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I have a nano sized business to cover some server costs in Finland. Here are the EU rules as I understand them: * Selling goods - If selling to private pers
by Ndymium 5y ago
I have a nano sized business to cover some server costs in Finland. Here are the EU rules as I understand them:
* Selling goods
- If selling to private persons in European Union fiscal territory (EUFT), add 24% (Finnish VAT).
- If selling to businesses in EUFT, no VAT.
- If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
- Note that there are separate customs rules!
* Selling electronic services
- If selling to private persons in EUFT, you need to register to the customer's country's tax authorities and add the customer's country's VAT, and then pay it later to the customer's country's tax authorities. EXCEPT if you only have an office in one country and you are selling to another EUFT country, and you only sell <= 10,000 € worth of services, then you can use your own country's VAT like normal.
o Or you can register to so called VAT MOSS (Value Added Tax Mini One Stop Shop) where you use the customer's country's VAT but you don't need to register or pay to their tax authorities, instead you send a quarterly report to your own country's tax authorities about all the sales you have done, then you pay them a calculated sum, and they will divide the paid VAT to all the countries based on the sales. Of course there is now a new VAT OSS that is somehow different from MOSS.
- If selling to businesses in EUFT, use reverse VAT (buyer is liable for VAT).
- If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
Now I'm not a tax lawyer, so this is all just my best understanding based on our tax authority's website. I just wanted to get some money back to pay for my ~20 €/mo server costs, and I had to learn all of this. I will be very interested in what this Stripe Tax can do to remove my headaches. :) Of course, since my revenue is so tiny (and thus the money I bring to Stripe), I can't access all of their services AFAIK. And I'm mostly one chargeback away from losing major revenue due to the 15 € penalty. :D
EDIT: Turns out I have no idea how to format lists on HN.
- jerrre 5y agoThere are also a lot of thresholds that might apply to your situation. More rules to look up, but could simplify it to having less administration if your revenue is under a couple K's
- ArkanExplorer 5y agoYou don't need to charge VAT unless you hit these thresholds: https://www.avalara.com/vatlive/en/eu-vat-rules/distance-selling/distance-selling-eu-vat-thresholds.html https://www.avalara.com/vatlive/en/eu-vat-rules/distance-sel... Which at the lowest end is € 35,000 per country. Countries like the UK for example have a VAT threshold of £85,000 for businesses located inside that country. This is one of the problems of online marketplaces - they have VAT added to them, even when the individual (small) business doesn't need to pay it. VAT is a big compliance burden for small businesses which is why every country has revenue thresholds under which you don't need to charge it.
- Silhouette 5y agoUnfortunately, almost everything you're talking about there is about selling physical goods. The rules for electronic sales have been completely different for quite a few years now and are a labyrinthine mess that makes even professional accountants frustrated and national tax authorities screw up the most basic processes. In most cases, they also don't have any minimum thresholds at all, and the few concessions that have been made are quite recent.
- kmoriarty 5y agoI just wanted to mention, our invite-only starts today, but we're working on making Stripe Tax available to all very very soon! Either way, we will be reviewing and onboarding users as quickly as possible after you submit your interest!
- rorykoehler 5y agoHow long is soon? I'm asking as I'm in the middle of building a saas. I might get to payments functionality in about 2-3 weeks if all goes well. Should I wait or register interest?
- alibarber 5y agoI understand that from the 1st of July, the electronic services section will expand to all goods, potentially with some thresholds, so you should charge the VAT rate for that particular item at the customer's home country and submit that to the Finnish tax authority (under the OSS scheme).
- exhilaration 5y agoThese are the thresholds for VAT going into effect on July 1st: IOSS (EU) <150 EUR VOEC (Norway) <3000 NOK HMRC (United Kingdom) <135 GBP
- scoot 5y agoGood summary. It's easy enough for EU VAT/MOSS, but this is the killer right here: > you may be liable to collect and pay VAT to the customer's country's tax authorities
- sdevonoes 5y ago> - If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities. I thought selling to businesses outside EUFT was the same as selling to businesses inside the EUTF.
- Ndymium 5y agoWell I guess it would depend on the target country's specific tax laws.