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The problem is that the VAT you need to charge does not only depend on where you're located and where your business partner is located, but also on the goods/se

The problem is that the VAT you need to charge does not only depend on where you're located and where your business partner is located, but also on the goods/services provided and on wether the partner is a business or a person and maybe even the moon phase and the current water level of the north sea. You can't just create a lookup table, you have to implement the actual rules.

Silhouette 14y ago
You can't just create a lookup table, you have to implement the actual rules. In general, that may be true, though certainly in some cases a look-up table seems to be sufficient. Even in more complicated cases you still typically need the same information about tax rates to start with, you just need a bunch more business logic on top. In any case, if the tax authorities who are experts on the rules can't find a way to codify and explain them to small businesses, surely it's self-evident that the rules are too complicated for non-expert small businesses to work with and should be replaced with something fit for purpose?
- Xylakant 14y ago
  > In any case, if the tax authorities who are experts on the rules can't find a way to codify and explain them to small businesses, surely it's self-evident that the rules are too complicated for non-expert small businesses to work with and should be replaced with something fit for purpose? Full ack. Still, that's the current state. To make matters worse, those rules are subject to change and open to interpretation. Example: We just did an ElasticSearch training for a members of a german company that sits in Hamburg. However, the contract was via an austrian consulting company and we were just the subcontractors. Now, the question of wether we have to pay vat or not hinges around the question of that austrian company does have a german branch office or not. The first thing our tax accountant did was grab the folder with tax laws and read up on what could possibly declared as a "branch office". Is a permanent representative enough or not? Go, codify that.
vidarh 14y ago
This is complex if you're selling a lot of different goods/services that may be different VAT rated, or enter into complex contract. But for companies dealing only with simple uniform stuff that's sold at the full VAT rate, it is very straightforward, and thankfully that makes up a substantial proportion of businesses. The EU-based businesses I've handled billing for have processed a few tens of millions without ever worrying following more rules than these: * Outside the EEA? If yes, no VAT. Done. * Got a VAT registration number? No VAT. Done * Otherwise, apply current standard VAT rate (20% in the UK) Of course, I have had the "luxury" of not dealing with any products that have other VAT rates applied. But even then, for a UK seller of products it's generally sufficient to mark the products with a VAT category and apply a lookup in the last case to determine which of the handful of rates applies. There may certainly be edge-cases where this meant we ended up overcharging VAT of customers, but nobody goes to jail for that. If you provide B2B services with complex contracts it certainly can get quite hairy, but that can get hairy in the US and elsewhere too. Beyond this, the only extremely vital things to consider in Europe when it comes to invoicing that seems to regularly confound US developers (and some European developers too): * Invoices don't change. Ever. No really. And that means storing a copy of the invoice as it was presented to the user rather than dynamically regenerating it from a template that might later change. * Specific phrases or wording and rounding rules tends to apply depending on the country you provide the service in. But this is rarely harder than getting your accountant to approve a suitable template.

Silhouette 14y ago

You can't just create a lookup table, you have to implement the actual rules. In general, that may be true, though certainly in some cases a look-up table seems to be sufficient. Even in more complicated cases you still typically need the same information about tax rates to start with, you just need a bunch more business logic on top. In any case, if the tax authorities who are experts on the rules can't find a way to codify and explain them to small businesses, surely it's self-evident that the rules are too complicated for non-expert small businesses to work with and should be replaced with something fit for purpose?

Xylakant 14y ago
> In any case, if the tax authorities who are experts on the rules can't find a way to codify and explain them to small businesses, surely it's self-evident that the rules are too complicated for non-expert small businesses to work with and should be replaced with something fit for purpose? Full ack. Still, that's the current state. To make matters worse, those rules are subject to change and open to interpretation. Example: We just did an ElasticSearch training for a members of a german company that sits in Hamburg. However, the contract was via an austrian consulting company and we were just the subcontractors. Now, the question of wether we have to pay vat or not hinges around the question of that austrian company does have a german branch office or not. The first thing our tax accountant did was grab the folder with tax laws and read up on what could possibly declared as a "branch office". Is a permanent representative enough or not? Go, codify that.

vidarh 14y ago

This is complex if you're selling a lot of different goods/services that may be different VAT rated, or enter into complex contract. But for companies dealing only with simple uniform stuff that's sold at the full VAT rate, it is very straightforward, and thankfully that makes up a substantial proportion of businesses. The EU-based businesses I've handled billing for have processed a few tens of millions without ever worrying following more rules than these: * Outside the EEA? If yes, no VAT. Done. * Got a VAT registration number? No VAT. Done * Otherwise, apply current standard VAT rate (20% in the UK) Of course, I have had the "luxury" of not dealing with any products that have other VAT rates applied. But even then, for a UK seller of products it's generally sufficient to mark the products with a VAT category and apply a lookup in the last case to determine which of the handful of rates applies. There may certainly be edge-cases where this meant we ended up overcharging VAT of customers, but nobody goes to jail for that. If you provide B2B services with complex contracts it certainly can get quite hairy, but that can get hairy in the US and elsewhere too. Beyond this, the only extremely vital things to consider in Europe when it comes to invoicing that seems to regularly confound US developers (and some European developers too): * Invoices don't change. Ever. No really. And that means storing a copy of the invoice as it was presented to the user rather than dynamically regenerating it from a template that might later change. * Specific phrases or wording and rounding rules tends to apply depending on the country you provide the service in. But this is rarely harder than getting your accountant to approve a suitable template.