7 ms·

Patreon to Europe on #VATMOSS: “Not our problem, mate.”

69 points by jakobegger 12y ago

idea15webdesign 12y ago
That escalated quickly...
chollida1 12y ago
This is the real story, its buried at the end of the article. > The UK government is also in the process of introducing the Diverted Profit Tax, announced by the chancellor, George Osborne in the Autumn Statement. > The tax aims to counter the use of "aggressive tax planning techniques" to divert profits from the UK to low tax jurisdictions. > Profits made after 1 April 2015, and diverted to other countries, will be taxed at 25%. This is a pretty watershed moment for world wide business tax strategies. It will be interesting to see how it plays out. I would hate to be one of the big accounting firms, or an employee of one, right now. Inter-country tax laws are about to get alot more complex and my guess is that at least of of the big accounting firms get bankrupted in the next few years due to this. Current tax law is kind of like trying to follow the bible, or quran, to the letter of the law. There are so many inconsistencies and just plain old conflicting rules that you just can't do it. EDIT To clarify, I'm pretty convinced, mostly from analysts I've talked to, that sooner or later a PWC or ther accounting firm will give a company tax advice that a country doesn't care for and they will get taken to the woodshed by that country. I'm not even referring to outright illegal activity like Arthur Anderson and Enron. So yes, more money in the future due to increased tax regulation but a heck of alot more risk due to it as well. You have to realize that Arthur Anderson was taken down because a relatively small team of auditors was corrupt. PWC has 10,000 partners and almost 200,000 employees. It just takes a team of 50 to mess up and the firm can be gone.
- riffraff 12y ago
  > Inter-country tax laws are about to get alot more complex and my guess is that at least of of the big accounting firms get bankrupted in the next few years due to this. could you expand? My feeling would be that with increasing complexity, big accounting firms stand only to make more money.
  - aetherson 12y ago
    It's a mixed blessing. More complexity = more billable hours for accountants, but also = more liability if they screw up.
    - jes 12y ago
      I think your comment is a good one. But I find myself wondering, if a company like PWC is also "Too big to fail." In this day and age, I have little trust in very large organizations, as I see them in league with politicians and bureaucrats. Edit: Change "too" to "to" in "Too big to fail."
- bobcostas55 12y ago
  The Diverted Profit Tax won't stand. It overrides double taxation treaties and breaks EU law. Not to mention it's extremely fuzzy and filled with subjective judgments on whether profits are "diverted" or not. It's basically just populist grandstanding.
Kiro 12y ago
What happens if you just ignore it?
- mrcncpt 12y ago
  Surely, if PwC is wrong, and Patreon is responsible (which seems this way) and HMRC decides to investigate, they will go after Patreon, and not individual users?
  - Kliment 12y ago
    Except Patreon is not in their jurisdiction, but their victims are.
    - petercooper 12y ago
      Correct, although I'd be very surprised if this actually happened. HMRC has enough trouble staying on top of non-compliance and lost taxes in the UK, let alone chasing people for VAT due in other EU states. I can't imagine HMRC being too quick to rush to become a debt collector for other EU states. Bear in mind that if people merely keep operating now as they did in 2014, HMRC loses nothing - it's only the tax authorities in other EU states who lose out. While no-one should take this as legal advice, I suspect all we'll see is other EU tax authorities taking action against the biggest non-compliers rather than individuals.
falcolas 12y ago
I imagine Patreon did the calculation of implementing complicated (and in flux) rules for for a portion of their market versus the lost income to Patreon from losing their European customers... I can understand that it's likely that the equation comes down on the side of the European creators costing them less over the long run.
peterarmstrong 12y ago
If you're an author, you can use Leanpub (https://leanpub.com/ https://leanpub.com/). We added #VATMOSS support, so you don't have to. We did this since we looked at the situation and decided it was the correct thing to do for our authors, even though we're based in Canada with our servers in the USA, and with no physical presence in the EU whatsoever. We also added "bring your own book" support, so you can just upload your own PDF, EPUB and/or MOBI files instead of needing to use our (awesome, Markdown-based) book creation workflow.
- jerf 12y ago
  Would you be willing to share approximately what it costs you? I saw your post here and deleted-before-posting speculation that Patreon simply can't make the numbers sensibly work out (bearing in mind they have to grow by offering an attractive package to both those who donate and create; if, for instance, 50% of the "donations" go into tax compliance there simply won't be any donations anyhow), but if we can get real numbers that would be even better. Of course, that's assuming you have a similar problem to Patreon, where the author claims that every patron would be involved in the VATMOSS transaction, which I can't speak to at all. If it's just a line-item per book for you but a line item per EU patron for Patreon that's not comparable.
  - peterarmstrong 12y ago
    We integrated Taxamo (http://www.taxamo.com/ http://www.taxamo.com/) into Leanpub, and their posted fees (http://www.taxamo.com/pricing/ http://www.taxamo.com/pricing/) start at 20 Euro cents for every EU transaction. Non-EU transactions are free. In terms of detecting whether the transaction is EU or not, there's a complicated workflow with 3 pieces of evidence etc, but (a) that's what Taxamo helps with and (b) if a bootstrapped Canadian startup can deal with this, presumably so could anyone else.
    - jerf 12y ago
      Thank you.
simplyinfinity 12y ago
So basically .. we have the freedom of the internet ... buut we can't do business on the internet unless we hire 20 accountants 5 accounting managers, 2 layers and we will still be limited to just working within europe?
- stuaxo 12y ago
  Not really - just keep a table of the vat rates and pay the relevant one.
  - nostromo 12y ago
    "Simply keep abreast of all tax laws and jurisdictions on planet Earth and pay accordingly. It couldn't be simpler..."
    - jessedhillon 12y ago
      It truly is complicated. If only there were some kind of service, to whom one would pay a service fee perhaps, and who in return could promote your work, then collect and aggregate small, recurring payments from international payers while properly computing the tax liability. Some kind of intermediary which enabled people to patronize artists, such that millions of artists around the world can simply pick up a check and focus on their work.
      - Kalium 12y ago
        Sounds like you have a new yc startup on your hands.
      - TillE 12y ago
        Heh. Seriously, this is (at least for me, and presumably for every other tiny indie developer) one of the huge attractions of storefronts like Steam and the iOS App Store: I'll just give you a license to sell my works, and you send me the royalties. I'll gladly give them a 30% cut to avoid all that bullshit. Incidentally, the Google Play store does not do this. Each developer is the merchant of record. I can only imagine that nearly every smaller business selling through Google has neglected to pay at least some sales taxes that they owe.
mcguire 12y ago
https://www.patreon.com/taxes https://www.patreon.com/taxes seems to be empty for me.
- Sir_Cmpwn 12y ago
  Have you got JavaScript disabled?
  - pluma 12y ago
    It's empty for me, too. Logged in or not. JS is not disabled.
    - Sir_Cmpwn 12y ago
      https://gist.github.com/SirCmpwn/0a80875342ec82c813e8 https://gist.github.com/SirCmpwn/0a80875342ec82c813e8
pluma 12y ago
It's disconcerting how many US online services claim to be usable internationally but then turn out not to have done their homework.
- Zietaggen 12y ago
  They did their homework. If you want to use Patreon and you have to deal with VAT, get to work and don't expect Patreon to do it for you. Especially all of the unnecessary paperwork for a backwards psuedo-nation.
  - pluma 12y ago
    You mean all the unnecessary paperwork for every EU member state affected by the VAT changes? And it's of course entirely reasonable to expect your users to know that they have to do the paperwork for contributions in the 1-10 dollar range themselves without ever explicitly telling them. I'm not even sure that level of information is available to the users. If I were being funded on Patreon, would I have to get in touch with every single patron and ask them for their VAT details? And what would I do if someone didn't answer? This is no different from the borderline criminal behaviour Uber and AirBnB are encouraging.
    - slowmovintarget 12y ago
      Why is it reasonable to expect Patreon to manage compliance and liability for such a law? If the EU wants to destroy commerce, that should be within the province of its citizens to address... oh wait. There's the problem.
      - idea15webdesign 12y ago
        Because that's what EU law, and its member states, have decreed. For example, here is the guidance from HMRC in the UK. https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#vat-accounting-options-for-businesses-supplying-digital-services-to-consumers https://www.gov.uk/government/publications/vat-supplying-dig... Per this law, the third party marketplace/gateway is responsible for compliance and liability. That is how everyone in the EU affected by the law views it, and it is why most marketplaces and platforms are slowly but surely coming into compliance. This particular marketplace, on the other hand, hired a consultancy firm whose raison d'etre is tax avoidance http://www.bbc.co.uk/news/business-31147276 http://www.bbc.co.uk/news/business-31147276, who proceeded to give them what they paid for. That tax advice was so incredibly wrong it was almost laughable; it misrepresented the "place of supply", the fundamental piece of information behind the entire continental tax change. https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-service-is-not-place-of-supply/ https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-ser... This issue is not a question of extraterritorial sovereignty or individual responsibility. It's about dodgy tax advisors giving dodgy advice to a company which paid good money for it.
zaroth 12y ago
"Aside from the hideous administrative burden Patreon has now forced onto their European users..." Hyperbolic much? Way to blame Patreon for the arduous EU tax policy.
- pyre 12y ago
  It may be a bit of hyperbole, but they are basically abandoning their EU users. It's a lot more arduous for individual content creators to track down and store VAT information for hundreds of $5 purchases than it is for the marketplace enabling those purchases to do so. Why not just cut-off EU users?
  - cannam 12y ago
    The rule is about place of supply, so any Patreon user receiving donations from people in the EU is presumably also supposed to register with VATMOSS and collect and pay VAT. Arguably Patreon aren't only abandoning users based in the EU, but users everywhere in the world with patrons there. I say "arguably" because of course I've no idea how that borderline-crazy rule is supposed to be enforced. (And I may be misunderstanding it too.) I'm based in the EU (in London) and I recently registered my business for VAT because of this regulation. Now I get to raise an eyebrow, metaphorical or literal, every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem. (Edit: I hope.) (Further edit: Thinking about it again, if a Patreon patron really doesn't receive a digital good in return, surely they don't have a case to answer after all?)
    - petercooper 12y ago
      every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem. Except that as soon as you became a VAT registered business it legally became your problem ;-) You have to "reverse charge" the VAT for those non-EU supplies and include them on your VAT return: https://www.gov.uk/vat-imports-acquisitions-and-purchases-from-abroad https://www.gov.uk/vat-imports-acquisitions-and-purchases-fr... Nearly all of my own purchases are subject to this and it's a bit of a pain in terms of admin overhead, but the good news is in many - but not all - cases the net financial position is the same as if you hadn't paid, since you can reclaim the reverse charged VAT.
belorn 12y ago
I thought patreon was a donation based service, as in "I give you money so you can continue to create" rather than "I give you money in exchange of services or goods". Is patreon one of them or both, and how do I know when looking at someones patreon page?
- sp332 12y ago
  They do both. On the left you can see "milestones", which are general project goals. But at the bottom, some of the pledge levels have specific rewards to the backer.
- idea15webdesign 12y ago
  Even their own tax page (linked to below) says that donations are considered earned income. HMRC does not care where it comes from or what it's called. It's income.
  - unreal37 12y ago
    I agree it's income, but it's also a tip. Like if I sent $5 to your Paypal account directly. You need to declare that, but does Paypal care whether I owed you $5 or it's income? Good question actually. What's Paypal doing about VAT?
    - petercooper 12y ago
      Nothing. They're a payment processor, not a marketplace - it's up to the actual vendor to handle tax. Money I make via PayPal is not PayPal's revenue at any point, whereas I believe Patreon takes payment direct and then pays its members through commission. (HMRC answered the same question that way in an online chat - lost the link to the transcript, but it's out there.)
    - idea15webdesign 12y ago
      I can only answer for the UK, but we have to go back to last autumn, when everyone started finding out about VATMOSS at all. HMRC did not communicate anything about EUVAT to anyone but businesses above a certain size which were already VAT registered. Their estimate was that only 34k business would be affected. So part of the outcry was the fact that marketplaces, gateways, and payment processors were not advised or consulted. They found out the same time everyone else did, in the same way everyone else did. One of them was PayPal, who were expected by the EU to be compliant in time for 1/1/15. This was news to them. HMRC were forced to admit they had no idea that gateways like Paypal did not already capture the information required to create the place of supply burden of proof, nor that your average non-technically minded microbusiness knew how to handle the API and the information passing through it. http://www.clarejosa.com/articles/from-passion-to-purpose/updates-from-our-meeting-with-hmrc-hm-treasury-and-a-minster-on-4th-december-2014/ http://www.clarejosa.com/articles/from-passion-to-purpose/up... One would hope that by now that it's all been sorted.
thekevan 12y ago
Patreon is the U.S. and not subject to European laws. Patreon is also really just a distributor of money, they don't provide the person with a service. Why is a person with a web design business looking to use a site used to help artists who have trouble connecting art and normal business income? Finally she tweeted about how many people saw that blog post and said she should have included a tip jar. It really seems like she cares more about what she can get out of a situation than anything else.
- idea15webdesign 12y ago
  You have a great day too, thekevan!
- malditojavi 12y ago
  Not really, every business with European based customers needs to comply with EU vat https://quaderno.io/blog/is-your-business-ready-for-the-new-eu-2015-vat-rules/ https://quaderno.io/blog/is-your-business-ready-for-the-new-...
  - petercooper 12y ago
    Well, so says the EU, but extraterritorial jurisdiction issues are very complicated and ultimately require cooperation between different countries to ever enforce.
- unreal37 12y ago
  "Patreon is the U.S. and not subject to European laws." What makes you think this is true? Why can't Americans play poker online? Why does Amazon have to collect state taxes for states they don't have a physical presence in? Google is forced to censor French and German search results. Facebook is forced to follow EU privacy laws. And on, and on. Having customers in a country means you're doing business in that country in this modern world. IANAL. But you may want to check with one.
  - jccooper 12y ago
    "Why can't Americans play poker online?" American anti-gambling laws. "Why does Amazon have to collect state taxes for states they don't have a physical presence in?" Because those states count things like affiliate programs and subsidiary companies as a sales tax "nexus". Amazon tends to kill those programs to avoid being taxable. They only collect sales tax in 24 states. "Google is forced to censor French and German search results. Facebook is forced to follow EU privacy laws." Yeah, because they have operations in those countries, and can thus be sued there. Also, perhaps, because they might be blocked in the relevant countries, and would rather stay in those markets. The EU simply cannot make me collect VAT (or do any other crazy thing they think up), because I'm not in the EU. They can ban me or my services or products in their jurisdiction, or make life hard for my customers in their jurisdiction, which may be enough.
polimorfico 12y ago
If you're using Stripe or Paypal, you can use Quaderno (https://quaderno.io https://quaderno.io). We're #VATMOSS complaint and help you to calculate VAT rates and track all the customer location evidences. Let me know if you have any questions.
- peterfa 12y ago
  Do you plan more integrations (e.g. Paymill)?
  - polimorfico 12y ago
    Yes! In fact, we're already working on it.
- heidijavi 12y ago
  What if I need to do some extra customization or if I want to disclose the final amount to my customers, do you offer something like that?
  - polimorfico 12y ago
    Sure! Everything is customisable.
elvis635 12y ago
Do you think is practical to build an internal invoice system that takes care of the whole VATMESS? How long do you think it'd take a single developer to do it? I know that there are many different services like the ones in this thread, but as a single developer, on a bootstrapping project they'd still be out of budget
Esifer 12y ago
Japan is implementing similar law in Oct 2015

69 points by jakobegger 12y ago

That escalated quickly...

This is the real story, its buried at the end of the article. > The UK government is also in the process of introducing the Diverted Profit Tax, announced by the chancellor, George Osborne in the Autumn Statement. > The tax aims to counter the use of "aggressive tax planning techniques" to divert profits from the UK to low tax jurisdictions. > Profits made after 1 April 2015, and diverted to other countries, will be taxed at 25%. This is a pretty watershed moment for world wide business tax strategies. It will be interesting to see how it plays out. I would hate to be one of the big accounting firms, or an employee of one, right now. Inter-country tax laws are about to get alot more complex and my guess is that at least of of the big accounting firms get bankrupted in the next few years due to this. Current tax law is kind of like trying to follow the bible, or quran, to the letter of the law. There are so many inconsistencies and just plain old conflicting rules that you just can't do it. EDIT To clarify, I'm pretty convinced, mostly from analysts I've talked to, that sooner or later a PWC or ther accounting firm will give a company tax advice that a country doesn't care for and they will get taken to the woodshed by that country. I'm not even referring to outright illegal activity like Arthur Anderson and Enron. So yes, more money in the future due to increased tax regulation but a heck of alot more risk due to it as well. You have to realize that Arthur Anderson was taken down because a relatively small team of auditors was corrupt. PWC has 10,000 partners and almost 200,000 employees. It just takes a team of 50 to mess up and the firm can be gone.

riffraff 12y ago
> Inter-country tax laws are about to get alot more complex and my guess is that at least of of the big accounting firms get bankrupted in the next few years due to this. could you expand? My feeling would be that with increasing complexity, big accounting firms stand only to make more money.
- aetherson 12y ago
  It's a mixed blessing. More complexity = more billable hours for accountants, but also = more liability if they screw up.
  - jes 12y ago
    I think your comment is a good one. But I find myself wondering, if a company like PWC is also "Too big to fail." In this day and age, I have little trust in very large organizations, as I see them in league with politicians and bureaucrats. Edit: Change "too" to "to" in "Too big to fail."
bobcostas55 12y ago
The Diverted Profit Tax won't stand. It overrides double taxation treaties and breaks EU law. Not to mention it's extremely fuzzy and filled with subjective judgments on whether profits are "diverted" or not. It's basically just populist grandstanding.

Kiro 12y ago

What happens if you just ignore it?

mrcncpt 12y ago
Surely, if PwC is wrong, and Patreon is responsible (which seems this way) and HMRC decides to investigate, they will go after Patreon, and not individual users?
- Kliment 12y ago
  Except Patreon is not in their jurisdiction, but their victims are.
  - petercooper 12y ago
    Correct, although I'd be very surprised if this actually happened. HMRC has enough trouble staying on top of non-compliance and lost taxes in the UK, let alone chasing people for VAT due in other EU states. I can't imagine HMRC being too quick to rush to become a debt collector for other EU states. Bear in mind that if people merely keep operating now as they did in 2014, HMRC loses nothing - it's only the tax authorities in other EU states who lose out. While no-one should take this as legal advice, I suspect all we'll see is other EU tax authorities taking action against the biggest non-compliers rather than individuals.

falcolas 12y ago

I imagine Patreon did the calculation of implementing complicated (and in flux) rules for for a portion of their market versus the lost income to Patreon from losing their European customers... I can understand that it's likely that the equation comes down on the side of the European creators costing them less over the long run.

peterarmstrong 12y ago

If you're an author, you can use Leanpub (https://leanpub.com/ https://leanpub.com/). We added #VATMOSS support, so you don't have to. We did this since we looked at the situation and decided it was the correct thing to do for our authors, even though we're based in Canada with our servers in the USA, and with no physical presence in the EU whatsoever. We also added "bring your own book" support, so you can just upload your own PDF, EPUB and/or MOBI files instead of needing to use our (awesome, Markdown-based) book creation workflow.

jerf 12y ago
Would you be willing to share approximately what it costs you? I saw your post here and deleted-before-posting speculation that Patreon simply can't make the numbers sensibly work out (bearing in mind they have to grow by offering an attractive package to both those who donate and create; if, for instance, 50% of the "donations" go into tax compliance there simply won't be any donations anyhow), but if we can get real numbers that would be even better. Of course, that's assuming you have a similar problem to Patreon, where the author claims that every patron would be involved in the VATMOSS transaction, which I can't speak to at all. If it's just a line-item per book for you but a line item per EU patron for Patreon that's not comparable.
- peterarmstrong 12y ago
  We integrated Taxamo (http://www.taxamo.com/ http://www.taxamo.com/) into Leanpub, and their posted fees (http://www.taxamo.com/pricing/ http://www.taxamo.com/pricing/) start at 20 Euro cents for every EU transaction. Non-EU transactions are free. In terms of detecting whether the transaction is EU or not, there's a complicated workflow with 3 pieces of evidence etc, but (a) that's what Taxamo helps with and (b) if a bootstrapped Canadian startup can deal with this, presumably so could anyone else.
  - jerf 12y ago
    Thank you.

simplyinfinity 12y ago

So basically .. we have the freedom of the internet ... buut we can't do business on the internet unless we hire 20 accountants 5 accounting managers, 2 layers and we will still be limited to just working within europe?

stuaxo 12y ago
Not really - just keep a table of the vat rates and pay the relevant one.
- nostromo 12y ago
  "Simply keep abreast of all tax laws and jurisdictions on planet Earth and pay accordingly. It couldn't be simpler..."
  - jessedhillon 12y ago
    It truly is complicated. If only there were some kind of service, to whom one would pay a service fee perhaps, and who in return could promote your work, then collect and aggregate small, recurring payments from international payers while properly computing the tax liability. Some kind of intermediary which enabled people to patronize artists, such that millions of artists around the world can simply pick up a check and focus on their work.
    - Kalium 12y ago
      Sounds like you have a new yc startup on your hands.
    - TillE 12y ago
      Heh. Seriously, this is (at least for me, and presumably for every other tiny indie developer) one of the huge attractions of storefronts like Steam and the iOS App Store: I'll just give you a license to sell my works, and you send me the royalties. I'll gladly give them a 30% cut to avoid all that bullshit. Incidentally, the Google Play store does not do this. Each developer is the merchant of record. I can only imagine that nearly every smaller business selling through Google has neglected to pay at least some sales taxes that they owe.

mcguire 12y ago

https://www.patreon.com/taxes https://www.patreon.com/taxes seems to be empty for me.

Sir_Cmpwn 12y ago
Have you got JavaScript disabled?
- pluma 12y ago
  It's empty for me, too. Logged in or not. JS is not disabled.
  - Sir_Cmpwn 12y ago
    https://gist.github.com/SirCmpwn/0a80875342ec82c813e8 https://gist.github.com/SirCmpwn/0a80875342ec82c813e8

pluma 12y ago

It's disconcerting how many US online services claim to be usable internationally but then turn out not to have done their homework.

Zietaggen 12y ago
They did their homework. If you want to use Patreon and you have to deal with VAT, get to work and don't expect Patreon to do it for you. Especially all of the unnecessary paperwork for a backwards psuedo-nation.
- pluma 12y ago
  You mean all the unnecessary paperwork for every EU member state affected by the VAT changes? And it's of course entirely reasonable to expect your users to know that they have to do the paperwork for contributions in the 1-10 dollar range themselves without ever explicitly telling them. I'm not even sure that level of information is available to the users. If I were being funded on Patreon, would I have to get in touch with every single patron and ask them for their VAT details? And what would I do if someone didn't answer? This is no different from the borderline criminal behaviour Uber and AirBnB are encouraging.
  - slowmovintarget 12y ago
    Why is it reasonable to expect Patreon to manage compliance and liability for such a law? If the EU wants to destroy commerce, that should be within the province of its citizens to address... oh wait. There's the problem.
    - idea15webdesign 12y ago
      Because that's what EU law, and its member states, have decreed. For example, here is the guidance from HMRC in the UK. https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#vat-accounting-options-for-businesses-supplying-digital-services-to-consumers https://www.gov.uk/government/publications/vat-supplying-dig... Per this law, the third party marketplace/gateway is responsible for compliance and liability. That is how everyone in the EU affected by the law views it, and it is why most marketplaces and platforms are slowly but surely coming into compliance. This particular marketplace, on the other hand, hired a consultancy firm whose raison d'etre is tax avoidance http://www.bbc.co.uk/news/business-31147276 http://www.bbc.co.uk/news/business-31147276, who proceeded to give them what they paid for. That tax advice was so incredibly wrong it was almost laughable; it misrepresented the "place of supply", the fundamental piece of information behind the entire continental tax change. https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-service-is-not-place-of-supply/ https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-ser... This issue is not a question of extraterritorial sovereignty or individual responsibility. It's about dodgy tax advisors giving dodgy advice to a company which paid good money for it.

zaroth 12y ago

"Aside from the hideous administrative burden Patreon has now forced onto their European users..." Hyperbolic much? Way to blame Patreon for the arduous EU tax policy.

pyre 12y ago
It may be a bit of hyperbole, but they are basically abandoning their EU users. It's a lot more arduous for individual content creators to track down and store VAT information for hundreds of $5 purchases than it is for the marketplace enabling those purchases to do so. Why not just cut-off EU users?
- cannam 12y ago
  The rule is about place of supply, so any Patreon user receiving donations from people in the EU is presumably also supposed to register with VATMOSS and collect and pay VAT. Arguably Patreon aren't only abandoning users based in the EU, but users everywhere in the world with patrons there. I say "arguably" because of course I've no idea how that borderline-crazy rule is supposed to be enforced. (And I may be misunderstanding it too.) I'm based in the EU (in London) and I recently registered my business for VAT because of this regulation. Now I get to raise an eyebrow, metaphorical or literal, every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem. (Edit: I hope.) (Further edit: Thinking about it again, if a Patreon patron really doesn't receive a digital good in return, surely they don't have a case to answer after all?)
  - petercooper 12y ago
    every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem. Except that as soon as you became a VAT registered business it legally became your problem ;-) You have to "reverse charge" the VAT for those non-EU supplies and include them on your VAT return: https://www.gov.uk/vat-imports-acquisitions-and-purchases-from-abroad https://www.gov.uk/vat-imports-acquisitions-and-purchases-fr... Nearly all of my own purchases are subject to this and it's a bit of a pain in terms of admin overhead, but the good news is in many - but not all - cases the net financial position is the same as if you hadn't paid, since you can reclaim the reverse charged VAT.

belorn 12y ago

I thought patreon was a donation based service, as in "I give you money so you can continue to create" rather than "I give you money in exchange of services or goods". Is patreon one of them or both, and how do I know when looking at someones patreon page?

sp332 12y ago
They do both. On the left you can see "milestones", which are general project goals. But at the bottom, some of the pledge levels have specific rewards to the backer.
idea15webdesign 12y ago
Even their own tax page (linked to below) says that donations are considered earned income. HMRC does not care where it comes from or what it's called. It's income.
- unreal37 12y ago
  I agree it's income, but it's also a tip. Like if I sent $5 to your Paypal account directly. You need to declare that, but does Paypal care whether I owed you $5 or it's income? Good question actually. What's Paypal doing about VAT?
  - petercooper 12y ago
    Nothing. They're a payment processor, not a marketplace - it's up to the actual vendor to handle tax. Money I make via PayPal is not PayPal's revenue at any point, whereas I believe Patreon takes payment direct and then pays its members through commission. (HMRC answered the same question that way in an online chat - lost the link to the transcript, but it's out there.)
  - idea15webdesign 12y ago
    I can only answer for the UK, but we have to go back to last autumn, when everyone started finding out about VATMOSS at all. HMRC did not communicate anything about EUVAT to anyone but businesses above a certain size which were already VAT registered. Their estimate was that only 34k business would be affected. So part of the outcry was the fact that marketplaces, gateways, and payment processors were not advised or consulted. They found out the same time everyone else did, in the same way everyone else did. One of them was PayPal, who were expected by the EU to be compliant in time for 1/1/15. This was news to them. HMRC were forced to admit they had no idea that gateways like Paypal did not already capture the information required to create the place of supply burden of proof, nor that your average non-technically minded microbusiness knew how to handle the API and the information passing through it. http://www.clarejosa.com/articles/from-passion-to-purpose/updates-from-our-meeting-with-hmrc-hm-treasury-and-a-minster-on-4th-december-2014/ http://www.clarejosa.com/articles/from-passion-to-purpose/up... One would hope that by now that it's all been sorted.

thekevan 12y ago

Patreon is the U.S. and not subject to European laws. Patreon is also really just a distributor of money, they don't provide the person with a service. Why is a person with a web design business looking to use a site used to help artists who have trouble connecting art and normal business income? Finally she tweeted about how many people saw that blog post and said she should have included a tip jar. It really seems like she cares more about what she can get out of a situation than anything else.

idea15webdesign 12y ago
You have a great day too, thekevan!
malditojavi 12y ago
Not really, every business with European based customers needs to comply with EU vat https://quaderno.io/blog/is-your-business-ready-for-the-new-eu-2015-vat-rules/ https://quaderno.io/blog/is-your-business-ready-for-the-new-...
- petercooper 12y ago
  Well, so says the EU, but extraterritorial jurisdiction issues are very complicated and ultimately require cooperation between different countries to ever enforce.
unreal37 12y ago
"Patreon is the U.S. and not subject to European laws." What makes you think this is true? Why can't Americans play poker online? Why does Amazon have to collect state taxes for states they don't have a physical presence in? Google is forced to censor French and German search results. Facebook is forced to follow EU privacy laws. And on, and on. Having customers in a country means you're doing business in that country in this modern world. IANAL. But you may want to check with one.
- jccooper 12y ago
  "Why can't Americans play poker online?" American anti-gambling laws. "Why does Amazon have to collect state taxes for states they don't have a physical presence in?" Because those states count things like affiliate programs and subsidiary companies as a sales tax "nexus". Amazon tends to kill those programs to avoid being taxable. They only collect sales tax in 24 states. "Google is forced to censor French and German search results. Facebook is forced to follow EU privacy laws." Yeah, because they have operations in those countries, and can thus be sued there. Also, perhaps, because they might be blocked in the relevant countries, and would rather stay in those markets. The EU simply cannot make me collect VAT (or do any other crazy thing they think up), because I'm not in the EU. They can ban me or my services or products in their jurisdiction, or make life hard for my customers in their jurisdiction, which may be enough.

polimorfico 12y ago

If you're using Stripe or Paypal, you can use Quaderno (https://quaderno.io https://quaderno.io). We're #VATMOSS complaint and help you to calculate VAT rates and track all the customer location evidences. Let me know if you have any questions.

peterfa 12y ago
Do you plan more integrations (e.g. Paymill)?
- polimorfico 12y ago
  Yes! In fact, we're already working on it.
heidijavi 12y ago
What if I need to do some extra customization or if I want to disclose the final amount to my customers, do you offer something like that?
- polimorfico 12y ago
  Sure! Everything is customisable.

elvis635 12y ago

Do you think is practical to build an internal invoice system that takes care of the whole VATMESS? How long do you think it'd take a single developer to do it? I know that there are many different services like the ones in this thread, but as a single developer, on a bootstrapping project they'd still be out of budget

Esifer 12y ago

Japan is implementing similar law in Oct 2015