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How well would VAT work for services like this? If facebook.fr sells adverts to (say) local realtors, and spends a lot of that on its own people, servers, etc,
by iguy 7y ago
How well would VAT work for services like this?
If facebook.fr sells adverts to (say) local realtors, and spends a lot of that on its own people, servers, etc, is VAT collected on the entire sales price? (I'm really asking, I don't know how this works.)
Completely agree that for physical goods, collecting tax where they are physically sold to end-users sounds like a great way of avoiding this game of deciding which branch of a company made the profit.
- Mirioron 7y agoVAT is charged on the consumer of the product. It is as the name says: a value-added tax. Let's look at an example of a physical good. Let's say the VAT rate is 25% and you buy a graphics card for €500. 25% is added as VAT which makes the total cost €625. Now you resell that graphics card for €1000 and have to add €250 as VAT. However, you get the €125 you paid when buying the product back (realistically you simply pay the government 250 - 125 = €125). Essentially, you added €500 to the value of the product and that's what you pay this tax on. I assume (don't know for sure) that in the case of FB ads FB just adds on the VAT rate to the cost of ads and that is then paid to the government. In the EU VAT has to be paid to the country where the purchase originates from. So if a French company buys ads then France should get the VAT.