Italy declares its "web tax" applicable to any digital service worldwide
reuters.com
reuters.com
Why is the title changed so much? I know we're supposed to assume good faith, but in some cases it is difficult.
…As I understand it, the intent of the law is to avoid that large companies book billions of revenues in the country, but then use price-transfer schemes to book the profits somewhere else, and not pay any taxes locally.
The net effect of the law on larger internet companies is probably marginal, but I am not sure the law was designed well enough, so as to avoid collateral damage on smaller internet companies
SO - what is the fuss over here? Is Italy doing anything more than say "if you sell digital widgets into Italy, then you gotta pay Italian sales tax on that revenue"?
This is already in effect for big corps like Google, but now it seems to be for everyone - therefore its presumed relevance to HN.
Because I'd never have guessed it from Reuters' crappy coverage.
The WTO agreements and institutions are due to collapse in the next 2-4 years (and nope, am not saying that, see Macron latest interview about cars).
https://www.icij.org/investigations/paradise-papers/top-eu-c...
As a European I want OUT of this hellhole.
In NL, bitcoin gains are taxable and there is a real estate tax.
Where in the developed world do you get untaxed gains on anything? Not even the USA has untaxed gains... Many loopholes if you are rich but you probably don't have access to those mechanisms.
Bright spots include AI research and some spots related to it, like Paris AI community, but the regulators can quickly kill that.
To just register a digital business and make one euro, an average American would cry out laughing.
At least in my country (France) it's not any harder than registering as an independent worker (you often use the exact same legal vehicle for both).
The real problem with European tech is that it's too easy for US company to land on the continent, and since they have a biggest market to begin with they always end up stronger than European companies when it comes to addressing the other European markets. The “single market” is a fantasy, every country has its own language, culture and business practices, things that EU's homogenization of regulations between country since the 80s have never overcome and never could have, and because of that it's not harder for an American company to do business in an EU country that it is for another European country.
Since forced homogenization isn't gonna do it, the correct approach would be to put barriers to foreign entry like Evey successful Asian country did in the second half of the 20th century with great success.
Advocating for free trade with a much more powerful country than your is as insane as it would be to advocate to remove the fences in a zoo…
A successful french startup means a loss of jobs and wealth to other countries. DACH customers will prefer working with DACH companies, French customers will prefer working with French startups.
If you dont work in english speaking environment (IT) moving countries within EU is practically impossible for people working normal jobs.
Not saying all regulations are bad, I like a lot of them, but if you have a company in the EU, especially one in the manufacturing industry then you know.
It also doesn't prevent international actors to arrive in the EU market, and from personal experience it's easier to do business in the EU when you are an American company than the opposite by a significant margin.
• About 15 minutes or so on the website of the Irish tax authorities.
Once we started selling, here's the ongoing burden:
• Collect VAT at the VAT rate of the country the customer is in.
• Early on in each quarter run a script that produces a report that shows our total sales for each EU country and how much VAT we collected for that country.
• Upload that report to the Irish tax authorities and give them the total VAT we collected. The Irish tax authorities deal with reporting our sales to the other countries and distributing the collected VAT to them.
• Keep our VAT rate table up to date. Unlike sales tax in the US VAT rates rarely change. Looking at our database of VAT rates I see an average of 1.7 rate changes per year over the last several years. That's 1.7 changes per year for the whole EU, not per country.
When VAT changes it almost always changes on a quarter boundary (I think I've only seen one or two times when it changed during a quarter).
Since the rates are per country there aren't many of them. It would not be too much hassle to simply download the rates from some EU government site and manually update our rate DB.
What we actually do is use an API from apilayer.com. Their free tier allows 1000 requests per year which is way more than are needed to keep up with VAT changes since it is one API call to get the rates for all of the EU.
We used Ireland because English is one of their official languages. We could have picked any other EU country to deal with instead of Ireland, although the registering and reporting details would differ so registering and reporting might not be as easy.
Compare to what an American company that wants to sell to multiple American states has to do to deal with sales tax. The tax depends on the exact address of the buyer, not just the state, and you have to register and file with each state. Generally dealing with that means you have to use a paid service which will charge a percentage of your sales.
If you only need to collect tax in the states that have joined the Streamlines Sales Tax group you can get a sort of EU like experience. To that you have to agree to collect tax for all of the SST states even if you only are actually legally required to collect for some of them, and then you can use a paid tax service from their list and the SST states will pay the cost of that.
If you need to collect tax for any of the approximately half the states not part of SST then you'll have to deal with those states separately.
Edit:
> "Portuguese, Indians, Brazilians are on my no-hire list. They have corruption and cronyism embedded in their DNA."
Ah, just noticed you were the user who posted this stupidity some weeks ago, thought the name was familiar because this comment really showed some true colours. Please, pack your shit and get moving to Russia to stay away from the hellhole :)
France and Germany are in much deeper shit compared to Slovakia, look at property tax, tax on land, income tax, Slovakia is almost a tax heaven in comparison
You're not wrong, though. Slovakia is at or near the bottom of EU average wages iirc.
I understand your point but personally I simply cannot accept such xenophobic stupidity, if someone spouts that in public they need to be publicly shamed for it. Unfortunately there are many safe places for this kind of abhorrent behaviour on the internet, I believe this forum shouldn't be one of them.
However, we have to endeavor to exercise good faith. Sometimes it's enough to simply let another's words speak for themselves, and by quoting alone, you have done the community a boon. The site isn't for public shaming, it's for thoughtful discussion. I would rather show respect for others by my response and hope to have a real human interaction that can show someone my true colors rather than tell someone else who or what they are or aren't.
I guess I care about people, even if I don't like their behavior or speech, because I want to understand them and their experiences. People make sweeping statements or unfair generalizations, and that's an opportunity to ask people how they came to believe or say such things. Sometimes, people don't even have specific things they can point to, and they may be more amenable to reason than you realize. It just takes willingness to meet people where they are, not where we'd rather they be.
"Darkness cannot drive out darkness, only light can do that. Hate cannot drive out hate, only love can do that." Strength to Love, 1963.
"If we are to have peace on earth, our loyalties must become ecumenical rather than sectional. Our loyalties must transcend our race, our tribe, our class, and our nation; and this means we must develop a world perspective." Christmas sermon, Atlanta, Georgia, 1967.
That comment is truly bizarre.
I wonder why algolia didn't turn it up? I can only assume it doesn't index flagged and/or dead comments?
Businesses can directly deduct any VAT that they pay from the VAT that they owe. If they pay more VAT than they owe, they can get it back.
This means that Google, Meta, etc., who make almost all of their revenue from B2B transactions, effectively pay no VAT.
The "digital services" tax changes that, by introducing a tax on those revenues.
Worth noting is that generally means the company has higher costs than revenues (not something you want).
That's not quite correct. At each transaction you pay VAT on the margin, that's why it's called Value Added Tax. So if company B buys from company A and sells to company C then company B pays VAT on the difference between what it charges company C and what it paid company A.
The reality is , recent politicians have been wasting money excessively, 50-60-70% of the tax revenue ends up being lost to corruption, inefficiencies, etc.
One can continue promoting taxing more and more, it’ll just end up killing the golden goose.
The problem is more with the oligarchic style of engagement between big corps and gov, its stifling innovation, making medicines 10000x more expensive than it needs to be, with extremely insane patents stifling competition and small startups defeating old barrons, a overly litigious society which is rampant in most western countries.
We keep losing our free market, and thus losing prosperity of the middle class, and we keep blaming it on not taxing enough…
Speaking of restructuring, how about we restructure the way multinationals pay taxes in Europe?
"Amazon pays no corporation tax in Europe despite €44bn sales" https://www.irishtimes.com/business/economy/amazon-pays-no-c...
"Facebook UK pays £29m corporation tax despite record £3.3bn sales" https://www.theguardian.com/technology/2022/oct/06/facebook-...
"Microsoft’s Irish subsidiary posted £220bn profit in single year [..] An Irish subsidiary of Microsoft recorded a profit of $315bn (£222bn) last year [..] The profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland’s gross domestic product – even though the company has no employees." https://www.theguardian.com/world/2021/jun/03/microsoft-iris...
Meantime dividend tax for an individual in Ireland is a brutal 51%. America is such a greedy leech on Europe's body.
The mindset is way different. I remember people in Irish tech slack bemused at the idea of saving for something that wasn’t retirement.
I wonder how they are going to game revenue based taxes?
You get that european companies selling in the US doesnt pay american corporate taxes right?
From that perspective, the U.S. operations of a European firm look to the U.S. taxman very similar to the U.S. operations of a U.S. firm, and vice-versa.
The revenues of such operations are usually easy to work out, but the cost-side can be pretty difficult if it's globally distributed and double-taxation treaties are also pretty difficult. This is where transfer pricing and flag of convenience shenanigans come in, allowing these megacorporations to evade the taxman.
It's not like the political will to fix this stuff is not there, but it requires coordinated action from nation-state players, which is not that easy to accomplish.
So, instead, you get these populist governments pandering to their base by going certain things alone in a way that almost certainly backfires economically.
But then they realised they had to raise taxes _somewhere_ to afford everything else they wanted to do… So instead of doing a mea culpa they instead put forth this stupid law.
Unlike raising taxes on your own citizenry, it has none of the usual downsides.