4 ms·

In France when you are a company you don't pay VAT on stuff you buy from other companies, so the main point of the article doesn't work. Because I guess if we h

• rahimnathwani 6y ago
  > Because I guess if we had sales tax > companies wouldn't pay it either Then it would more accurately be called a VAT, than a sales tax.
  • polote 6y ago
    so only the companies which sell to citizens add value?
• Hamuko 6y ago
  Saying that companies don't pay VAT is not entirely accurate. Technically companies pay VAT but get it rebated when they need to send the government the VAT that they have collected.
• locallost 6y ago
  it applies, that's the whole point of the "added" part. you pay the government their full cut, but you get all the VAT you paid for back. so only the difference is taxed to you, as is to everyone else in the chain.
  • polote 6y ago
    yeah you are right, I'm wrong
• Phenomenit 6y ago
  VAT is a tax on the final consumer collected with the aid of the companies in the supply chain.
• tobias3 6y ago
  If it works the same as in Germany you only pay no VAT if you buy from a company in another EU country as a company. Therefore the EU has both a sales tax and a VAT depending on if you look at individual countries or the EU as a whole.
  • TazeTSchnitzel 6y ago
    No, you must pay VAT on intra-EU B2B transactions too. The accounting is more complicated because the buyer pays rather than the seller, but it is still there.
    • joefourier 6y ago
      You don't pay VAT on intra-EU B2B transactions; the buyer adds the VAT amount at their country's rate to both the amount to pay and the amount to claim back, cancelling it out.
      • imhoguy 6y ago
        This, reverse charge.
      • TazeTSchnitzel 6y ago
        The reverse charge is still VAT being paid, just differently.
        • joefourier 6y ago
          How so if the net liability change is nil? No extra money comes out of your account, it's just a paper charge that cancels itself. If I have misinterpreted it, I would very much like to know so I can inform my accountant. VAT is enough of a hairy mess as it is.
    • tobias3 6y ago
      Yeah, the accounting is there, but not the actual transfer. I.e. you're not transferring the actual money to France, which the French finance ministry would then have to send back to the German one once it got it from the French company (in order for the German one to give it back to the company buying the product). And the accounting is there because of tax fraud, I guess. And I also guess that the US has a similar accounting system where they have to report the amount purchased per tax bracket and the IDs of the companies they bought from.
• gamblor956 6y ago
  French businesses still pay VAT on stuff they buy from other companies. Generally, most VAT systems work this way: Business collects VAT from customers for services or goods sold(output VAT), and must pay it to the government. But businesses may offset that liability with the VAT they paid acquiring goods or services that were used in their own revenue-generating activities (input VAT). So, for example, ACME sells TNT for $10 and VAT is 10% or $1 (output VAT), so price to customer is $11 and ACME's VAT liability is $1. Say ACME paid $0.25 VAT to its suppliers for the chemicals in the TNT and the paper casing (input VAT). ACME's net tax liability is $0.75, and that is how much they would actually fork over to the government. Note that if ACME's customer is Bugs' Mining Shop, i.e., a business, they still charge VAT on the transaction. In a sales tax system, ACME would not have paid sales tax to its suppliers at all, and it would not have charged Bugs' Mining Shop a sales tax. Thus, sales tax is generally more economically efficient than a VAT from a business perspective.