2015 EU VAT rules ("MOSS")

[Angus_FX]

Hi all,

More of a business question than a development one. Just wanted to conduct a straw poll amongst commercial and shareware devs, and also any musicians who sell direct (e.g. using PayPal and supplying mp3 or flac links - not just using third party shopfronts (iTunes) or streaming services (Spotify)), to see how many people know about the coming changes.

You may or may not know that the rules on VAT tax (TVA in France, MwST in Germany etc.) are changing substantially on January 1st 2015, and developers will need to update their web sites or be in breach of the law.

Basically, VAT accounting is about to get a whole lot more complicated, even if your business is below the VAT threshold. Google "EU VAT 2015 MOSS" for more info, I'm not going to try and explain the rules themselves here. They even want and expect non-EU vendors to comply with the new rules,though I'm not sure how that'll be enforced.

There's been very little talk about it in the UK (apart from a few newspaper articles about iTunes / Amazon music downloads becoming 20% more expensive, due to those companies' tax-avoiding methods being blocked), wanted to find out if devs in other countries are more aware of what's about to happen.

(If you only sell your music or software on the iTunes store or similar, you won't notice any difference - though your customers' prices will go up).

Cheers,
Angus.

[Zaphod (giancarlo)]

arg.

[Zaphod (giancarlo)]

complicated... you need to know very well each vat for each country... a lot of work apparently, damn.
It is a good news for italian companies, though, since our vats are now 22% I suppose our products will be cheaper at least in eu

[masterhiggins]

They even want and expect non-EU vendors to comply with the new rules, I'm inclined to think "good luck with enforcing that".

Yeah. F**k them.

[Zaphod (giancarlo)]

ok I see there is this moss system. I'll hope it will be transparent using paypal services

[sonigen]

I was under the impression that if you went over the VAT threshold in your home country (in total sales) you then had to pay VAT in each country you sell too, and that if that's the case you have to register for and pay VAT in each country individually.

I also though that people selling into the EU from outside were suposed to do collect VAT already, just its not easy for the EU to enforce unless you have some presence in the EU. Dont expect it'll be long before the US does the same.

So on the one hand it makes life harder cause smaller operations now have to keep more records, but if you need to pay VAT then it's easier cause you can just pay all in your home country?

I'm not sure whether the VAT exempt fresholds still apply? That's really crappy if they dont.

[Angus_FX]

According to the advice I've been given, the exemption thresholds no longer exist for anything (music, movies, software) sold as a download. Well, they may exist for sales within your own country, but not to other EU countries. Whether the tax authorities in any given country will actively pursue a foreign debt of any given size is very unclear - as is how they even know a transaction has taken place, if the company doesn't bother to register (perhaps due to being under the national threshold & not knowing the new rules exist, or due to being outside the EU).

The situation in the US is saner in one important way: US advertised prices are usually exclusive of sales tax, which varies from state to state. So it's added on afterwards, and the customer expects it. EU advertised prices are almost always inclusive of tax. But now it will be almost impossible to give customers what they want, which is the same tax-inclusive price across the whole EU, because the tax rates vary from 5%-27%.

[Compyfox]

Well funk, make it more difficult than it already is. Especially for freelancers that work off of the international market.


If I understood it right, you have to "register" your company in every EU state you offer your service to. It's... only like 28. So small business owners (Freelancers would count to that) have to bleed for yet another crazy EU idea - to make things "more fair". Right...


So I also have to get in touch with the finance bureaus here in my town, ask how it will be handled for small businesses and micro-businesses, and from now on write on every darn receipt "VAT of the corresponding country applies" and think with like 30% VAT right from the start, or each country has different prices in the end (as can be seen with several webstores all over the world).

And of course, the US and Australia is an own world in itself in terms of VAT.



Thanks for the info, Angus_FX.
But it's yet another thing that (small) companies don't really need.

[Angus_FX]

Compyfox, that depends - if you're a freelancer that works business-to-business, you're probably unaffected.

Those affected can register just in their home country, but you still have to collect and account for VAT separately for the 28 different countries at 28 different rates, file a quarterly report with (at least) 3 boxes for each territory, and keep the records for 10 years.

[Compyfox]

Unfortunately, I work both ways: Business-to-business (as AE for a producer for example) and Business-to-Customer (as AE for a private person).

Ultimately, it's more paper work, it's different pricing and you have to keep track of every single thing, which can blow up in your face if you're doing it wrong.


Due to this, I expect a price raise of a lot(!) of tools in the near future to compensate the different VAT rates. So the only people that can cope with this, are the big companies that already ask for your kidney or firstborn. Freelancers and small scale businesses will bleed for these people.


So thanks again to the European Union and their excellent ideas. I think they should dig out their old projects again, to force hens to lay square eggs and not oval ones.

[Angus_FX]

If by AE you mean audio engineer, I don't think you'll be affected - from the point of view of the kind of things KvR people are involved in, it's sales of music downloads and software downloads that are mostly affected.

What's kind of sad is, a move aimed at limiting the power of the mega-portals like iTunes & Amazon, by preventing their tax-avoidance and making a fairer playing field for brick-and-mortar retail, in fact ends up doing the opposite: brick-and-mortar retail of music and apps is mostly dead anyway (outside of a few specialists); the smallest music and software vendors may well end up selling via one of the giants instead of going direct to the customer, because staying on the right side of the rules is beyond their capability.

The kind of businesses that previously had to be VAT registered can probably afford to implement and comply with the new rules, but the new system seems to 1) essentially remove the minimum threshold for registration, and 2) if you don't register with MOSS, creates tax liabilities not just to your own government (something any business should be expected to cope with) but 27 others as well.

Will keep you updated if/when I hear more on this.

[Compyfox]

Since I am offering services, and file transfer is involved in that case, I think the shiny new MOSS rules apply to me just as well. Sadly...

[Robmobius]

Another reason to hate the EU.

[DavenH]

How do they plan to collect tax from offshore businesses I wonder? There will be millions of non-compliant cases. I daresay it won't be much of a risk to ignore the whole thing moreover dumb moves like this get repealed sooner or later.

[Numanoid]

Nice name: Mini One Stop Shop (MOSS)

"The MOSS will allow business to submit returns and pay the relevant VAT due to Member States through the web portal of one Member State. Otherwise the business would be required to register and submit returns in several Member States."