6 ms·

As someone who sells digital software licenses, this is quite an baffling situation to experience. Currently, I live in Massachusetts, which does not require c

• pjc50 12y ago
  Someone will correct me if I'm wrong, but this only applies if you're selling from within the EU.
  • shedside 12y ago
    I’m afraid it looks like you’re wrong. https://twitter.com/HMRCgovuk/status/537214398855913472 https://twitter.com/HMRCgovuk/status/537214398855913472 (see the green box at the very bottom of the flowchart)
    • mootothemax 12y ago
      I’m afraid it looks like you’re wrong Yes and no. Yes the EU authorities would love for the entire world to collect VAT from its citizens. No because the EU has absolutely no way to enforce this worldwide. However, the big fun is coming on Thursday, when the EU is due to rule over Google and politely requesting that Google splits off search from the rest of its business. I believe this decision will be indicative of how crazy the EU lawmakers might be prepared to go. For example, if they try and enforce splitting up Google, maybe they'd have the sheer bloody-mindedness to try and enforce blocking sales from EU cards to e.g. non-registered US sellers?
      • rmc 12y ago
        The USA has ordered that big companies be split in the past. It's just the "crazy EU lawmakers".
        • adventured 12y ago
          I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split. Can you provide examples of that?
          • nawitus 12y ago
            There are "Google companies" inside the EU. Of course, they often officially state that there's no connection to the "American Google" to evade certain legislation.
          • dragonwriter 12y ago
            > I don't recall the US DOJ using anti-trust laws to attempt to force a European or Asian company to be split. The European Parliament passing a non-binding resolution recommending that the European Commission take seek a certain goal as part of a remedy if its concerns aren't otherwise resolved in an ongoing proceeding is not analogous to the US DOJ actually seeking a particular remedy in a proceeding.
            • adventured 12y ago
              If the European Commission is seeking as an end goal to force Google to split its business, on anti-competitive concerns, then that is similar to what the DOJ does with anti-trust enforcement. The intent is the same: to see business X split. The DOJ's domestic powers are far greater than the EU Commission's ability to impact Google, but that's not for lack of wanting to. My point stands regardless. Show me where the United States Government attempts to force major European or Asian companies to split into pieces. I'd love to see numerous examples of the US Government doing what the EU Commission is doing.
• mahouse 12y ago
  > I'm almost considering shutting down sales to EU customers. Then someone will launch a business that will do the same you do, but complying with regulations. Taxes must be collected; without taxes, the welfare state collapses. You should know that, to be able to sell something in a market, you must understand its regulations first, and respect the decisions the citizens have taken (in this case, regarding taxes) through democratic ways.
  • e98cuenc 12y ago
    He understands that. His problem is that the bureaucracy to comply with the rules is too high, and I agree. I have a SaaS service in the EU. I have always paid my taxes and I'm not against them. But I want to have a reliable and hopefully simple process to know how to process payments. The proposed changes are a bit PITA to everybody. I hope they will come with a simpler process, as it's scary all that I will have to do to add a foreign EU customer.
    • Silhouette 12y ago
      There is a simpler (not simple) mechanism that is being set up to help administer this scheme. Here in the UK, it's the government's Mini One Stop Shop: https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop https://www.gov.uk/register-and-use-the-vat-mini-one-stop-sh... I gather similar schemes are being set up elsewhere in the EU, though I don't know if it's universal. It appears that as a business that is already VAT registered and filing quarterly returns in the UK, the key points for us will be that: 1. we have to charge VAT to customers elsewhere in the EU at their local rates, which we will be responsible for monitoring in all 28 states; 2. we have to submit all of the VAT to the UK tax authority (HMRC) as we do at present; 3. we have to file an additional quarterly return via MOSS breaking down exactly where our customers/revenues come from, so HMRC can distribute the funds to their counterparts around the EU; 4. we will be required to collect a completely impractical standard of evidence for the location of those customers and will be entirely responsible if and when we fail to do the impossible and it turns out someone lied to us about where they live; and 5. we will be subject to arbitrary audit/investigation by 28 tax authorities instead of just our own, at our own expense naturally (though there is some suggestion that the UK authorities will at least try to co-ordinate this to prevent what they consider an unreasonable burden being imposed). The real sting in the tail, if I've understood the announcements so far correctly, will be for those who have a low volume of trade and so currently do not have to register for VAT at all. In order to use MOSS, you have to be VAT registered within the UK, and thus either add the current VAT rate onto all your prices when charging customers or take a hit of the equivalent fraction of your existing revenues if you choose to keep prices the same. I really hope I'm wrong about this, but I haven't yet seen anything suggesting that just because you're under the threshold for VAT registration in any/all EU states you'll be exempt from the new funds transfer arrangements, meaning a single foreign customer could suddenly put your entire business within the range of requiring VAT registration.
• MistahKoala 12y ago
  Whilst I don't know the ins and outs of your business or the implications of non-EU/EEA businesses selling to member state consumers... I'm wondering how such a requirement would be enforceable, given that you are outside the EU? I've yet to see anything that declares a requirement that you must collect VAT - but I have seen HMRC guidance saying that member state businesses selling outside the EU are not affected and don't have to charge/collect VAT, so I'm inclined to believe that it's reciprocal. A question that occurs for me is how TTIP would affect this situation, though. If TTIP was established, would the EU then require US businesses to collect VAT in the same fashion? Because that would be really sucky for you.
  • AverageBanana 12y ago
    These rules only affect cross-border sales within the EU. Any non-EU business supplying digital services direct to a customer in the EU will be affected. B2B supplies do not come under the scope of these rules. There's a lot of chatter on Twitter (#VATMOSS) about the new rules (mostly micro-businesses). The thing to remember is that EU member states with a high number of digital service customers will see a boost in VAT take as the VAT is accountable at the place of consumption. EDIT: I've have noticed these guys mentioned in the conversation: https://www.taxamo.com/#solution https://www.taxamo.com/#solution - they have developed an EU VAT compliance solution. HMRC have also released further information about the new rule changes, more details here: https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop#contents https://www.gov.uk/government/publications/vat-supplying-dig.... The UK, by the way, has estimated that they will gain a VAT windfall of £1.2 billion between 2015 and 2019. It is now in the interests of EU member states to enforce collection of this VAT, as they will be the ones to benefit. The old (2003) rules meant a non-EU business could just set up in a low-tax jurisdiction and route all supplies via that establishment. Not possible with new rules, that's the key change.
• rmc 12y ago
  You're not in the EU. So EU law doesn't apply to you.
  • maljx 12y ago
    These rules apply to anyone selling to EU customers.
  • wbond 12y ago
    I wish it was that simple, but everywhere I look for advice, I get told the opposite: http://www.aicpa.org/publications/taxadviser/2013/june/pages/clinic-story-05.html.aspx http://www.aicpa.org/publications/taxadviser/2013/june/pages... http://www.taxamo.com/digital-eu-vat-myths/ http://www.taxamo.com/digital-eu-vat-myths/ http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices-the-keep-it-simple-edition/ http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices... Even if I were to presume that I could just ignore it since I am small, if I were to become more successful then I could owe back taxes and fines. I'm no expert on international law, but I presume there could be issues if I were running a company avoiding EU taxes and I ever decide to visit the EU.
    • Taxamo 12y ago
      Hey guys, JP here from Taxamo. Many thanks for linking to our content. The new rules affect all suppliers of digital services to customers in the EU, only B2C supplies are affected. We have developed an EU VAT compliance solution designed around these new rules: http://www.taxamo.com/#solution http://www.taxamo.com/#solution We have also created a knowledge base explaining the new rules and why they have been introduced: http://support.taxamo.com/ http://support.taxamo.com/
• kybernetyk 12y ago
  >As someone who sells digital software licenses, this is quite an baffling situation to experience. >I'm almost considering shutting down sales to EU customers. Do you have a payment processor (like Fastspring)? If so then they're handling all that ugly mess.
  • wbond 12y ago
    I looked into them when I first started trying to figure this all out. They take a big chunk of money (9%), and would require a bunch of new custom integration. I would end up making less money, or having to raise prices, and still having to do a bunch of custom integration work.
• Hermel 12y ago
  I went through all of this with my previous startup. It is tedious, but feasible. Note that in practice, you probably won't have to fear much as long as your revenue does not exceed a certain threshold. In Germany, for example, the "Bemessungsgrenze" is 17'500€, but I'm not sure if that also applies to your case. Furthermore, you should also see the positive side: when for example renting dedicated servers from a German hoster, you won't have to pay VAT, so everything is 20% cheaper for you.
  • wbond 12y ago
    I know it is feasible, but yet another thing to get in the way of me as a single developer trying to actually provide value to my customers. Who knows how many other countries I could be violating tax laws in.
  • salemh 12y ago
    Hm, are there postentially "outsourced" consultancies that manage things of this nature for a % of gross? If it becomes feasible ($ wise), perhaps this then can be a new process implementation with lower (but feasible) margins. If not feasible, then sales stop to the EU.
  • pbhjpbhj 12y ago
    In the UK HMRC (Her Majesty's Revenue & Customs) are stating that VAT on digital services [and so e-goods too by their definitions] is payable from the first transaction, there is no threshold you can hide under as their is for local UK VAT (~£80k turnover IIRC). Apparently a threshold couldn't be agreed and so there isn't one! This means that if you sell £50 a year of knitting patterns you now have a liability to document the geography of your customers and prove that non are in other EU countries, OR pay tax to each country you sell to individually. HMRC are saying that companies (who may be individuals [sole traders in local parlance]) can not legally refuse to sell across EU borders to avoid this either. Along with that as you're now holding personal information on your customers there is a whole raft of new laws to attend including apparently a £35 registration with the UK Information Commissioners Office (ICO). Foreigners already don't pay local VAT in the EU do they? This change is about sales to customers in the EU, there is no change AFAICT to transactions with customers not in the EU the VAT laws relevant to that are unaltered. It's totally bonkers. The people involved have described "micro businesses" as selling < £2million GBP of digital services. They clearly haven't considered the impact on the many small businesses (now being termed nano businesses) that sell maybe a few thousand GBP of e-books or a few hundred pounds of knitting patterns or similar.