EU VAT rules make EU startups uncompetitive in a global market
rachelandrew.co.uk
rachelandrew.co.uk
We're already VAT registered. We already do cross border sales and we have no clear guidance on how to implement this.
https://www.gov.uk/register-and-use-the-vat-mini-one-stop-sh...
[1] https://gdsdata.blog.gov.uk/vat-mini-one-stop-shop-service-a...
A good example would be a design agency who also wants to launch a product. Other than freelancers most small agencies are likely to be VAT registered, so they will need to use the MOSS and collect the required data.
And yes the VAT rules really do add alot of overheads on a business and bloat, which companies elsewhere are not subjected to.
I have raised this with Revenue in Ireland (pointing at competitors in US, China etc not held back by paperwork) they ignored it and clarified (I wanted it in writing, I recommend every business has a clarification in writing if they are not sure about the VAT position, to cover their asses) that YES we have to charge 23% VAT to ANYONE from EU29 countries, and 0% VAT for outside.
Tho' nothing was said about how this is to be measured, So I am keeping timestamps, ip addresses and billing addresses when accepting payment for our hosting products.
All in all its just a pain in the rear having to jump thru' this loops with no benefit to my company and plenty of downside :(
They "abuse" it from the point of view from the countries where they don't pay the VAT.... f.e. the UK would like Amazon to pay VAT in the UK, and not in Luxembourg. So this new law is meant to prevent that, but at the same time waltz over small companies.
They might like/want X but they will have to negotiate and endup with X-Y or nothing, since negotiating something as important as VAT while threatening to leave the club is politically counterproductive.
It's similar to the changes a few years ago to the channel islands that was used (and some say abused) by online CD and DVD stores, including some large high-street names.
Now, the way this has been implemented, and the speed at which a lot of small retailers will have to change their systems is unfortunate, and the EU have shot themselves in the foot there.
I have no idea how this will ever be enforced for anyone outside the EU.
https://support.google.com/cloudbilling/answer/6090602?hl=en
Tax across the EU is an important concern, given how large companies can position themselves to take full advantage of differences. People should be thinking about this. Unfortunately, the law is a rather blunt instrument and there's a valid argument that current changes hurt small companies disproportionately more.
I'll leave software engineers to say whether or not they've ever had a 'real' job.
I'm not even sure what argument you're trying to make as it simply comes across as a rant. Wealth creators should decide tax policy? Career politicians are career politicians? Do you actually know how such policies are put together and the processes/consultation they go through? I have no idea so I'm not going to form a strong opinion either way.
So indeed you should be surprised (and enraged) if you think they're not doing a good enough job.
The fact they're not experts has been factored in and provided for by the system.
However I understand that some feel that drawing attention to the processes and construction of the EU is irrelevant and is a rant - the latter retort being an effective conversation stopper.
Still, not many people will go out of their way to exploit this loophole.
VISA, Mastercard, Paypal and etc should have systems in order to donate it to the right country (they know the owner of the card). Don't have a solution yet for Bitcoin though...
We are also talking about shitload of fraud.
And that's kind of the point. If you buy from Amazon in the UK, the goods are already stored in a warehouse in the UK, the consumer is in the UK, the guys doing the deliveries will be UK citizens. It's a UK operation.
1. Countries like UK where the EU is constantly demonized in the tabloids (and hence in the mind of average person who reads this trash) would have their populations screaming murder, hell there already strong calls to leave the EU
2. Countries like Ireland have increased VAT to insane levels as a revenue raising measure to pay for huge deficits run up by banking fiascos and huge welfare/healthcare commitments
Anyways even the US has individual states setting their own sales taxes (or none) albeit at a quite lower average level than anywhere in EU
What is needed is clear exemption EU wide for online businesses selling service (And maybe even goods) for lets say 10 years, to encourage competition There is a reason the likes of Amazon, Ebay etc have appeared in the US first
UK needs EU, weither they like it or not.
So how do I, as a customer, go about buying something online while not at home? The 'unless' doesn't appear to unravel the mystery.
But other than that, there are other allowed bits of information to proof country of consumption, it's just going to be a pain to implement in your check-out process :-/
I intend to stop selling to (non-UK) EU countries in 2015, but I am worried about that decision as it may open me up to discrimination laws. If that's the case, I'll have to close my business entirely.
I live in the Czech Republic and here you can become so called "person identified for VAT" which (if I understand correctly - IANAL) enables you to use mini one stop shop for selling over the border while internally (selling inside the country) you remain in non-VAT regime.
Our law is based on the same EU directive as yours so I suggest you check whether your law also offers something like that.
It is still more complicated than it should be (I think the whole concept of VAT is bad) but I hope it is not as bad as registering in all EU countries.
I will also consider 3rd party services like http://www.taxamo.com - I am not related to them, I am just sharing that because you might find it useful.
Presumably the various payment solutions are going to adapt to this, simply because it costs a lot less to to implement whatever is necessary than to just give up the EU market.
We get people already complaining that we make them create an account to buy software - and we use the accounts for other things such as support and license management. How much more will people feel they are being asked for too much information if all they want to buy is an ebook?
That said, I'm really not sure that all this "two pieces of data must be collected" is as onerous as everybody is saying - the guidance seems much looser than that. For each transaction they want 2 consistent pieces of evidence of location, but the sources of said data are fairly broad & include ip address, some form of geolocation and the self reported location by the end-user, credit card location etc etc. Anything that the vendor believes to be reasonably reliable according to their data-model really. See guidance document here: http://ec.europa.eu/taxation_customs/resources/documents/tax... which amongst other things states that a country located account number (bank / credit card) combined with a customer self-reported country location is enough in many cases. (This is what Steam requests already btw.)
The problem for vendors is that the rules pushes liability onto them when they want certainty, plus the data storage requirements are fairly stringent (10 years!). The tax authorities are effectively saying: you can either collect enough information to be absolutely certain of the end-user location or collect less and carry the risk that an audit will result in big fines if we decide that you've been attempting to evade VAT by misrepresenting the location of your customers. This is of course no different from any other tax, but with a new system there's always some uncertainty to begin with until things settle down & no one likes uncertainty.
Just incorporate there.