It's one of the most ridiculous regulations there could be. As a small business founder you are not really in position to do the accounting for it properly and most accountants here have very little idea how to prepare all the documents either. You are required to keep 2 pieces of evidence of customer's location (IP, address etc.) which you often just don't have access to in the first place (if you payment gateway provider doesn't make this information available to you).
So not only you need to find someone who knows what to do (already very hard), pay them significantly more than you would for normal accounting (big burden for small business owners and especially people who start), keep accounting information you often don't have access to, then prepare this accounting information as well (which means you spend resources for writing the scripts yourself as most tools accountants use don't track needed info).
Additionally to all of this there is no more VAT free quota for people who just start (usually there is for business who don't qualify for VATMOSS, size of the quota depends on the country).
When I've learnt about it (I started my business in 2015, the regulations started to be law Jan 1th 2015) I was really depressed about the whole thing. I was spending my days reading some contrived law and various interpretations of it instead of doing the actual programming. Nobody had answers for me (I've got different opinions from 2 tax advisors, different one from our tax office and yet different one from national tax information line) and I was just close to giving up altogether (I didn't expect my project getting as much traffic as it did and I wasn't really in position to spend significant resources for accounting when I didn't even know I would make enough to cover it).
It's a hostile piece of regulation which very severely disincentivize you from starting a business or paying your taxes properly. It only shows how out of touch EU bureaucrats are. I guess they think typical business is like Google or Amazon or something.
>I guess they think typical business is like Google or Amazon or something.
I guess, that is all they want -- and it very likely could be, that this is all they will get, when they are not stopping this. The EU is about to kill inventions in the online business. With this kind of regulations, the EU will become a dessert with the Amazon's and Googles ruling over it.
But I think, many big systems tend to go in this direction: The dinosaur corporations are going to win, because after the day, they can change the rules to their favor and the small businesses are going downhill, because they are to small to be recognized -- but those are those that innovate. And remember: Google and Amazon once also started small, but those where the days, where the focus of the big players where mostly elsewhere.
Exactly. Many in the EU imagine that "business owner" is a synonym for "evil capitalist plutocrat." For them, if you are not someone's employee, you are by definition rich. Questions of scale are ignored.
I see that, because at least in Germany (where it is very chic in the political class to talk how to aid smaller businesses and startups ...!) the tax rules are in favor of the big corporations (they have been changed in the last decades, so the corporations got better and better conditions) ... but of course this relieves for the big ones must be compensated somehow -- so the smaller companies have to pay even more taxes.
The current VATMOSS legislation is also a good example: It was announced to be a means to counter the fact that bigger corporations like Amazon avoid VAT by having subsidiaries in Luxembourg. But the biggest problems with the new rulings have now the smaller companies, that never had the chance to open subsidiaries in Luxembourg. For Amazon it is a small drawback and they may have to raise some prices -- but the troubles of other companies are tremendous.
So: The politicians are talking much about smaller companies -- but are only thinking about the bigger ones. And in Germany, many laws are even written by people from the bigger corporations.
One tried to start some kind of innovative form of pharmacy (the details weren't clear to me), but found himself unable to join the pharmacy guild, and apparently it is illegal to start a business without joining the guild. The other tried to start a bed & breakfast business, but the 'breakfast' part was closed down indefinitely when the food safety inspection found he didn't have the right license for a Sandwichtoaster. Apparently there are different regulations for serving a hot breakfast.
I live in germany and I am willing to be independent in the mid-term (~ 2-4 years), but I have major doubts about doing it here...
Here a link from a German organization of self-employed people that informs about the current situation and what is planned (it is planned to worsen the situation): (sorry, only in German)
http://www.vgsd.de/kampagne-scheinselbststaendigkeit/
The big corporations, of course, which really use different models to betray the social system and their employed people, they have the lawyers and the tricks to come away with it. And again, they are the reason for this hunt ... because they are searching for ways to cut costs -- the state tries to close the holes that make such things possible -- but currently the only people they hurt, are those that are innocent, because the big corporations are always ahead of the game. And additionally I am not sure, if the politicians are really willing to hurt the real big players, because those have so much power -- so they merely show "actionism" and make laws that are ineffective or even hurt innocent people.
At the end (if by intention or just stupidity), they hurt the country ... but we Germans still vote for those people!
One fiscal year can be very short in the IT sector. In some cases, you need halve a year to get to know the complete topic.
According to the link I have given, at least in Germany the situation is now such, that even when you have more than one customer in a year, you can be accused to be "Scheinselbstaendig". The offices just search for evidence that you might be, but not for evidence that you are not. One such evidence for "Scheinselbstaendigkeit" can be for example small investment needs ... something you typically have in the IT sector as freelancer ...
It seems that the new law in preparation shall codify this practice.
But of course, when the situation is better e.g. in the Netherlands, it could be worthwhile to work there. But (since I already thought about that possibility) would it also be possible to do so without moving there and still earn the benefits?
Guilds used to rule all professions in the middle ages and a lot of the regulations are sadly derived from that. This means you can't do certain things without the proper certifications (e.g. if you're a licensed car mechanic or "KFZ-Mechatroniker" that doesn't mean you're also allowed to do paint jobs because for that you'd need to be a licensed "Lackierer").
Likewise, pharmacies and pharmaceuticals in general are heavily regulated, especially with regard to prescription drugs. I think online pharmacies only became legal quite recently (previously most of them operated out of other EU countries, effectively creating a grey market with all the problems that entails for the customers).
What killed your friend's B & B idea was likely the strict requirements for food safety. It's practically impossible to use private kitchens to produce commercial food products and commercial kitchens have to conform to various rules (plus the employees working in them have to obtain the necessary certificates). IMO this is a good thing, but it can of course make easy things (like serving a breakfast in a single bedroom B & B) very difficult.
The huge difference between the US and Germany is that in Germany suing for damages results in compensations that are a fraction of what you see in the US. But at the same time companies are more likely to run into trouble with the authorities before they can harm you and even if you end up with permanent injuries the public healthcare covers them in most cases -- i.e. you're less likely to be harmed and the economic damage of that harm is likely considerably smaller.
But as an employer I have to say some of the regulations, laws and restrictions can be incredibly tedious and annoying. Especially if you're running a very small business.
Yea. My impression is (too), that the regulations in Germany are much more harmful to smaller companies than to big corporations. As big corporation, you basically can do very, very much, without being penalized much. In Germany, you always can say, that health costs are covered by the public health insurance. So, it is common, that compensations are small fractures of that which is paid in the US or even no compensations are made.
My feeling is, that German judges are much more reluctant to rule against corporations, as long as their fault can not be proven 110% -- for common people on the other hand, 80% prove are enough most of the time (I remember, that not long ago a young girl was convicted for computer fraud, just because Siemens said, that the 4 digit PIN-system for EC cards was 100% secure -- something we soon later found out, was never true!).
Would this fall under regulatory capture? I'm not sure to what extent existing international businesses worked to get this established.
Regulatory capture is almost always given some reason behind it. As such when determining if something was regulatory capture, the stated reasoning behind it is ignored, which is why I was asking to what extent did multinational organizations influence this decision.
The dynamics are different in the decision making processes in the EU. None of the commissioners are elected, they don't have campaign funds to worry about, so there is no legal veneer for corporate 'lobbying' as you would call it. I can't tell you for sure that it doesn't happen, but it can't happen out in the open as it would be considered corruption, and illegal.
The problem instead is that the commissioners are put forward by the (elected) governments of member states, so there is always the danger of them either deliberately or unwittingly favoring their national interests, and it makes them potentially vulnerable to domestic political pressure.
It is just as difficult to see why the US population would support laws that favor massive companies at the cost of the general populace but they still do. Large companies have no nationality in the realm of politics.
(disclaimer, I am a happy FastSpring customer in the US, but have no other relationship with them)
I've had maybe one or two chargebacks that made it past their filter in the ~three years I've been with them, and I don't remember having to pay any extra fees for it.
It sounds like a part of OPs issue was not the "cost" so much as trying to do to much himself, which ended up being costly.
I love Fastspring but they're not the only game in town. I used to use Kagi, and Avangate & Cleverbridge are two other companies I've heard of. There's lots of them out there.
Yep, VOES was put in place in 2003 and that was a simplification, before that businesses were supposed to register themselves with each country's tax office and fill VAT everywhere. For non-EU businesses VATMOSS mostly updates the scheme: register yourself in any member state and use their MOSS portal as a non-EU business, the tax office is supposed to redistribute VAT based on your fillings.
The business also has the option to forego MOSS/VOES and register itself in each country of course.
That doesn't help you if you're in an EU country, of course.