5 ms·

When the state buys stuff, the paid VAT always goes right back to it. In some/many cases it's easier to eat this inefficiency, but in some cases it's easier to

When the state buys stuff, the paid VAT always goes right back to it. In some/many cases it's easier to eat this inefficiency, but in some cases it's easier to not do the useless transfer - especially when we're talking about tens of millions of euro and products that only the government can buy. I don't see anything weird about selecting few specific industries where the transactions are always with the government and in high amounts to optimize this useless transfer and bureaucratic busy work away. Nobody paid less taxes than they should have, nothing has changed about that. > Then, of course, If I produce pistol (as a company), and buy metal, and make a pistol, don't I end up paying VAT on the "added value" ? in other way, even if a company sell to other companies, the VAT% (10% or 90%) does or does not affect profitability? No, profitability is not affected in any way. The consumer always pays, not any company in the chain of raw material to consumer product. VAT is irrelevant to them, it's just some bureaucracy that needs to be taken care of, but nothing else. It could be 110% and they wouldn't care - VAT is separately on top of the invoiced price and you never treat it as your money, you're just holding it for the government for up to 30 days. > Then of course you sure have some percentage of buyers who cannot claim VAT (is it small, only consumers? what about not perfectly legal business.... ) Any business can claim VAT back if they choose to. Some countries allow small businesses to say "I don't care, don't bother me, I will eat the difference". This results in losses to the small business, it's done because the paperwork is really hard to do - takes a lot of time and money (you need an expensive tax advisor in many everyday cases). The usual limit of this is around 50k USD of yearly revenue. Above that, it's necessary to fill the VAT forms.

oriettaxx 2y ago
ah, I understand. Well, anyhow, let me say that, since it makes no difference for them (apart from the burden of VAT accounting), I would let them pay VAT as every other sector and that's it :) One last doubt: * when in the national accounting a State report to have spent 1M for goods for education, in that million they do include VAT (I've just found out, I did not know it before), so the VAT% of that spending was money that "went back" to the State (to us). * when in the same accounting they report to have spent 1M in guns (a vat exempt sector), that VAT% benefit for us is gone: am I right?
- throwaway48540 2y ago
  Consider that it's not just a burden to the company, but also to the tax agency. Imagine being the guy who has to go through the papers (could easily be hundreds or thousands of sheets - my own small company submits around 10-20 sheets per month) and then make a transfer of hundreds of millions of EUR every month. Imagine you make a mistake there... That company definitely has lawyers ready to pick on every little thing you do wrong. Accounts of businesses and governments are without VAT except for the most generalized cash flow tables. My own government reports both numbers (with and without VAT) in cases where this matters. I'm quite surprised yours doesn't do this. But yes, you're right - in your situation the actually spent amount would be different by the VAT rate.
  - oriettaxx 2y ago
    > My own government reports both numbers (with and without VAT) ah, interesting. no VAT in the UK https://www.gov.uk/government/publications/how-public-spending-was-calculated-in-your-tax-summary/how-public-spending-was-calculated-in-your-tax-summary https://www.gov.uk/government/publications/how-public-spendi... (well, it's the first link I found... even in the excel file no vat mention..... I am sure I can find mention to it, I did not search much No vat for Italy, too (just a quick search), even for the defence https://temi.camera.it/leg19DIL/temi/19_il-bilancio-della-difesa-in-breve https://temi.camera.it/leg19DIL/temi/19_il-bilancio-della-di...
  - oriettaxx 2y ago
    > My own government which one? if you don't want to tell I understand of course
- oriettaxx 2y ago
  I came to this https://www.europeaninterest.eu/tax-exemption-measures-facilitate-common-defence-efforts https://www.europeaninterest.eu/tax-exemption-measures-facil... where there are no words about the burden of accounting then this https://blogs.plymouth.ac.uk/dcss/2015/11/16/vat-exemption-for-projects-run-by-the-eda-new-incentive-for-defence-cooperation/ https://blogs.plymouth.ac.uk/dcss/2015/11/16/vat-exemption-f... "One Member State has for example recently submitted an order of about 1.3 million Euros for one year of services. Due to the VAT exemption, this Member State will not have to pay VAT for a corresponding value of 273 thousand Euros which represents about three months of free services." This is also interesting https://meta-defense.fr/en/2022/02/16/the-european-commission-wants-to-abolish-vat-for-european-defense-programs/ https://meta-defense.fr/en/2022/02/16/the-european-commissio... "The European Commission, and its Commissioner Thierry Breton in charge of industrial issues, has therefore taken up the problem once again, and has proposed several measures to try to favor "made in Europe" in terms of defense equipment contracts. within the Union. Thereby, it proposes to abolish VAT for European programs, so as to put European proposals on the same level as those coming from the American FMS, which is also systematically exempt from VAT". so, exempting VAT for the Defence will push the "made in Europe"... why not do it in another sector? then https://sede.agenciatributaria.gob.es/Sede/en_gb/todas-noticias/2023/junio/15/exenciones-fiscales-aplicadas-fuerzas-armadas-europea.html https://sede.agenciatributaria.gob.es/Sede/en_gb/todas-notic... "In this way, deliveries, imports and intra-community acquisitions of goods made by the aforementioned armed forces, for their use or that of the civilian personnel in their service, as well as for the supply of their dining rooms or canteens, are declared exempt." Does the VAT extemp (which is far more popular as I thougt and not limited to Italy) for the "defence" sector benefit the defence industries even when a State is the buyer? I get it they do it "for us", but we come to the main point: using weapon manufactoring to raise economy..... why that and not anything else which spread less shit?

oriettaxx 2y ago

ah, I understand. Well, anyhow, let me say that, since it makes no difference for them (apart from the burden of VAT accounting), I would let them pay VAT as every other sector and that's it :) One last doubt: * when in the national accounting a State report to have spent 1M for goods for education, in that million they do include VAT (I've just found out, I did not know it before), so the VAT% of that spending was money that "went back" to the State (to us). * when in the same accounting they report to have spent 1M in guns (a vat exempt sector), that VAT% benefit for us is gone: am I right?

throwaway48540 2y ago
Consider that it's not just a burden to the company, but also to the tax agency. Imagine being the guy who has to go through the papers (could easily be hundreds or thousands of sheets - my own small company submits around 10-20 sheets per month) and then make a transfer of hundreds of millions of EUR every month. Imagine you make a mistake there... That company definitely has lawyers ready to pick on every little thing you do wrong. Accounts of businesses and governments are without VAT except for the most generalized cash flow tables. My own government reports both numbers (with and without VAT) in cases where this matters. I'm quite surprised yours doesn't do this. But yes, you're right - in your situation the actually spent amount would be different by the VAT rate.
- oriettaxx 2y ago
  > My own government reports both numbers (with and without VAT) ah, interesting. no VAT in the UK https://www.gov.uk/government/publications/how-public-spending-was-calculated-in-your-tax-summary/how-public-spending-was-calculated-in-your-tax-summary https://www.gov.uk/government/publications/how-public-spendi... (well, it's the first link I found... even in the excel file no vat mention..... I am sure I can find mention to it, I did not search much No vat for Italy, too (just a quick search), even for the defence https://temi.camera.it/leg19DIL/temi/19_il-bilancio-della-difesa-in-breve https://temi.camera.it/leg19DIL/temi/19_il-bilancio-della-di...
- oriettaxx 2y ago
  > My own government which one? if you don't want to tell I understand of course
oriettaxx 2y ago
I came to this https://www.europeaninterest.eu/tax-exemption-measures-facilitate-common-defence-efforts https://www.europeaninterest.eu/tax-exemption-measures-facil... where there are no words about the burden of accounting then this https://blogs.plymouth.ac.uk/dcss/2015/11/16/vat-exemption-for-projects-run-by-the-eda-new-incentive-for-defence-cooperation/ https://blogs.plymouth.ac.uk/dcss/2015/11/16/vat-exemption-f... "One Member State has for example recently submitted an order of about 1.3 million Euros for one year of services. Due to the VAT exemption, this Member State will not have to pay VAT for a corresponding value of 273 thousand Euros which represents about three months of free services." This is also interesting https://meta-defense.fr/en/2022/02/16/the-european-commission-wants-to-abolish-vat-for-european-defense-programs/ https://meta-defense.fr/en/2022/02/16/the-european-commissio... "The European Commission, and its Commissioner Thierry Breton in charge of industrial issues, has therefore taken up the problem once again, and has proposed several measures to try to favor "made in Europe" in terms of defense equipment contracts. within the Union. Thereby, it proposes to abolish VAT for European programs, so as to put European proposals on the same level as those coming from the American FMS, which is also systematically exempt from VAT". so, exempting VAT for the Defence will push the "made in Europe"... why not do it in another sector? then https://sede.agenciatributaria.gob.es/Sede/en_gb/todas-noticias/2023/junio/15/exenciones-fiscales-aplicadas-fuerzas-armadas-europea.html https://sede.agenciatributaria.gob.es/Sede/en_gb/todas-notic... "In this way, deliveries, imports and intra-community acquisitions of goods made by the aforementioned armed forces, for their use or that of the civilian personnel in their service, as well as for the supply of their dining rooms or canteens, are declared exempt." Does the VAT extemp (which is far more popular as I thougt and not limited to Italy) for the "defence" sector benefit the defence industries even when a State is the buyer? I get it they do it "for us", but we come to the main point: using weapon manufactoring to raise economy..... why that and not anything else which spread less shit?