2015 EU VAT rules ("MOSS")

DSP, Plug-in and Host development discussion.

Do you know about the new VAT rules for 2015?

I live in the EU and know about the new VAT rules (MOSS)
30
15%
I live in the EU and don't know about the new VAT rules (MOSS)
120
60%
I live outside the EU and know about the new VAT rules (MOSS)
6
3%
I live outside the EU and don't know about the new VAT rules (MOSS)
44
22%
 
Total votes: 200

User avatar
KVRAF
25857 posts since 20 Jan, 2008 from a star near where you are

Post Fri Apr 04, 2014 11:04 am

Angus_FX wrote: iTunes / Amazon music downloads becoming 20% more expensive, due to those companies' tax-avoiding methods being blocked)
About time that loophole got plugged. Good news for businesses within the EU that already are paying that tax.

KVRian
505 posts since 30 Jan, 2009 from UK

Post Fri Apr 04, 2014 11:18 am

Thanks for the heads-up. At least we can deal with just one entity rather than registering in all countries. I suspect a lot of vendors are going to just hike the price by some average based on past sales country data.

KVRAF
14485 posts since 19 Oct, 2003 from Berlin, Germany

Post Fri Apr 04, 2014 11:39 am

Well cool, then a 1,30EUR individual song will now cost 1,60EUR. With barely any revenue for the musician. The only one that is winning, is the big music company.

Weren't we at this place before with regular CDs? I thought "DLC" is the future, to save on fees (production, pressed CD, booklet, store shares, GEMA). Now the fees will simply be added on top of it. Then again, the taxed didn't change. How is it "more worth" if you only have a download instead of a physical copy?!

So a 15EUR CD download will now cost 18EUR (3EUR more expensive!), and I already stated the new prices of individual songs. Might as well go for the physical medium, which is only 2-3bucks more expensive. Unless I have to go through channels like Amazon or CDbaby, to get an import.



But wait... this doesn't end there...

Let's take a 25EUR expensive MIDI pack by Toontrack's EZ Keys and add the additional 20-30%. For simplicity's sake, let's add 30%:
Then we do not pay 25EUR, we now pay 32,50EUR. If the VAT wouldn't already apply in this case. (at least for me in Germany)

So let's do the "reverted" math:
Let's say the 25EUR includes a for Germany typical 19% VAT, then the sale price sans taxes would be 20,25 EUR. Would the VAT now be 30% to cover every EU country, then the sale price sans VAT is actually 17,50EUR. A difference of 2,75EUR (a loss!), if the price post VAT should stay the same. Which the users expect!



Then there is of course the scenario with companies like IK Multimedia and Sonnox, who say "VAT does apply on top of the sale price".

A typical plugin at IKM costs about 70EUR - since they are in a country where 22% or even 23% will be added on top of the sale price, we actually pay 86,10EUR. Low let's go up to the EU "unified" 30%, and we're already at 91EUR. We pay 21 EUR VAT just for buying a piece of software with 5MB!

Let's take a look at Sonnox: Fraunhofer ProCodec ships for about 360EUR sans VAT. That company is in the UK and has a VAT of 20% - so add that on top of it: 432EUR (72EUR VAT). Now be unfortunate and live in the country where you have to pay (again, fictional) 30% - and you suddenly spend 468EUR. That's 108EUR tax! For something that is presented in digital form, that you have to archive yourself, download yourself, etc.



Granted, this particular example is actually better for companies, since they only need to care about their actual sale price. The VAT that they get on top of it, is what they need to keep and then forward to the appropriate finance departments. They can not work with that money.

The other way, where VAT is included (and that is a rule in Germany!), is a more risky calculation.
Example: If the price would remain the same at about (say) fictional 400EUR, and then only change the VAT according to the country where it's bought. Sonnox would then have an income of 280EUR (30% VAT) to 372EUR (7% VAT). With the majority of the buyers in countries with around 20-23% VAT.


This is especially risky for small companies. You can't simply raise prices and then expect users to say "it's the new EU VAT rule... pft, I want to get it anyway". It doesn't work like that.

Somebody is offering it cheaper, and you're out of the game.



As usual... the EU thinks that it does us some "good", but funks up on all ends.

And don't let me get started on that "energy saving light bulbs" BS (and after 5 years, there are still no affordable, non-health changing systems with suitable light strength! not to mention that the power companies raised prices to "compensate"), the "heat saving" renovation regulations (which the tennant has to pay most of the time, and also changes the size of the estate, and therefore the service charges since the house is "bigger"), and their newest coup... "saving water" with built-in non-changeable stream resistors in toilets, faucets and shower heads.

It is all about f*cking money! And this will yet again extend the gap between the small man, and the large companies. Don't have the funds or a larger company to back that up - you're sh*t out of luck.

And I do have my severe issues with that.



But can we change it? Unfortunately not.
Yes, the "black sheeps" are being punished, but unfortunately also the small people that just barely make it until the end of the month.



Unless... I understood the whole concept of VAT wrong.
Then I'm sorry for the rant.
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Banned
12897 posts since 5 Jun, 2012

Post Fri Apr 04, 2014 11:41 am

Gee, the EU sucks. On the one hand they are trying to force the same crap on everyone in the EU, but they don't go far enough to simply have one and the same VAT rate within the EU.
I hope I will get out of this union of stupidity really soon...

User avatar
Banned
10240 posts since 12 Mar, 2012 from the Bavarian Alps to my feet and the globe around my head

Post Fri Apr 04, 2014 11:53 am

fluffy_little_something wrote:Gee, the EU sucks. On the one hand they are trying to force the same crap on everyone in the EU, but they don't go far enough to simply have one and the same VAT rate within the EU.
I hope I will get out of this union of stupidity really soon...
Well, the EU simplifies things to make our life more complicated! :P

KVRAF
14485 posts since 19 Oct, 2003 from Berlin, Germany

Post Fri Apr 04, 2014 12:35 pm

fluffy_little_something wrote:...but they don't go far enough to simply have one and the same VAT rate within the EU.
If it goes by the EU, EVERY EU country member should have gone to 23% by now.

Yet you don't have more money in your pocket to cover that.
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Banned
12897 posts since 5 Jun, 2012

Post Fri Apr 04, 2014 12:38 pm

I don't like the whole concept of VAT.

KVRAF
3607 posts since 10 Sep, 2010 from A shit hole (Ireland).

Post Fri Apr 04, 2014 1:41 pm

fluffy_little_something wrote:I don't like the whole concept of VAT.
Yeah, I'm with you there... Especially here in Ireland where we've always paid more.

It's not as if they (the EU) didn't get enough money out of us for that whole bogus bailout crap.
“Human decency is not derived from religion. It precedes it.”
― Christopher Hitchens

User avatar
KVRAF
4695 posts since 8 Sep, 2004 from Paris (France)

Post Sat Apr 05, 2014 5:44 am

While it will indeed require a few changes in the way VAT is computed for each customer, it sounds more fair and logical than the current system that makes a difference between physical and non physical goods (and will actually make things easier for companies that sell both).

As long as all tax rates are easy to find and not updated every day (that's a bit of a challenge...), it should not have a huge impact on our own systems. And I guess (hope?) there will be a way to pay VAT just once.

KVRAF
14485 posts since 19 Oct, 2003 from Berlin, Germany

Post Sat Apr 05, 2014 5:48 am

The question is... what "will be" declared as physical and non physical goods?

Is a software DLC "physical"? IMO, it is not (since I don't hold a "physical copy" in my hands, read: a CD and printed manual)

A service (like a mix job) is definitel "non physical" by certain definition.


This is something that is bugging me since I was in school...
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User avatar
KVRAF
4695 posts since 8 Sep, 2004 from Paris (France)

Post Sat Apr 05, 2014 6:00 am

The good news is that you won't care anymore.

Today, it is pretty simple for VAT: software as a download is a digital good, whereas software on a CD is a physical good.

KVRAF
14485 posts since 19 Oct, 2003 from Berlin, Germany

Post Sat Apr 05, 2014 6:03 am

If it's digital, then it's non physical. Therefore the VAT percentage should change. At least this is what I learned in school.


Of course, I could be way wrong on this. Economics were never my strongest point.
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User avatar
KVRAF
4695 posts since 8 Sep, 2004 from Paris (France)

Post Sat Apr 05, 2014 6:06 am

Compyfox wrote:If it's digital, then it's non physical. Therefore the VAT percentage should change. At least this is what I learned in school.
Yes, that's the way it works.

KVRAF
14485 posts since 19 Oct, 2003 from Berlin, Germany

Post Sat Apr 05, 2014 6:31 am

Then why is it still 19% in Germany for "non physical"? And also 19% for "physical" (media) here in Germany?

This doesn't make sense.
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KVRAF

Topic Starter

4731 posts since 18 Jul, 2002 from London, UK

Post Sun Apr 06, 2014 4:56 am

About time that loophole got plugged. Good news for businesses within the EU that already are paying that tax.
Not really. We (well, actually our customers) already pay the 20% UK tax, this will just make paying roughly the same amount of tax a bunch more complicated, create liabilities to foreign governments that never previously existed, and make it more difficult to offer the flat EU-wide, tax-inclusive price which our customers want.

Well, it's good that they're cracking down a bit on the giants who were blatantly abusing the system, but the lack of any minimum thresholds means all sorts of tiny hobby businesses will get caught in a VAT trap.
While it will indeed require a few changes in the way VAT is computed for each customer, it sounds more fair and logical than the current system that makes a difference between physical and non physical goods (and will actually make things easier for companies that sell both).
Except it won't. If you sell physical and digital goods internationally, and are below the distance selling registration threshold per territory (about EUR 100,000 in each of the big territories), it gets more complicated. Because in that situation, physical goods remain taxed at the vendor's rate & digital becomes taxed at the customer's rate.

@ Blue Cat there will be a way to pay VAT just once, but you have to report and account individually per territory. There's a quarterly return you have to do with around 3-5 boxes per territory x 28 territories. It's not really clear whether it's the local tax office or the foreign one which will penalize you if you make a mistake...
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