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Yes, this has been quite an amazing f-up by the tax authorities in the EU. I wrote a blogpost about it the other day: http://blog.satago.co.uk/2014/11/what-is-t

Yes, this has been quite an amazing f-up by the tax authorities in the EU. I wrote a blogpost about it the other day: http://blog.satago.co.uk/2014/11/what-is-this-vatmoss-mess/ http://blog.satago.co.uk/2014/11/what-is-this-vatmoss-mess/ imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now.

coob 12y ago
It's going to force people to use marketplaces/providers. Probably a startup opportunity.
- Major_Grooves 12y ago
  In fact lots of people assumed that the marketplaces would take the heavy lifting here. However most of them are US-based and have said they won't be the ones to take care of this. However, part of the problem is the authorities assuming that everyone sells through marketplaces, and that marketplaces would be the ones to tackle the issue. You'd be surprised how many people this is going to affect who are just selling a few items with PayPal - and PayPal cannot supply the required data to comply. The people that got most vocal about this were mom solo entrepreneurs. I wrote a follow-up blog post about this: http://blog.satago.co.uk/2014/11/when-the-crafting-community-gets-angry/ http://blog.satago.co.uk/2014/11/when-the-crafting-community...
  - deleted 12y ago
    [deleted]
k-mcgrady 12y ago
>> "imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now." You mean you have to pay VAT even if you earn under £69,000 (I think that was the threshold last I checked)?
- Major_Grooves 12y ago
  Yes - if you sell these digital goods.
Omniusaspirer 12y ago
This is effectively impossible to enforce though, at least for foreign sellers; is that a fair assessment? I'm really not seeing any mechanism whereby the EU could actually force them to pay their taxes when they're selling goods that don't physically exist. Small arts and crafts need to be shipped, software does not. I guess they could pressure payment services (Paypal, Dwolla), but Bitcoin could always be used as a fallback- it's also VAT exempt or at least appears to be from my quick searches on the subject.
- sailfast 12y ago
  I could see tax authorities going after consumers that are not paying VAT - they reside in the EU and are easier to prosecute than foreign companies. In the past in the United States, the providers (such as Amazon) have placed the burden of paying state taxes on the consumer - I wonder if they could, somehow, also make the consumer responsible in this case and thereby continue to operate in the same manner?
santacluster 12y ago
The really major f-up is that of online sellers (it's a major pain for sellers of physical goods as well, it's just easier for them to at least know which country they're selling to) who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. The reasoning behind the law is perfectly logical, and the problem they're trying to solve very real. The actual implementation utterly impractical, and a major burden on pretty much everyone. But the only people who could have told the political dinosaurs and clueless civil servants just how impractical chose to pretend the change would somehow magically just go away. This is one piece of legislation that could probably have been stopped or redirected quite early on, if those affected had just bothered to try.
- Silhouette 12y ago
  The really major f-up is that of online sellers ... who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. And what exactly do you think an affected seller should have done if they had no reason to know these changes even existed? Certain government representatives have been claiming that they have provided information and notified businesses. However, right now the Internet seems to have no shortage of small businesses who claim they had never heard of this change until very recently. I can certainly understand that: I personally run two businesses that could potentially be affected by these changes, both already VAT registered, yet I have no indication that our government has made any attempt to notify either company in any way about these changes. Even some on-line payment services and marketplaces appear to have had no idea, and it looks like some won't be able to support the required taxation and record-keeping in time. These are the very organisations that many people in governments seem to have assumed will fix the problem because according to them almost every micro-business uses one! This is one piece of legislation that could probably have been stopped or redirected quite early on, if those affected had just bothered to try. I'm not convinced it would have helped even then. This is the same EU that imposed those mandatory cookie notices. More recently, they pushed through consumer protection regulations that mean if someone wants to buy a digital download and gives you their money today, the default is that you must not actually provide the data to them for two weeks, among other similarly unhelpful-to-anyone measures. No doubt some of these measures were promoted with genuinely good intentions, but it is clear that the people writing the laws and regulations are completely disconnected from the realities of running a small business. It will be literally impossible for a lot of small businesses to comply with the letter of the law under some of the new rules. The biggest irony of them all is that the most likely beneficiaries of these changes are... big US businesses, specifically those which function as on-line marketplaces and have the resources no small business does to investigate and comply with all the new taxation and reporting rules and to put up a serious legal fight if they are formally investigated for failing to do the impossible.
jkulmala 12y ago
That's a great blog post, Major_Grooves - Thanks for shouting out! I totally agree and addressed that in my other blog post which is targeted to EU folks: http://www.happybootstrapper.com/2014/eu-vat-changes-online-businesses-act-jan-1st/ http://www.happybootstrapper.com/2014/eu-vat-changes-online-... I hope lots of people read it and sign up the petition to set up a revenue threshold: https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders https://www.change.org/p/pierre-moscovici-a-unilateral-suspe...

coob 12y ago

It's going to force people to use marketplaces/providers. Probably a startup opportunity.

Major_Grooves 12y ago
In fact lots of people assumed that the marketplaces would take the heavy lifting here. However most of them are US-based and have said they won't be the ones to take care of this. However, part of the problem is the authorities assuming that everyone sells through marketplaces, and that marketplaces would be the ones to tackle the issue. You'd be surprised how many people this is going to affect who are just selling a few items with PayPal - and PayPal cannot supply the required data to comply. The people that got most vocal about this were mom solo entrepreneurs. I wrote a follow-up blog post about this: http://blog.satago.co.uk/2014/11/when-the-crafting-community-gets-angry/ http://blog.satago.co.uk/2014/11/when-the-crafting-community...
- deleted 12y ago
  [deleted]

k-mcgrady 12y ago

>> "imo the major f-up is removing the tax threshold for selling digital goods - even if you sell a £1 kintting pattern you have to register for VAT now." You mean you have to pay VAT even if you earn under £69,000 (I think that was the threshold last I checked)?

Major_Grooves 12y ago
Yes - if you sell these digital goods.

Omniusaspirer 12y ago

This is effectively impossible to enforce though, at least for foreign sellers; is that a fair assessment? I'm really not seeing any mechanism whereby the EU could actually force them to pay their taxes when they're selling goods that don't physically exist. Small arts and crafts need to be shipped, software does not. I guess they could pressure payment services (Paypal, Dwolla), but Bitcoin could always be used as a fallback- it's also VAT exempt or at least appears to be from my quick searches on the subject.

sailfast 12y ago
I could see tax authorities going after consumers that are not paying VAT - they reside in the EU and are easier to prosecute than foreign companies. In the past in the United States, the providers (such as Amazon) have placed the burden of paying state taxes on the consumer - I wonder if they could, somehow, also make the consumer responsible in this case and thereby continue to operate in the same manner?

santacluster 12y ago

The really major f-up is that of online sellers (it's a major pain for sellers of physical goods as well, it's just easier for them to at least know which country they're selling to) who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. The reasoning behind the law is perfectly logical, and the problem they're trying to solve very real. The actual implementation utterly impractical, and a major burden on pretty much everyone. But the only people who could have told the political dinosaurs and clueless civil servants just how impractical chose to pretend the change would somehow magically just go away. This is one piece of legislation that could probably have been stopped or redirected quite early on, if those affected had just bothered to try.

Silhouette 12y ago
The really major f-up is that of online sellers ... who did absolutely nothing during the entire process of creating and implementing this change, and only now start to whine when it's way, way too late. And what exactly do you think an affected seller should have done if they had no reason to know these changes even existed? Certain government representatives have been claiming that they have provided information and notified businesses. However, right now the Internet seems to have no shortage of small businesses who claim they had never heard of this change until very recently. I can certainly understand that: I personally run two businesses that could potentially be affected by these changes, both already VAT registered, yet I have no indication that our government has made any attempt to notify either company in any way about these changes. Even some on-line payment services and marketplaces appear to have had no idea, and it looks like some won't be able to support the required taxation and record-keeping in time. These are the very organisations that many people in governments seem to have assumed will fix the problem because according to them almost every micro-business uses one! This is one piece of legislation that could probably have been stopped or redirected quite early on, if those affected had just bothered to try. I'm not convinced it would have helped even then. This is the same EU that imposed those mandatory cookie notices. More recently, they pushed through consumer protection regulations that mean if someone wants to buy a digital download and gives you their money today, the default is that you must not actually provide the data to them for two weeks, among other similarly unhelpful-to-anyone measures. No doubt some of these measures were promoted with genuinely good intentions, but it is clear that the people writing the laws and regulations are completely disconnected from the realities of running a small business. It will be literally impossible for a lot of small businesses to comply with the letter of the law under some of the new rules. The biggest irony of them all is that the most likely beneficiaries of these changes are... big US businesses, specifically those which function as on-line marketplaces and have the resources no small business does to investigate and comply with all the new taxation and reporting rules and to put up a serious legal fight if they are formally investigated for failing to do the impossible.

jkulmala 12y ago

That's a great blog post, Major_Grooves - Thanks for shouting out! I totally agree and addressed that in my other blog post which is targeted to EU folks: http://www.happybootstrapper.com/2014/eu-vat-changes-online-businesses-act-jan-1st/ http://www.happybootstrapper.com/2014/eu-vat-changes-online-... I hope lots of people read it and sign up the petition to set up a revenue threshold: https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders https://www.change.org/p/pierre-moscovici-a-unilateral-suspe...