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

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

Post Sun Apr 06, 2014 11:05 am

Well, it's definitely not ideal but could have been much worse... Let's see how it goes when this is put in place...

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KVRian
1030 posts since 15 Nov, 2005 from Italy

Post Tue May 06, 2014 11:45 am

I'm reading the Guide and looks like this would be impratical (and suicidal) for sole traders and small companies. We'd know and follow invoicing rules for all the 28 countries: wording, currency, rates. I don't know yet if we'd invoice in the consumer language or english would be enough. I guess for Italian business would be even worse, since here (in Italy) we have to follow very complex and intricate rules for invoicing, accounting and such. Sometimes I spend more time on invoicing/accounting than on making sounds. I'm thinking to stop selling to EU customers.

My 2 cents,
Luca

User avatar
KVRAF
13014 posts since 15 Mar, 2008 from Czech republic

Post Wed May 07, 2014 7:28 am

The whole EU is just full of this crap. The whole accounting is a nightmare here, changing all the time... I'm personally thinking about starting a dedicated company outside of EU. I can survive the 20% VAT, which basically means 20% less income and that's a hell of a lot. But all the problems and risks, I think it's not worth it anymore...

I don't know much about it, but as far as I remember, if you start a company in Hong Kong for instance, you get 15% taxes of everything and that's all. It's probably more complex than that, but there are companies, who will do all the "accounting work" for you. Obvious response to the f*** up system in EU.
Vojtech
MeldaProduction MSoundFactory MDrummer MCompleteBundle The best plugins in the world :D

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KVRAF
1604 posts since 13 Apr, 2011 from EU

Post Thu May 08, 2014 1:26 am

MeldaProduction wrote:I'm personally thinking about starting a dedicated company outside of EU. I can survive the 20% VAT, which basically means 20% less income and that's a hell of a lot. But all the problems and risks, I think it's not worth it anymore...
According to what I read, it doesn't matter where you are, you still have to pay VAT in each EU country you sell using this new MOSS system (and so opening a VAT number somewhere).

http://ec.europa.eu/taxation_customs/ta ... dex_en.htm
NON-EU BUSINESSES supplying:

1. Business in the EU
No VAT charged.
Customer must account for the tax (reverse-charge mechanism).

2. Consumer in the EU (telecoms, broadcasting or electronic services)
Must charge VAT in the EU country where the customer belongs.
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KVRAF

Topic Starter

4731 posts since 18 Jul, 2002 from London, UK

Post Thu May 08, 2014 4:01 am

According to what I read, it doesn't matter where you are, you still have to pay VAT in each EU country you sell using this new MOSS system (and so opening a VAT number somewhere).
That's correct. However, the way things stand at the moment, the national tax authorities have little or no capability to audit a non-EU company with no local presence - there's very little they can do to a small foreign business which fails to collect VAT.

I can only guess that there will be an international EU/US tax treaty along soon requring EU businesses to collect State sales tax & vice versa.

Right now the big problem with the 2015 MOSS rules is that it's wiped out at a stroke the VAT-free threshold for small businesses (previously 100,000EUR/year turnover), if your business sells digital goods across borders. That's a really crappy move from the EU governments. If you make 100K EUR/year turnover, you should be able to afford to hire an accountant to deal with this B.S., but the little guys were exempt for a good reason and now they're not :(
I'm reading the Guide and looks like this would be impratical (and suicidal) for sole traders and small companies. We'd know and follow invoicing rules for all the 28 countries: wording, currency, rates. I don't know yet if we'd invoice in the consumer language or english would be enough.
I don't imagine that aspect will be enforced. As long as you register for MOSS, get the individual VAT rates right, and collect and pay the right amount of tax, I'd be surprised if they make problems for you.
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KVRAF
2866 posts since 28 Jan, 2004 from Da Nang, Vietnam

Post Wed May 14, 2014 7:57 pm

How do developers in the U.S. handle this? I'm assuming we also have to comply with all the EU VAT regulations if we sell to EU customers but this sounds like a real nightmare. I guess I'm spoiled from so far only working on iOS apps and letting Apple sort out all the tax issues.

User avatar
KVRian
1030 posts since 15 Nov, 2005 from Italy

Post Thu May 15, 2014 2:00 am

This is exactly what they are pushing small developers to do ;)

U-o
KVRian
1317 posts since 16 Nov, 2011

Post Sat May 24, 2014 9:58 pm

f**k the VAT! I hate it! I'm living in EU and VAT is almost everywhere... 22% for this, 19% for that... :x
yzcoruhT

kp
KVRian
694 posts since 6 Aug, 2002 from London, UK

Post Wed Jun 11, 2014 12:51 am

I am having to deal with this in my "real" job (ie. not music related) and I thought I'd add the following about the new VAT rules which I found out yesterday, which is so bat-shit crazy as to be unbelievable:

"(ii) Defining place of consumption

Q5 How is a business meant to identify a customer’s place of residency in the EU, especially if they are not resident in that country (eg an ‘expat’)?.What evidence will the business be required to hold to prove that this is the correct tax decision and for how long?

A5 The business is expected to take reasonable, but not exhaustive, steps to identify the place where the customer has his/her permanent address, or usually resides, by obtaining and keeping two pieces of ‘non-contradictory’ evidence. Articles 12 and 13 of the EU VAT place of supply Implementing Regulations defines ‘permanent address’ (the address in a population or similar register) and ‘usual residence’ (where a person has personal and occupational ties and where different, personal ties). So if, for example, a UK citizen is an ‘expat’ who works or lives most of the time in Spain, then that person should be paying Spanish VAT on the telecoms, broadcasting or e-services they consume and the new rules will seek to ensure this is the case.

A list of the different types of information that it is suggested a business obtain and keep to support its taxing decisions is set out in Article 24g and ga of the EU Implementing Regulations and includes: billing address of the customer, bank address details, Internet Protocol (IP) address, mobile telephone SIM Code. The business will normally be expected to keep these records for several years in accordance with each Member State tax authorities normal record keeping requirements. However, in respect of MOSS supplies, the current EU wide record keeping requirement is 10 years."

The burden of proof is way too much for even moderate sized businesses, and the practicalities aren't, well, really practical, not to mention that the redesign and redevelopment of online checkout processes to deal with the various options could be significant and complicated ("you've given me a UK billing address but your IP address is Frenech so I can't sell to you because I don't actually know how to identify you in a non-contradictory way - you're probably on holiday but tough...oh, tough on both of us actually as I've lost a sale too").

KVRAF
2866 posts since 28 Jan, 2004 from Da Nang, Vietnam

Post Wed Jun 11, 2014 12:58 am

That sounds completely ridiculous. It sounds like smaller businesses will have to either ignore the rules and hope they don't get caught, raise their prices by a very large amount, or just quit, right?

Maybe this will be a business opportunity for new companies that just handle all this bureaucracy for other small companies?

kp
KVRian
694 posts since 6 Aug, 2002 from London, UK

Post Wed Jun 11, 2014 1:33 am

I think there will be a market for "VAT-service providers, but they'd need to act as a storefront/provide ecommerce services, which is still a lot of work for smaller companies to move to. And they only have 6 months to set themseles up and get companies to start using them...that's still re-development of shopping processes and integration work that needs to be done. And this is going to really hurt smaller companies - like many of the developers here - who can't afford to make these changes as well as support and develop their own products.

I can also see a lot of - say - Russian and Chinese service providers stepping in who will simply tell the EU where to go with VAT registration.

Talk about law of unintended consequences!

User avatar
KVRist
162 posts since 19 Apr, 2014 from London

Post Wed Jun 11, 2014 4:24 am

It's a law designed to create rent seeking business designs leveraging large scale infrastructure profiting by serving small scale business operations.

Unless small businesses unite, we will all incur an implicit EU tax. That being said, since I'm developing rack extensions, that's mostly taken care of in pretty much the same manner.

KVRian
505 posts since 30 Jan, 2009 from UK

Post Thu Oct 16, 2014 3:14 am

"If you are a business making B2C digital service supplies to EU consumers and are not registered for VAT (because you are under the VAT threshold), you need to take action now as you will need to register for VAT. Under the new rules, you potentially have to register for VAT in every EU MS where you supply consumers with digital services. By opting to use VAT MOSS, you will not have to do this but will be able to make VAT declarations and payments, in respect of all of your EU supplies of digital services, to a single elected Member State on a calendar quarterly return."

http://www.hmrc.gov.uk/posmoss/index.ht ... VAT_POSjan

Having to register for VAT just because you have a bit of an idea for a plugin that maybe you'd like to see if it takes off is insane. Real great for fostering innovation, well done EU. I tend to agree somebody will step in and provide a service for this, but it's just another excuse for middle man do no good businesses that top slice the money of people with genuine skills to crop up and fill in unnecessary red tape.

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

Post Thu Oct 16, 2014 4:58 am

Great, so I can close my doors in terms of international service(s) permanently.
We already have enough "jobless" audio engineers in Germany as it is.


Definitely nice move, EU.
Next thing you'll request permanent installed "flush reducers" in toilets and shower heads again (Berlin alone has a high ground water status), and the request (again) to grow square cucumbers at equal length.


:dog:
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fmr
KVRAF
10084 posts since 16 Mar, 2003 from Porto - Portugal

Post Thu Oct 16, 2014 6:12 am

kuniklo wrote:How do developers in the U.S. handle this? I'm assuming we also have to comply with all the EU VAT regulations if we sell to EU customers but this sounds like a real nightmare. I guess I'm spoiled from so far only working on iOS apps and letting Apple sort out all the tax issues.
I suspect Apple doesn't sort anything at all. They even don't issue a document when we make a purchase. I once made a purchase and was forced to specifically ask for an invoice, and in reply I received an e-mail which as of today, I still have doubts about it's legality.
Fernando (FMR)

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