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In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be

In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). It sounds like it was indeed subsidy for small businesses. I don’t know about Japan, but in some countries like Italy there is a problem of small inefficient businesses. Whether such direct or indirect subsidies are good or not for the economy as whole, to keep these small businesses around, is a good question which may not have a definite answer. Internationally it may reduce competitiveness, but it may be good for local and rural area employment, which increases the quality of life for a very small national cost. Also there is cost for maintaining the records and adminstration: for 15k EUR/year this cost would be significant % for the actual value adding activity.

Zanfa 3y ago
> In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). There's also VAT reverse charge for invoices when selling goods & services between EU countries where you don't include VAT on the invoice.
- JanSt 3y ago
  Only B2B
logifail 3y ago
> In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). Isn't there provision for reverse charge (effectively zero VAT) on B2B transactions where both parties are within the EU?
- brtkdotse 3y ago
  Between countries, yes. Domestically, you invoice businesses with VAT, hold on to the VAT money and quarterly deposit it to the tax authorities (minus the VAT for deductible expenses).
- JanSt 3y ago
  It‘s not zero VAT. It just reverses who has to pay the VAT. E.g Microsoft invoices me at 0% VAT but I have to report and pay 19% to the state. (b2b only)
  - Arcanum-XIII 3y ago
    Uh ? No. I don’t pay for VAT if I buy anything out of Belgium - because it would create a big administrative mess of pay back between member state. Which is the stupidest system internally : get paid vat, paid it to the state minus the VAT you’re owned as business for whatever you’ve bought. Loss of time and energy all around.
  - Kiro 3y ago
    I would still call it zero VAT. What happens is that you debit and credit the same VAT amount in the books, effectively deducting and zeroing it immediately. https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm https://europa.eu/youreurope/business/taxation/vat/cross-bor...
- jusssi 3y ago
  > (effectively zero VAT) on B2B transactions Businesses don't actually pay VAT, they just act as collectors for it. If the VAT balance for some business is negative, they actually get it returned by the tax authority. Invoiced VAT, zero VAT, reverse charges in B2B are just an implementation detail that doesn't affect bottom line.
faeriechangling 3y ago
Large businesses are inefficient in an insidious way. It's incredibly expensive and inefficient to tax them and get money out of them once you put money into them. This sole problem is why the neoliberal welfare state does not work. Simply making the most powerful organisations around more powerful does not actually force them to then turn around and help the powerless, it actually just makes them more capable of not doing that. Does favouring small businesses actually reduce international competitiveness? Sure - in the same sense that not subsidising large businesses reduces international competitiveness. But what is the good of having an internationally competitive business you can't get money back out of? What if ItalyCorp decides they are not an Italian company, but actually a company based out of the Canary Islands in no way bound to Italy? Making a business internationally competitive has no point if you can't also make it your vassal, which you can only really do in cases where the business relies on some state resource, and even then a large business is likely to corrupt the government anyways. Small-Medium sized businessmen by contrast are much much easier to tax once they're past the subsidies. Besides that, they tend to spend relatively large amounts of their in-country in ways that can be taxed efficiently, and on other businesses which can also be taxed efficiently. It makes addressing income inequality more efficient.
carlosjobim 3y ago
It is erroneous to call a tax break a subsidy. They are not getting any money from the government, they are simply paying less to the government. > a problem of small inefficient businesses Would it be better for these people to be unemployed? Or that the money they would have put into their business instead goes into VAT payments to the government, where there of course is no kind of inefficiency? The questions of efficiency and competitiveness are frankly only the business of the person with the business, not something for other people to stick their nose in – unless you have a better job offer for them.
- emielbeinema 3y ago
  >It is erroneous to call a tax break a subsidy. They are not getting any money from the government, they are simply paying less to the government. The result (more money for the business/individual, less money for the government) is pretty similar, right? The WTO definition of subsidies [1], for example, explicitly includes the kind of subsidy in which "government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits)" [1] https://www.wto.org/english/docs_e/legal_e/24-scm.pdf https://www.wto.org/english/docs_e/legal_e/24-scm.pdf
  - carlosjobim 3y ago
    In a very narrow perspective, you can say that the result is the same. And yes, in general many people call tax breaks subsidies like you point out. But there's a huge difference. Example one: You give a man a fish. That to me is a gift or subsidy. Example two: You force every fisherman to give you a fish each when they come back from sea. One slips through and you don't get a fish from him. Was that a subsidy? Was that a gift from you to him, since the net result is the same? Pardon the pun.
- konschubert 3y ago
  It's not a tax break! Small businesses did not pay VAT, and they STILL could effectively attach some cash from the government to their bills. (To be cashed in by their customers as VAT reduction).

Zanfa 3y ago

> In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). There's also VAT reverse charge for invoices when selling goods & services between EU countries where you don't include VAT on the invoice.

JanSt 3y ago
Only B2B

logifail 3y ago

> In Finland and AFAIK all Nordics, all invoices must be VAT inclusive. If you are selling up until 15k EUR year you can do it VAT free, which is too small to be considered a professional business. Alternatively if you are selling services outside the EU (freelancing internationally). Isn't there provision for reverse charge (effectively zero VAT) on B2B transactions where both parties are within the EU?

brtkdotse 3y ago
Between countries, yes. Domestically, you invoice businesses with VAT, hold on to the VAT money and quarterly deposit it to the tax authorities (minus the VAT for deductible expenses).
JanSt 3y ago
It‘s not zero VAT. It just reverses who has to pay the VAT. E.g Microsoft invoices me at 0% VAT but I have to report and pay 19% to the state. (b2b only)
- Arcanum-XIII 3y ago
  Uh ? No. I don’t pay for VAT if I buy anything out of Belgium - because it would create a big administrative mess of pay back between member state. Which is the stupidest system internally : get paid vat, paid it to the state minus the VAT you’re owned as business for whatever you’ve bought. Loss of time and energy all around.
- Kiro 3y ago
  I would still call it zero VAT. What happens is that you debit and credit the same VAT amount in the books, effectively deducting and zeroing it immediately. https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm https://europa.eu/youreurope/business/taxation/vat/cross-bor...
jusssi 3y ago
> (effectively zero VAT) on B2B transactions Businesses don't actually pay VAT, they just act as collectors for it. If the VAT balance for some business is negative, they actually get it returned by the tax authority. Invoiced VAT, zero VAT, reverse charges in B2B are just an implementation detail that doesn't affect bottom line.

faeriechangling 3y ago

Large businesses are inefficient in an insidious way. It's incredibly expensive and inefficient to tax them and get money out of them once you put money into them. This sole problem is why the neoliberal welfare state does not work. Simply making the most powerful organisations around more powerful does not actually force them to then turn around and help the powerless, it actually just makes them more capable of not doing that. Does favouring small businesses actually reduce international competitiveness? Sure - in the same sense that not subsidising large businesses reduces international competitiveness. But what is the good of having an internationally competitive business you can't get money back out of? What if ItalyCorp decides they are not an Italian company, but actually a company based out of the Canary Islands in no way bound to Italy? Making a business internationally competitive has no point if you can't also make it your vassal, which you can only really do in cases where the business relies on some state resource, and even then a large business is likely to corrupt the government anyways. Small-Medium sized businessmen by contrast are much much easier to tax once they're past the subsidies. Besides that, they tend to spend relatively large amounts of their in-country in ways that can be taxed efficiently, and on other businesses which can also be taxed efficiently. It makes addressing income inequality more efficient.

carlosjobim 3y ago

It is erroneous to call a tax break a subsidy. They are not getting any money from the government, they are simply paying less to the government. > a problem of small inefficient businesses Would it be better for these people to be unemployed? Or that the money they would have put into their business instead goes into VAT payments to the government, where there of course is no kind of inefficiency? The questions of efficiency and competitiveness are frankly only the business of the person with the business, not something for other people to stick their nose in – unless you have a better job offer for them.

emielbeinema 3y ago
>It is erroneous to call a tax break a subsidy. They are not getting any money from the government, they are simply paying less to the government. The result (more money for the business/individual, less money for the government) is pretty similar, right? The WTO definition of subsidies [1], for example, explicitly includes the kind of subsidy in which "government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits)" [1] https://www.wto.org/english/docs_e/legal_e/24-scm.pdf https://www.wto.org/english/docs_e/legal_e/24-scm.pdf
- carlosjobim 3y ago
  In a very narrow perspective, you can say that the result is the same. And yes, in general many people call tax breaks subsidies like you point out. But there's a huge difference. Example one: You give a man a fish. That to me is a gift or subsidy. Example two: You force every fisherman to give you a fish each when they come back from sea. One slips through and you don't get a fish from him. Was that a subsidy? Was that a gift from you to him, since the net result is the same? Pardon the pun.
konschubert 3y ago
It's not a tax break! Small businesses did not pay VAT, and they STILL could effectively attach some cash from the government to their bills. (To be cashed in by their customers as VAT reduction).