2015 EU VAT rules ("MOSS")

[coincidental]

I do not understand the panic. It took me 40 min to extend our old scripts, maybe a dozen lines of PHP and minimal extension of the database. Our tax consultant is super relaxed.

IMHO, these new rules are fair and will finally break with all those megacorps not paying any form of real taxes in any real countries. The previous system was illogical imho, the new one is a reasonable correction against tax trickery.

That's good news, and interesting too - because if you've come up with a straightforward way of reliably sniffing location, reconciling pieces of evidence etc and charging the correct VAT-inclusive price without making the buyer create an account or jump through lots of hoops, then I think a lot of people would like to know exactly how you're going about it! Could you blog about it? Is it live on the site yet, or are you waiting till 1 Jan?

Having said that, a lot of the people affected don't know any PHP, though they might be world experts in their own field. I agree that the current system was being abused, but the replacement runs the risk of driving small/sole traders into the arms of the megacorps, and I suspect they may well turn out to be just as adroit at tax avoidance as they were before. I'm still hopeful that some mitigation for the smallest businesses can be arranged, though, so we'll see...

[FabienTDR]

We only use Paypal and its IPN. We previously had to track customer locations anyway. IP tracking is (although not really legal) a piece of cake. Presentation wise, we simply include the potential tax into the price ("includes taxes where applicable").

Sure, it's easy to make it much more complicated with further payment gateways and complicated price structures, but that's a business decision. Same with the fact that we generally do not work with re-sellers.

I'm automatically generating a monthly excel for the consultant. For everything else, time will show. There's no question that certain interpretations of the new regulations aren't realistic, but these will correct itself.

[audiothing]

Fabien, are you showing a VAT inclusive price? I don't see any VAT or additional tax notice, and I don't see where I should put my VAT number if I want to discount VAT.

The main problem for me would be showing the correct price VAT inclusive as I'm pretty sure there are EU countries where you can't show the "price + vat".

As I understand you have to track the customer ip (easy with GeoIP), apply the correct VAT to the price, and perhaps make a script to check the VAT numbers for B2B transactions. Not easy if you are using multiple payment processors.

IMHO these new rules are wrong and poorly written. I am happy to see big corporations being forced to pay real taxes in real countries, but it's pointless for small business that don't even exceed the VAT threshold in their own country. And the stupid workaround that they gave (manually attaching files to avoid the MOSS) is a clear example of why this new rules are a mess.

[do_androids_dream]

Been doing a lot more reading today. Came across this article here:

http://www.digitalartsonline.co.uk/news ... essionals/

Although it's not anything 'official' I'm inclined to think that someone like myself (freelance mixing/mastering engineer) is NOT affected by any of this. I'm pretty sure I'm not classed as 'providing a digital product to a consumer'. Seeing as nothing I do is automated and the fact that I'm providing a one-off exclusive creative service to a single client (rather than an automated download of any sort) I'm hopeful that I have this right.

I would love to hear any input by anyone here who provides a similar service. What do you think?

Cheers

[masterhiggins]

Yes, it's true, but there are already several US based companies charging VAT in their bills, which is something I find very strange, since I seriously doubt they will deliver it to anyone. I suspect they simply take the chance to charge more and fill their pockets. Yet, when asked, they show me the EU determination, as if that would enforce them in any way.

When I purchased from Waldorf, they charged me VAT. I asked them why I was being charged VAT when I didn't reside in the EU and they stated that they wanted the pricing to be more "fair." I was kind of considering the fact that we aren't provided services by the EU that it was "fair" enough, but whatever. Not that big of a deal, but just kind of a silly response.

-Sam

[SampleScience]

Judging by what I see on this page:

https://www.gov.uk/vat-registration-thresholds

I don't think small businesses are concerned by the new VAT/MOSS, since it's written:

The thresholds for registering for VAT or joining a VAT accounting scheme.

VAT registration More than £81,000
Registration for distance selling into the UK More than £70,000
Registration for bringing goods into the UK from the EU More than £81,000
Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less

From what I understand, if you make less than £81,000, don't bother. Maybe I'm wrong though, let me know if this is the case.

[coincidental]

I'm afraid you are wrong. Sorry!

The whole reason this has raised a stink - particularly in the UK - is that the threshold for these goods is £0. There are a couple of EU countries without VAT thresholds for business (and all the others are set at different figures) so the solution agreed was for there to be no threshold. So... any business in the UK selling a digital good into the EU has to charge VAT at the buyer's local rate and register for VAT in the UK to use the MOSS. The UK tax authorities have said that UK businesses under the threshold can keep their threshold for sales (and purchases) in the UK, which is some help, but they still need to be registered and, of course, they still need to be compliant with all the record-keeping requirements to know where their customer is. This means that many, many thousands of people with turnovers of a couple of hundred a year and sales to the EU of £4.50 (for instance) have to register and comply, and that's the root of all the anger. That, plus the fact that the regulations were framed by people who didn't know such small businesses existed and therefore didn't inform them about it for nearly 6 years.

And, of course, the regulations also (theoretically) apply to anyone, in any part of the world, who's selling to someone in the EU. With no turnover threshold. Non-EU sellers should register in an EU country (most likely Ireland or the UK) to use the MOSS to pay VAT. More info at http://www.vataction.org!

[do_androids_dream]

Compy, did you read the article I linked to? I know you make some of your income from mixing - what do you think of it? Having read plenty more about it now I'm inclined to think that this doesn't affect us.

[coincidental]

Yeah, my reading of the regs is that mixing shouldn't be covered: it's bespoke, it's not automated supply. However, the plan is to roll this system out to physical goods and, eventually, services, so what's decided now regarding digital goods will influence the framework for future legislation which will cover mixing and, indeed, pretty much everything traded cross-border. And there are OECD discussions regarding rolling this stuff out worldwide. Indeed, I read that Japan are proposing something similar to the EU digital goods rules for sales into Japan, starting during 2015.

A healthy threshold is the only practical solution for small businesses (and the official "small" in "SME" is turnover under $2m, so we're really talking "microbusinesses" here, or even "nanobusinesses"), so make your voice heard now!

[SampleScience]

It really sucks. I hope it will be modified by the time I put my small business website online (in two years). Otherwise, I'll have to take accountant's tuition! (and I'm not even joking)

[do_androids_dream]

Good info links:

http://euvataction.org/updates/

https://www.gov.uk/government/publicati ... -consumers

[SPC Plugins]

We only use Paypal and its IPN. We previously had to track customer locations anyway. IP tracking is (although not really legal) a piece of cake. Presentation wise, we simply include the potential tax into the price ("includes taxes where applicable").

Sure, it's easy to make it much more complicated with further payment gateways and complicated price structures, but that's a business decision. Same with the fact that we generally do not work with re-sellers.

I'm automatically generating a monthly excel for the consultant. For everything else, time will show. There's no question that certain interpretations of the new regulations aren't realistic, but these will correct itself.

AFAIK, you have to collect TWO pieces of 'non-conflicting' evidence of a customers' country of residence, i.e., not just their IP address.

[do_androids_dream]

We only use Paypal and its IPN. We previously had to track customer locations anyway. IP tracking is (although not really legal) a piece of cake. Presentation wise, we simply include the potential tax into the price ("includes taxes where applicable").

Sure, it's easy to make it much more complicated with further payment gateways and complicated price structures, but that's a business decision. Same with the fact that we generally do not work with re-sellers.

I'm automatically generating a monthly excel for the consultant. For everything else, time will show. There's no question that certain interpretations of the new regulations aren't realistic, but these will correct itself.

AFAIK, you have to collect TWO pieces of 'non-conflicting' evidence of a customers' country of residence, i.e., not just their IP address.

If you're a UK business you now need to collect only ONE piece of evidence until the 30th of June 2015. Read here:

http://euvataction.org/2014/12/29/hot-o ... p-trading/

[coincidental]

AFAIK, you have to collect TWO pieces of 'non-conflicting' evidence of a customers' country of residence, i.e., not just their IP address.

In the UK at any rate, this has just changed for the first 6 months of 2015. More here: http://euvataction.org/2014/12/29/hot-o ... p-trading/.
The fact that these changes in interpretation are being made two days before the regs come into effect makes it pretty clear that this hasn't been well thought through, so I would expect more changes. However, the change that will encounter the hardest resistance is a threshold...

[liquidsonics]

Since this 6 month grace period note plays heavily on payment processors already having the required two bits of information I could imagine them coming up with some amendment before that self-imposed deadline saying that certain processors may be exempt from the two evidence rule in certain situations. It does look like HMRC understands the problem and is actually trying to help. I look forward to seeing how that plays out.