6 ms·

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards

by mastef 12y ago

It seems like this is actually a step in the proper direction. The removal of 'VAT based on seller country' from the system, standardizes now everything towards 'VAT in buyers country' Now after talking with other SaaS owners it seems we're one of the 'few' non-EU companies that actually complies with this - however that choice is rather due to the provider we use. We comply with the rules by using a payment reseller ( fastspring / saasy ) which allows us to reduce accounting ( only major payments are being sent from reseller ), and at a comparable rate to stripe ( 1-2% higher ) Since they specialise in regulations and payments, it's really a big headache off our shoulders - plus you reduce the invoices you have to handle. Also it removed that whole merchant account setup process etc, which was a bigger pain for a Hong Kong based company.

toyg 12y ago
> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.
- bad_user 12y ago
  Also, the higher the VAT, the higher the tax evasion in those countries. One reason this happens is because many businesses are at the limit of survival and cannot afford to pay. One would think that somebody would get a clue that reducing the VAT would make it more affordable to more companies, but unfortunately law makers are clueless.
  - Luc 12y ago
    Companies don't pay VAT.
    - tormeh 12y ago
      They can take the customer's VAT payment and stuff it in their pocket, though. A win-win for everyone except everyone who's not that business.
    - toyg 12y ago
      I think parent is referring to the classic "VAT advance": in most countries, after a business registers for VAT, after 12 to 24 months the State will calculate your "expected VAT turnout" for the following 1 or 2 years, and demand advance payment. This is because some 80% of businesses don't survive the first 24 months anyway, so the State tries to collect every penny before they go bust. Ironically, that advance payment (which is invariably too high) is often a nail in the coffin...
      - laurencerowe 12y ago
        That sounds nuts, but it's nothing like how the system works in the UK. As a small business you complete your VAT return and pay your balance at the end of each quarter. A large business (turnover > £2M) will make payments on account more frequently so they don't get to keep hold of the VAT that has been paid to them as long.
        toyg 12y ago
        I believe it often happens here in the UK as well, although it does not involve 100% of businesses like in some other countries. It's also a one-off, whereas elsewhere it can, in some circumstances, become a recurring request.
        laurencerowe 12y ago
        Can you point me to any examples? I ran a small business in the UK for several years and never heard of anything like it. The closest would be the Windfall Tax, but that targeted a small number of privatised utilities that were sold off on the cheap by a previous government. http://en.wikipedia.org/wiki/Windfall_Tax_%28United_Kingdom%29 http://en.wikipedia.org/wiki/Windfall_Tax_%28United_Kingdom%...
  - tormeh 12y ago
    That's not really how it works. Tax rate and tax evasion aren't really linked. It's about culture and enforcement. Anyway, if your business can't pay tax it should close and you should find something more profitable to do. I guess you can argue that some businesses of cultural or otherwise non-monetary worth should have some subsidies, but as long as the company goal is to "bring in the dough", then that's the dumbest excuse I've heard. On par with "just because".
    - bad_user 12y ago
      > Tax rate and tax evasion aren't really linked. It's about culture and enforcement And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion? Of course they are linked - especially in countries in which the private sector is underrepresented and overwhelmed compared to the retired, the unemployed and the ones in the public sector, all of them assisted socially. In a country in which 60-70% of a company's revenue goes to taxes, such that the government can deliver their electoral alms, it's not so much about bringing in the dough, but more about surviving for one more year with food on the table.
      - tormeh 12y ago
        >And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion? No, they get brought up by their parents to do it, usually. The justification is that the government will just waste it anyway, which can be true. Of course, the culture that breeds tax evasion is the same one that breeds poor government. Happily I don't have to deal with it.
      - laurencerowe 12y ago
        The correlation is almost the exact opposite: https://ideas.repec.org/p/ces/ceswps/_431.html https://ideas.repec.org/p/ces/ceswps/_431.html It's cultural, tax evasion is higher in countries which were recently dicatatorships (Spain, Portugal, Greece) or never developed a strong central government (Italy.)
    - refurb 12y ago
      Tax rate and tax evasion aren't really linked. Do you have any sources that support that assertion? Increasing tax rates increase the incentive to avoid said taxes. If I'm going to go to jail for tax fraud, I'm not going to that if the rate is 2%, but I might if it's 50%.
- fulafel 12y ago
  Many essentials like food and bus tickets have lowered (or zero) tax rates, and it's printed on every receipt you get. Not really regressive or hidden. Taxing wealth has big problems with transparency and evasion. Progressive taxation is not a means to an end, just one mechanism to implement income redistribution. See eg basic income proposals with flat income tax. But a worrying trend in EU lately has been to cut payroll taxes and raise VAT and other consumption taxes without compensating them in transfers, a combination which does hurt income equality.
  - toyg 12y ago
    > Many essentials like food and bus tickets have lowered (or zero) tax rates That's charity, not progressive taxation. Besides, VAT is fixed-rate, which makes it regressive in practice. > it's printed on every receipt you get But nobody is taught how it works, in school or elsewhere, and unless you run your own business you'll never find out. Also, because it's segmented, atomic changes to different segments are usually reported under "business news" (unless it's for stuff like petrol and tobacco), the sort of thing most readers will skip. Honestly, the more you look into VAT, the more you see how it's always been used to raise taxes on employees without making them aware. > Taxing wealth has big problems with transparency and evasion Preying on the weak is obviously easier, that's always been the case. It doesn't make it right. > a combination which does hurt income equality. Amen.
    - iopq 12y ago
      It's not possible to tax wealth. Unless you want to tell me how many Bitcoins I own.
      - toyg 12y ago
        I'm a State actor. I can hire detectives that will go through the blockchain and monitor your traffic, and I'll likely get a fair approximation of how many bitcoins you have. Or you can just tell me when asked, as a good law-obeying citizen should do. This is how all tax works, btw. Income tax is nothing but a wealth tax limited to wealth accumulated over a certain period. There is nothing impossible about it.
- tormeh 12y ago
  VAT is pretty dumb, but at least now it's applied fairly.
- humanrebar 12y ago
  If you're worried about regressive taxation, offset it with standard deductions, minimum income, or earned income tax credits. Distorting tax codes to accommodate social goals creates information disparities and, indirectly, justice issues. It's like the discussions people have around here about how keeping salaries secret only helps employers. Keeping tax codes byzantine is good for corrupt politicians and special interest groups.
- joosters 12y ago
  How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill. Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. Same tax rate despite the increased bill. Now, rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT...
  - djrogers 12y ago
    I'd argue that showing pre-tax prices and charging tax at checkout makes the tax burden much more obvious to most consumers. Showing only the post-tax price on the tag hides the proportions of the tax vs item cost.
    - mbesto 12y ago
      At the end of the year why does it matter what my VAT burden is anyway? As long as I have enough cash in the bank to pay for the things I need, and my bank account isn't negative at the end of the year, then I'm fine right? What behaviors are you trying to support?
    - reitanqild 12y ago
      Obviously. It also means you can't just sum together the prices of the stuff to get the total. It annoys me seriously every time.
    - mastef 12y ago
      I was super-annoyed when first time in USA to find out I had to pay more at the cashier. Also it makes products seem cheaper than they really are - it's a cop-out to display pre-tax prices if you're billing more at the counter. Are people shopping with a calculator?
  - toyg 12y ago
    > For a start, I'd say that just about every EU citizen is aware of it. They know it exists, they don't know how it works or why (unless they run a business). > Plus, prices in shops have to show VAT-inclusive prices to end customers ... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is calculated, what is tax and what is not, until after you've paid -- and even then you'll see an aggregated total, so if your basket included stuff that was taxed in different ways, you'll likely never know. Which nobody cares about, because we don't know how VAT works, for us it's just a random pricing element like the cost of materials. Except it's not: when it's said and done, it's a tax on fixed-income employees who can't justify a VAT return. The american approach to sales tax, which seems complicated and "magic" at first, is actually much more transparent. > Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. Nope. It's regressive because it's flat rate. A millionaire buying a dishwasher will pay the same amount of tax as a regular joe buying the same dishwasher, in practice penalising the poorest of the two. That's the definition of regressive taxation. The theoretical notion that this is evened out by millionaires buying dozens of dishwashers versus joe's single one, is just that: theoretical. In practice, it does not happen: consumption levels are basically the same across most of the population. > If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. If you buy a luxury yacht, it's likely not owned by you; it's owned by You™ Ltd, and filed as asset for this or that reason. You™ Ltd will diligently file its VAT forms, of course, and in the end it will get that VAT money back. Of course there are rules and enforcement etc etc, but in practice that's how it works for everything but the most outrageous items. > rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT No, but VAT makes it trivial to game the system in practice, which is why businesses are fine with it. Note how there are constant attempts at abolishing "pesky" laws like inheritance tax or stamp duty, which touch very few individuals but are hard to game; whereas VAT involves everything and everyone but it's just accepted as part and parcel of doing business, because in the end it's paid only by fixed-income n00b employees who can't justify a VAT return.
- zo1 12y ago
  >"[...] would be admitting that VAT is a regressive hidden tax on employees" Could you elaborate a little more on that? I'm curious of your reasoning.
- mastef 12y ago
  With 'step in the proper direction' I was referring to the table showcasing how calculations from 2014 to 2015 are now even further simplified. VAT in itself is another debate. However, as many others have commented on this in this thread already, I don't have to go into specifics too much.

by mastef 12y ago

toyg 12y ago

> It seems like this is actually a step in the proper direction. No. A step in the proper direction would be admitting that VAT is a regressive hidden tax on employees, and abolish it or replace it with more transparent taxation of real wealth. Until that happens, we're all just jumping through hoops so that European politicians can tax the working man while hiding behind meaningless "consumption" codewords.

bad_user 12y ago
Also, the higher the VAT, the higher the tax evasion in those countries. One reason this happens is because many businesses are at the limit of survival and cannot afford to pay. One would think that somebody would get a clue that reducing the VAT would make it more affordable to more companies, but unfortunately law makers are clueless.
- Luc 12y ago
  Companies don't pay VAT.
  - tormeh 12y ago
    They can take the customer's VAT payment and stuff it in their pocket, though. A win-win for everyone except everyone who's not that business.
  - toyg 12y ago
    I think parent is referring to the classic "VAT advance": in most countries, after a business registers for VAT, after 12 to 24 months the State will calculate your "expected VAT turnout" for the following 1 or 2 years, and demand advance payment. This is because some 80% of businesses don't survive the first 24 months anyway, so the State tries to collect every penny before they go bust. Ironically, that advance payment (which is invariably too high) is often a nail in the coffin...
    - laurencerowe 12y ago
      That sounds nuts, but it's nothing like how the system works in the UK. As a small business you complete your VAT return and pay your balance at the end of each quarter. A large business (turnover > £2M) will make payments on account more frequently so they don't get to keep hold of the VAT that has been paid to them as long.
      - toyg 12y ago
        I believe it often happens here in the UK as well, although it does not involve 100% of businesses like in some other countries. It's also a one-off, whereas elsewhere it can, in some circumstances, become a recurring request.
        laurencerowe 12y ago
        Can you point me to any examples? I ran a small business in the UK for several years and never heard of anything like it. The closest would be the Windfall Tax, but that targeted a small number of privatised utilities that were sold off on the cheap by a previous government. http://en.wikipedia.org/wiki/Windfall_Tax_%28United_Kingdom%29 http://en.wikipedia.org/wiki/Windfall_Tax_%28United_Kingdom%...
- tormeh 12y ago
  That's not really how it works. Tax rate and tax evasion aren't really linked. It's about culture and enforcement. Anyway, if your business can't pay tax it should close and you should find something more profitable to do. I guess you can argue that some businesses of cultural or otherwise non-monetary worth should have some subsidies, but as long as the company goal is to "bring in the dough", then that's the dumbest excuse I've heard. On par with "just because".
  - bad_user 12y ago
    > Tax rate and tax evasion aren't really linked. It's about culture and enforcement And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion? Of course they are linked - especially in countries in which the private sector is underrepresented and overwhelmed compared to the retired, the unemployed and the ones in the public sector, all of them assisted socially. In a country in which 60-70% of a company's revenue goes to taxes, such that the government can deliver their electoral alms, it's not so much about bringing in the dough, but more about surviving for one more year with food on the table.
    - tormeh 12y ago
      >And how does that culture happen? Do you think people just get up one morning and decide to do tax evasion? No, they get brought up by their parents to do it, usually. The justification is that the government will just waste it anyway, which can be true. Of course, the culture that breeds tax evasion is the same one that breeds poor government. Happily I don't have to deal with it.
    - laurencerowe 12y ago
      The correlation is almost the exact opposite: https://ideas.repec.org/p/ces/ceswps/_431.html https://ideas.repec.org/p/ces/ceswps/_431.html It's cultural, tax evasion is higher in countries which were recently dicatatorships (Spain, Portugal, Greece) or never developed a strong central government (Italy.)
  - refurb 12y ago
    Tax rate and tax evasion aren't really linked. Do you have any sources that support that assertion? Increasing tax rates increase the incentive to avoid said taxes. If I'm going to go to jail for tax fraud, I'm not going to that if the rate is 2%, but I might if it's 50%.
fulafel 12y ago
Many essentials like food and bus tickets have lowered (or zero) tax rates, and it's printed on every receipt you get. Not really regressive or hidden. Taxing wealth has big problems with transparency and evasion. Progressive taxation is not a means to an end, just one mechanism to implement income redistribution. See eg basic income proposals with flat income tax. But a worrying trend in EU lately has been to cut payroll taxes and raise VAT and other consumption taxes without compensating them in transfers, a combination which does hurt income equality.
- toyg 12y ago
  > Many essentials like food and bus tickets have lowered (or zero) tax rates That's charity, not progressive taxation. Besides, VAT is fixed-rate, which makes it regressive in practice. > it's printed on every receipt you get But nobody is taught how it works, in school or elsewhere, and unless you run your own business you'll never find out. Also, because it's segmented, atomic changes to different segments are usually reported under "business news" (unless it's for stuff like petrol and tobacco), the sort of thing most readers will skip. Honestly, the more you look into VAT, the more you see how it's always been used to raise taxes on employees without making them aware. > Taxing wealth has big problems with transparency and evasion Preying on the weak is obviously easier, that's always been the case. It doesn't make it right. > a combination which does hurt income equality. Amen.
  - iopq 12y ago
    It's not possible to tax wealth. Unless you want to tell me how many Bitcoins I own.
    - toyg 12y ago
      I'm a State actor. I can hire detectives that will go through the blockchain and monitor your traffic, and I'll likely get a fair approximation of how many bitcoins you have. Or you can just tell me when asked, as a good law-obeying citizen should do. This is how all tax works, btw. Income tax is nothing but a wealth tax limited to wealth accumulated over a certain period. There is nothing impossible about it.
tormeh 12y ago
VAT is pretty dumb, but at least now it's applied fairly.
humanrebar 12y ago
If you're worried about regressive taxation, offset it with standard deductions, minimum income, or earned income tax credits. Distorting tax codes to accommodate social goals creates information disparities and, indirectly, justice issues. It's like the discussions people have around here about how keeping salaries secret only helps employers. Keeping tax codes byzantine is good for corrupt politicians and special interest groups.
joosters 12y ago
How is VAT regressive or hidden? For a start, I'd say that just about every EU citizen is aware of it. Plus, prices in shops have to show VAT-inclusive prices to end customers, unlike some states in the USA where sales taxes can get magically added on to the final bill. Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. Same tax rate despite the increased bill. Now, rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT...
- djrogers 12y ago
  I'd argue that showing pre-tax prices and charging tax at checkout makes the tax burden much more obvious to most consumers. Showing only the post-tax price on the tag hides the proportions of the tax vs item cost.
  - mbesto 12y ago
    At the end of the year why does it matter what my VAT burden is anyway? As long as I have enough cash in the bank to pay for the things I need, and my bank account isn't negative at the end of the year, then I'm fine right? What behaviors are you trying to support?
  - reitanqild 12y ago
    Obviously. It also means you can't just sum together the prices of the stuff to get the total. It annoys me seriously every time.
  - mastef 12y ago
    I was super-annoyed when first time in USA to find out I had to pay more at the cashier. Also it makes products seem cheaper than they really are - it's a cop-out to display pre-tax prices if you're billing more at the counter. Are people shopping with a calculator?
- toyg 12y ago
  > For a start, I'd say that just about every EU citizen is aware of it. They know it exists, they don't know how it works or why (unless they run a business). > Plus, prices in shops have to show VAT-inclusive prices to end customers ... which is exactly what I mean by "hiding it". You'll hardly ever see "€ 4.00 + € 1.00 vat" when going through shelves; you'll always see "€ 5.00". You have no idea how that price is calculated, what is tax and what is not, until after you've paid -- and even then you'll see an aggregated total, so if your basket included stuff that was taxed in different ways, you'll likely never know. Which nobody cares about, because we don't know how VAT works, for us it's just a random pricing element like the cost of materials. Except it's not: when it's said and done, it's a tax on fixed-income employees who can't justify a VAT return. The american approach to sales tax, which seems complicated and "magic" at first, is actually much more transparent. > Secondly, it's not regressive because the more goods and services you buy, the more you get taxed. Nope. It's regressive because it's flat rate. A millionaire buying a dishwasher will pay the same amount of tax as a regular joe buying the same dishwasher, in practice penalising the poorest of the two. That's the definition of regressive taxation. The theoretical notion that this is evened out by millionaires buying dozens of dishwashers versus joe's single one, is just that: theoretical. In practice, it does not happen: consumption levels are basically the same across most of the population. > If I buy a luxury yacht, I'll end up paying more VAT than someone buying a toy boat. If you buy a luxury yacht, it's likely not owned by you; it's owned by You™ Ltd, and filed as asset for this or that reason. You™ Ltd will diligently file its VAT forms, of course, and in the end it will get that VAT money back. Of course there are rules and enforcement etc etc, but in practice that's how it works for everything but the most outrageous items. > rich individuals may well try out all kinds of tax avoidance schemes but that's not a problem specific to VAT No, but VAT makes it trivial to game the system in practice, which is why businesses are fine with it. Note how there are constant attempts at abolishing "pesky" laws like inheritance tax or stamp duty, which touch very few individuals but are hard to game; whereas VAT involves everything and everyone but it's just accepted as part and parcel of doing business, because in the end it's paid only by fixed-income n00b employees who can't justify a VAT return.
zo1 12y ago
>"[...] would be admitting that VAT is a regressive hidden tax on employees" Could you elaborate a little more on that? I'm curious of your reasoning.
mastef 12y ago
With 'step in the proper direction' I was referring to the table showcasing how calculations from 2014 to 2015 are now even further simplified. VAT in itself is another debate. However, as many others have commented on this in this thread already, I don't have to go into specifics too much.