Can't believe the lack of media of the new EU VAT changes starting 1/1/15

[markwebster]

I just wanted to wish everyone a merry Christmas and a happy new year to everyone on the forum.

I also wanted to engage in people's thoughts and opinions on how the new EU-imposed VAT rules will affect your businesses.

See: https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers
(From the UK's official Government website)


My gut instinct is that it will hinder many businesses and seeing as it is specific to those trading digital goods and services, I think it will be a massive retraction in digital development and competitiveness.

Many thanks for looking

[pawel7777]

I just wanted to wish everyone a merry Christmas and a happy new year to everyone on the forum.

I also wanted to engage in people's thoughts and opinions on how the new EU-imposed VAT rules will affect your businesses.

See: https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers
(From the UK's official Government website)


My gut instinct is that it will hinder many businesses and seeing as it is specific to those trading digital goods and services, I think it will be a massive retraction in digital development and competitiveness.

Many thanks for looking

Wow. That's pretty bad. I'm not sure do I understand this correctly (I hope not) but does that mean that if UK business sells few ebooks to other EU countries (say Spain, Germany, Lithuania), they would have to charge different VAT rate and deal separately with tax authorities of each country (which would require translators)?

Where digital services are supplied on a business to consumer basis, the supplier is responsible for accounting for VAT on the supply:
- to the tax authority
- at the VAT rate applicable

in the consumer’s EU member state.

The changes will create a level playing field for UK businesses by removing the current competitive advantage of EU member states with lower rates of VAT.

You need to identify the place where your consumer is based, has their permanent address, or usually resides. This will be the member state where VAT on the digital services supply is due. So if, for example, a UK citizen is an ‘expat’ who works or lives most of their time in Spain, then you, as the person supplying digital services to that consumer, should be charging Spanish VAT on those services and not UK VAT.

What if I'm unable to identify where customer is based? I cannot proceed with sale?

Also, US businesses are not exemption:

Businesses outside the EU (for example, the USA) that supply digital services to consumers in one or more EU member state are also affected by the changes.

The only good thing is you don't have to register for VAT if you're a small business (turnover less than £81,000) ,so these rules would be irrelevant.
https://www.gov.uk/vat-registration/when-to-register


Thanks for sharing. Marry Christmas.

[markwebster]

Many thanks for your interest.

The specific Government article states that if you turnover less that £81,000 then you can register for UK VAT MOSS which I believe, means that VAT would still be applicable upon a sale with relation to the buyer's location. (For digital goods)


"VAT accounting options for businesses supplying digital services to consumers

Apart from those businesses who sell digital services entirely through digital platforms or marketplaces who take on responsibility for accounting for the VAT due (see below) businesses must consider how they intend to account for the VAT on those supplies. Businesses will have to make one of the following choices and either register:

    to use the UK VAT Mini One Stop Shop (VAT MOSS).
    for VAT in every EU member state where you make digital supplies to consumers, and file returns and make payments to the tax authorities in each of those member states

HMRC strongly recommends that you register for and use UK VAT MOSS. It makes accounting for VAT due in all the EU member states much easier.

If you are below the UK VAT registration threshold (currently £81,000) you can register for UK VAT to use the UK VAT MOSS. You can charge and account for VAT in respect of your EU cross-border B2C supplies but won’t have to charge and account for VAT on your UK domestic supplies. In addition, you will also be able to reclaim any VAT charged on business expenses directly related to your cross-border digital service supplies."

[franky1]

VAT MOSS

Do you only sell your e-services through a third party platform or marketplace? (For example not through your own website?)

BIG loop hole..

get an agent/ third party to handle the payment

EG local bitcoins.com is not your business thus any FIAT handed to local bitcoins is third party marketplace.
EG bitpay is not your business
EG coin base is not your business.....

so i dont see much of an issue

[markwebster]

Is it therefore down to the third party that handles the payment to pay the VAT if sold to EU customer?

[markwebster]

In the new legislation, the word 'Bitcoin' or 'cryptocurrency' aren't even mentioned

[xDan]

Yup, this is fucking TERRIBLE. My first thought when I heard this was: bring on the cryptoanarchy...

You still have to deal with this if you are below the VAT threshold. So it basically means anyone selling online in small amounts now should in theory have to deal with VAT bullshit.

And worse still it benefits these awful "app store" type place and closed ecosystems. And hinders people trying to sell directly person to person. It encourages centralisation and choke points.

(OH! And to relate this more to Bitcoin: It means selling anonymously to a person without finding and gaining PROOF of their physical location, will technically be illegal. It goes completely against the bitcoin dream.)

And the UK gubment's response to some petition was completely obliviously retarded, basically sticking their fingers in their ears and saying they don't give a shit.

[markwebster]

That was my understanding of being below the threshold and still having to deal with it.

I still can't believe that it hasn't been broadcast - even on the BBC.
The UK Government made the really positive announcement about companies not having to pay VAT on Bitcoin and now this comes along and overrides it all. I find it incredible how everyone is just made to lay down and accept the raft of VAT changes in what is, an ever-expanding digital goods market.

I wonder about if the changes would alter the Cryptocurrency sales because it does not state currency whilst others class Bitcoin as a 'digital good' rather than 'digital currency'.

[xDan]

It's just ridiculous. Location based tax on a digital item? So stupid and regressive.

Maybe this topic should be renamed "Selling digital products anonymously now illegal in EU" to grab more people's attention...

(I already had to move away from a web hosting provider in Germany because they didn't want to deal with this. They decided to only accept customers with a VAT ID, which I don't have.)

[Lauda]

It's just ridiculous. Location based tax on a digital item? So stupid and regressive.

Maybe this topic should be renamed "Selling digital products anonymously now illegal in EU" to grab more people's attention...

(I already had to move away from a web hosting provider in Germany because they didn't want to deal with this. They decided to only accept customers with a VAT ID, which I don't have.)

Re-name the thread and contact a few sites to report about this.
This is horrible.
Looks like it is really the time to created an independent Bitcoin nation.

[pawel7777]

Many thanks for your interest.

The specific Government article states that if you turnover less that £81,000 then you can register for UK VAT MOSS which I believe, means that VAT would still be applicable upon a sale with relation to the buyer's location. (For digital goods)

OK. The wording on gov.uk can be pretty confusing. But just to summarise:

- You don't need to register for VAT (or VAT MOSS) if your turnover is less than £81,000, you can if you wish to.
- If you're VAT registered, you can register for VAT MOSS (your turnover can be higher than £81,000).

So it's not all that bad. VAT MOSS makes it easy to apply the new regulations. You only submit VAT return to HMRC and they deal with the foreign tax offices on your behalf. You probably still need to keep the records of destination of sales (that's the annoying part).

Once you have registered for a UK VAT MOSS scheme, you submit, each calendar quarter, a single MOSS VAT Return and single VAT payment to HMRC. HMRC will then forward the relevant parts of your return and payment to the tax authorities in the member state(s) where your consumers are located. This fulfils your VAT obligations. By using the VAT MOSS scheme, you won’t have to register for VAT in every EU member state where you make digital service supplies to consumers.

https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop

[elephantas1]

after all these posts i understood that only sellers will have problems am i right?

[pawel7777]

after all these posts i understood that only sellers will have problems am i right?

Yes and no. All of the issues relate directly to some of the sellers (not all of them), but as a buyer you may be expected to disclose some info that usually is not required, such as your country of residence. That's just my guess, I'm clueless how it's suppose to work in practice.

And theoretically, as a buyer you may no longer be able to purchase some of the digital goods (if seller decides to withdraw from your country for the convenience of VAT accounting etc). But honestly, I don't think the buyers will see any significant changes.

[xDan]

- You don't need to register for VAT (or VAT MOSS) if your turnover is less than £81,000, you can if you wish to.

To quote the Guardian because I cannot be bothered to read the actual legislation:

UK businesses are currently exempt from paying VAT if they sell under £81,000 worth of products a year. However this threshold will be removed for those exporting digital products and services to Europe, from New Year’s Day.

From January, if a UK business makes a sale in another EU member state they will have to pay VAT there. The only way to comply is to register for VAT with that country or register for HMRC’s Mini One Stop Shop scheme (VAT MOSS). According to the HMRC website, the VAT MOSS scheme requires businesses to submit a ‘single calendar quarterly return’ and VAT payment to HMRC, which then sends the ‘appropriate information and payment to each relevant member state’s tax authority.’

Amanda Tickel, tax partner at KPMG UK, says: “It’s important to understand that the UK threshold of £81,000 is not being removed and micro-businesses selling digital services to customers in the UK can still trade VAT free as long as they are below that threshold.

“What is changing is that all sales of relevant digital services to EU customers outside the UK will be subject to the local VAT regardless of the value of the sales as there is no minimum threshold.”

http://www.theguardian.com/small-business-network/2014/nov/25/new-eu-vat-regulations-threaten-micro-businesses

[countryfree]

I'm dealing with that kind of issue everyday.

You've got to understand that this is more paper work (virtual, actually) for businesses but there's hardly any change for consumers. VAT is 20% in the UK, 19% in Germany and 21% in Spain. If a German buys some digital good from a British company, next year he will have to pay 19% tax, instead of the 20% he pays this year, so that's better. If he's a Spaniard, tax will move up from 20% to 21%, but it's only a 1% difference, so that's small beer.

The real problem is for business owners who will have to upgrade their software to add the relevant VAT rate for each European country. It sounds like a pain, but with the accounting software we have today, solutions will be easy.

[pawel7777]

- You don't need to register for VAT (or VAT MOSS) if your turnover is less than £81,000, you can if you wish to.

To quote the Guardian because I cannot be bothered to read the actual legislation:

UK businesses are currently exempt from paying VAT if they sell under £81,000 worth of products a year. However this threshold will be removed for those exporting digital products and services to Europe, from New Year’s Day.

From January, if a UK business makes a sale in another EU member state they will have to pay VAT there. The only way to comply is to register for VAT with that country or register for HMRC’s Mini One Stop Shop scheme (VAT MOSS). According to the HMRC website, the VAT MOSS scheme requires businesses to submit a ‘single calendar quarterly return’ and VAT payment to HMRC, which then sends the ‘appropriate information and payment to each relevant member state’s tax authority.’

Amanda Tickel, tax partner at KPMG UK, says: “It’s important to understand that the UK threshold of £81,000 is not being removed and micro-businesses selling digital services to customers in the UK can still trade VAT free as long as they are below that threshold.

“What is changing is that all sales of relevant digital services to EU customers outside the UK will be subject to the local VAT regardless of the value of the sales as there is no minimum threshold.”

http://www.theguardian.com/small-business-network/2014/nov/25/new-eu-vat-regulations-threaten-micro-businesses

Thanks for that. The official website didn't make it clear at all (or maybe I missed something).

So that's pretty bad news for all the small, currently non-VAT (often one-man-band) companies. They'll be forced to register for VAT (in order to register for VAT MOSS) or just limit their sales to UK only.

Anyone knows why are they enforcing those changes on digital services only?