4 ms·

AFAIK Vat is a tax which insist on consumers, not on companies.

by J_cst 8y ago

njarboe 8y ago
So an oil company that buys steel pipe to make an oil well doesn't pay VAT on the pipe? Not a European, so just asking.
- lultimouomo 8y ago
  Either it pays the VAT and gets an equal tax credit, or it doesn't pay it at all (when applying reverse charge). Result is the same, VAT is not a cost for enteprises. Obviously the fact that end consumers pay VAT might disincentivise them to buy stuff, so companies still suffer the effects of high VAT rates.
  - woodpanel 8y ago
    > Result is the same, VAT is not a cost for enteprises. That's just partly true. Depending on the taxing agreements between two countries involved you can apply reverse charge, yes. But within one company's country, the VAT is not something that you can "just refund" from the government. Instead you can set off the VAT you've paid against the VAT your customers paid. In other words: The only way for you pay zero VAT is if your earnings (income minus expenditures) are zero too (something that despite the tax-evasion clichés is something that companies usually try to avoid).
    - unilynx 8y ago
      That's not how VAT works. As a simple example for a EU company: - buy something nationally (you pay VAT to the company) - export it to another EU company (reverse charge, so no VAT received or paid) - get the VAT refunded from your local tax agency. Even nationally, you get VAT refunded if you've paid more to others than you've collected. At least for NL, but I'm pretty sure these rules should be the same in all EU countries.
      - lultimouomo 8y ago
        This. There are exceptions (e.g. in Italy you only get refunded for 50% of the VAT you pay when buying phones, or 40% the VAT you pay when buying cars), but they are pretty much that, exceptions. If operating domestically you will usually get more VAT money from customers than you will give to suppliers, so you will pay the difference to the state. If for any reason you pay more to suppliers than you get from customers, the difference becomes a tax credit that you can carry to the following accounting period or deduce from some other tax.
        mamon 8y ago
        >> If for any reason you pay more to suppliers than you get from customers, the difference becomes a tax credit that you can carry to the following accounting period or deduce from some other tax. In Poland it is even possible to get that difference in cash - Tax office wire transfers it to your bank account. This gave birth to a countless scams, where the shell companies forge invoices, ask for VAT tax refund and then disappear with the money.
      - woodpanel 8y ago
        How is that any different to what I've said? > Even nationally, you get VAT refunded if you've paid more to others than you've collected. You do realize that this implies you're operating at a loss? Thus my statement about companies usually being run to make profits.
        lultimouomo 8y ago
        But if you get more VAT from your customers than you give to your suppliers, when you're "paying" the difference to the state you're just forwarding part of the VAT which your customers paid, you're not paying it yourself.
        woodpanel 8y ago
        You see the error here? You write an amount in an invoice, the customer pays you. From that, the taxman demands his percentage later on from you. The only way to reduce the amount you have to pay is by buying stuff. Nowhere in the process is the customer paying two parties. It's just lexical. Would you say 'oh the company is just routing its income tax to the taxman' if companies had to put their income tax percantages on invoices too? The client however pays you 10 bucks in gross regardless whether the VAT you have to pay afterwards is 7, 15 or 25%
  - bluecalm 8y ago
    >>Result is the same, VAT is not a cost for enteprises. It's not a cost when transacting with other companies but it's obviously a cost when selling to end customers. If people are willing to buy a car for 20 000 Euro you will be forced to sell for 16 666 Euro + 20% VAT, you can't magically sell for 20 000 + 20% VAT because "consumers pay VAT". If materials + labor cost of a car is 10 000 Euro you make 6 666 Euro per car if there is 20% VAT and 10 000 Euro per car if there is no VAT.
bluecalm 8y ago
Usually companies collect it and pay it but it really doesn't matter. At the end of the day all the money the corporation has comes from consumers and chunk of it goes to taxes. The question is what you are allowed to deduct and how tax burden is distributed among various companies. Every company will try to sell goods for as much as the customers are willing to pay. The consumer doesn't care if there is VAT, environmental tax or whatever else included. They just look at the final price.

AFAIK Vat is a tax which insist on consumers, not on companies.

by J_cst 8y ago

AFAIK Vat is a tax which insist on consumers, not on companies.

njarboe 8y ago

So an oil company that buys steel pipe to make an oil well doesn't pay VAT on the pipe? Not a European, so just asking.

lultimouomo 8y ago
Either it pays the VAT and gets an equal tax credit, or it doesn't pay it at all (when applying reverse charge). Result is the same, VAT is not a cost for enteprises. Obviously the fact that end consumers pay VAT might disincentivise them to buy stuff, so companies still suffer the effects of high VAT rates.
- woodpanel 8y ago
  > Result is the same, VAT is not a cost for enteprises. That's just partly true. Depending on the taxing agreements between two countries involved you can apply reverse charge, yes. But within one company's country, the VAT is not something that you can "just refund" from the government. Instead you can set off the VAT you've paid against the VAT your customers paid. In other words: The only way for you pay zero VAT is if your earnings (income minus expenditures) are zero too (something that despite the tax-evasion clichés is something that companies usually try to avoid).
  - unilynx 8y ago
    That's not how VAT works. As a simple example for a EU company: - buy something nationally (you pay VAT to the company) - export it to another EU company (reverse charge, so no VAT received or paid) - get the VAT refunded from your local tax agency. Even nationally, you get VAT refunded if you've paid more to others than you've collected. At least for NL, but I'm pretty sure these rules should be the same in all EU countries.
    - lultimouomo 8y ago
      This. There are exceptions (e.g. in Italy you only get refunded for 50% of the VAT you pay when buying phones, or 40% the VAT you pay when buying cars), but they are pretty much that, exceptions. If operating domestically you will usually get more VAT money from customers than you will give to suppliers, so you will pay the difference to the state. If for any reason you pay more to suppliers than you get from customers, the difference becomes a tax credit that you can carry to the following accounting period or deduce from some other tax.
      - mamon 8y ago
        >> If for any reason you pay more to suppliers than you get from customers, the difference becomes a tax credit that you can carry to the following accounting period or deduce from some other tax. In Poland it is even possible to get that difference in cash - Tax office wire transfers it to your bank account. This gave birth to a countless scams, where the shell companies forge invoices, ask for VAT tax refund and then disappear with the money.
    - woodpanel 8y ago
      How is that any different to what I've said? > Even nationally, you get VAT refunded if you've paid more to others than you've collected. You do realize that this implies you're operating at a loss? Thus my statement about companies usually being run to make profits.
      - lultimouomo 8y ago
        But if you get more VAT from your customers than you give to your suppliers, when you're "paying" the difference to the state you're just forwarding part of the VAT which your customers paid, you're not paying it yourself.
        woodpanel 8y ago
        You see the error here? You write an amount in an invoice, the customer pays you. From that, the taxman demands his percentage later on from you. The only way to reduce the amount you have to pay is by buying stuff. Nowhere in the process is the customer paying two parties. It's just lexical. Would you say 'oh the company is just routing its income tax to the taxman' if companies had to put their income tax percantages on invoices too? The client however pays you 10 bucks in gross regardless whether the VAT you have to pay afterwards is 7, 15 or 25%
- bluecalm 8y ago
  >>Result is the same, VAT is not a cost for enteprises. It's not a cost when transacting with other companies but it's obviously a cost when selling to end customers. If people are willing to buy a car for 20 000 Euro you will be forced to sell for 16 666 Euro + 20% VAT, you can't magically sell for 20 000 + 20% VAT because "consumers pay VAT". If materials + labor cost of a car is 10 000 Euro you make 6 666 Euro per car if there is 20% VAT and 10 000 Euro per car if there is no VAT.

bluecalm 8y ago

Usually companies collect it and pay it but it really doesn't matter. At the end of the day all the money the corporation has comes from consumers and chunk of it goes to taxes. The question is what you are allowed to deduct and how tax burden is distributed among various companies. Every company will try to sell goods for as much as the customers are willing to pay. The consumer doesn't care if there is VAT, environmental tax or whatever else included. They just look at the final price.