuhrumsatzsteuer".
  - DanBC 9y ago
    https://www.gov.uk/goods-sent-from-abroad/overview https://www.gov.uk/goods-sent-from-abroad/overview https://www.gov.uk/goods-sent-from-abroad/tax-and-duty https://www.gov.uk/goods-sent-from-abroad/tax-and-duty > You pay VAT on goods sent from non-European Union (EU) countries and EU special territories (eg the Canary Islands) if they’re: > gifts worth more than £39 > other goods worth more than £15 > alcohol, tobacco products and fragrances (eg perfume, eau de toilette and cologne) of any value Customs duty is different. > You’ll be charged Customs Duty on gifts and other goods sent from outside the EU if they’re above a certain value. > The value includes: > the price paid for the goods > postage, packaging and insurance Type and value of good Customs Duty Anything under £135 No charge Gifts worth £135-£630 2.5%, but rates are lower for some goods - call the helpline Gifts above £630 and other goods above £135 The rate depends on the type of goods and where they came from - call the helpline
- ralfn 9y ago
  If that distinction would exist (it doesn't) it would be another huge loophole. Ill sell you a car for 1 cent if you also take the car care service where we email you a magazine for 60k. Tax avoided. And companies within the country that would have to pay tax couldnt compete with that. So soon everybody in the country would be unemployed.

DangerousPie 9y ago

Really? I always need to charge/pay VAT on services. The only exception is if both are VAT-registered businesses in the EU (but in different member states), in which case you can charge 0% VAT.

KayEss 9y ago
We're talking about things imported to the EU from outside the EU. Do you really pay VAT in europe on services you buy in the US? Or in Asia?
- gcp 9y ago
  Yes? You have to declare this. You don't physically pay of course, it's just taken into account for the VAT balance.
- mikekchar 9y ago
  The problem (at leas in Japan) is the other way around. If I export an service from Japan to another country, I have to pay the Japanese equivalent of VAT. The importer does not generally have to pay (but I guess it depends on the place) because it has already been paid. The problem for the Krita foundation was that their employee (who was outside of the EU) was doing consulting work through Krita. It didn't matter that he resided outside of the EU, because he was working as an employee. I presume if he were an arms-length contractor, he could have invoiced the work personally (and that's how they really should have set it up -- I assume he was trying to avoid Russian tax by invoicing through Krita, but I'm speculating). So it was an EU service done in the EU (even though the employee was physically outside of the EU). VAT has to be paid for that. What I don't quite understand (and what seems to also mystify the Krita people) is why they have to also pay VAT on their donations. That's a pretty crazy law.
  - kgwgk 9y ago
    I think you got it completely wrong. He was not an employee. He was providing a service to the foundation and sending them an invoice. I guess that if he had been in the EU instead of Russia, they would have noticed earlier that they were required to pay also the VAT. As he was in Russia, they had to account for the VAT owed to the tax authorities for this imported service themselves but they didn't.

ralfn 9y ago

Are you selling to consumers or companies? If companies: they need to pay taxes: not your legal risks but you be wise to warn them. If consumers they need to declare it or the service or good can be confiscated. None of this is fishy.. it works like this between all Western nations and all other modern economies. And if you find a country that is an exception that that would be a huge bussiness opportunity for every one just moving profits that way. There was actually a way to do this. Cheat your way out of VAT. But its a complicated trick only companies like Apple and IKEA use and that trick is under full attack by both the US and EU government.