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I don't think you understand VAT. If you buy some computers for $100, do some work, and manage to sell your services for $1000, you get to reclaim $20 of VAT b

I don't think you understand VAT. If you buy some computers for $100, do some work, and manage to sell your services for $1000, you get to reclaim $20 of VAT but you have to pay $200 of VAT, so a 20% VAT rate costs this hypothetical business 18% of its revenue, which is hardly "unimportant". And a typical tech company would be taking in far more than 10x in revenue than what they are spending on VAT-able goods. EDIT: But see below.

cuban-frisbee 8y ago
He litterally just said it only matters in a B2C setting and not a B2B. Can you name even one AI product that is sold directly to consumers? Most if not all is B2B and there VAT is not used as it is a tax on consumption levied at the consumer, not other businesses.
- jstanley 8y ago
  Ah, TIL, I didn't know VAT was not charged when selling to a business! So it was I who did not understand how VAT works :) I thought pavlov was under the impression that the VAT you pay when buying automatically cancels out with the VAT you charge when selling, so the only people who VAT affects are end users.
- petre 8y ago
  Amazon Alexa? Wait, the AI there is meant for vendor lock in. Roomba vacuum cleaners? Spotify? As a business you stll have to buy stuff to recover VAT and sell your product 20% inflated.
  - cuban-frisbee 8y ago
    On of the most succesful EU businesses (spotify) does not seem to support the assertion that VAT is a undue burden. Also I don't know if spotify uses their own tech or if they are uses stuff from another vendor. Do also remember that all your competitors are bound by the same rules, so from a purely economical standpoint prices in a given country with VAT will just appear x% higher accross the board, and then the real question is more of disposable income. To be perfectly honest I am no expert in VAT, but I do know that a country like Denmark with 25 % VAT is also ranked in the top 5 countries to do business in. Also don't know what you mean by "As a business you stll have to buy stuff to recover VAT" but oh well maybe you can clarify.
    - jstanley 8y ago
      > prices in a given country with VAT will just appear x% higher across the board, and then the real question is more of disposable income. In other words, "if you can't make at least a 20% profit on the value you add, you're not allowed to make a profit at all". This stifles innovation at the margin.
pavlov 8y ago
Who buys your $1000 service? Most likely another business. (I don’t know about you, but I don’t need $1000 software services at home.) If you’ve ever done business in the EU, you know that prices are negotiated and quoted excluding VAT. The VAT rate literally is totally irrelevant to B2B pricing. If you’re selling B2B from one EU country to another, you don’t even need to collect VAT. Another reason why its rate is irrelevant to EU startups.

cuban-frisbee 8y ago

He litterally just said it only matters in a B2C setting and not a B2B. Can you name even one AI product that is sold directly to consumers? Most if not all is B2B and there VAT is not used as it is a tax on consumption levied at the consumer, not other businesses.

jstanley 8y ago
Ah, TIL, I didn't know VAT was not charged when selling to a business! So it was I who did not understand how VAT works :) I thought pavlov was under the impression that the VAT you pay when buying automatically cancels out with the VAT you charge when selling, so the only people who VAT affects are end users.
petre 8y ago
Amazon Alexa? Wait, the AI there is meant for vendor lock in. Roomba vacuum cleaners? Spotify? As a business you stll have to buy stuff to recover VAT and sell your product 20% inflated.
- cuban-frisbee 8y ago
  On of the most succesful EU businesses (spotify) does not seem to support the assertion that VAT is a undue burden. Also I don't know if spotify uses their own tech or if they are uses stuff from another vendor. Do also remember that all your competitors are bound by the same rules, so from a purely economical standpoint prices in a given country with VAT will just appear x% higher accross the board, and then the real question is more of disposable income. To be perfectly honest I am no expert in VAT, but I do know that a country like Denmark with 25 % VAT is also ranked in the top 5 countries to do business in. Also don't know what you mean by "As a business you stll have to buy stuff to recover VAT" but oh well maybe you can clarify.
  - jstanley 8y ago
    > prices in a given country with VAT will just appear x% higher across the board, and then the real question is more of disposable income. In other words, "if you can't make at least a 20% profit on the value you add, you're not allowed to make a profit at all". This stifles innovation at the margin.

pavlov 8y ago

Who buys your $1000 service? Most likely another business. (I don’t know about you, but I don’t need $1000 software services at home.) If you’ve ever done business in the EU, you know that prices are negotiated and quoted excluding VAT. The VAT rate literally is totally irrelevant to B2B pricing. If you’re selling B2B from one EU country to another, you don’t even need to collect VAT. Another reason why its rate is irrelevant to EU startups.