2015 EU VAT rules ("MOSS")

[liquidsonics]

Sorry such a basic question, I'm fresh and hate taxes

Are reselling services like shareit a remedy for dealing with vat-moss? E.g. do they work like Apple, it's B2B and they handle VAT?

Yes it's B2B. And yes that's the solution for those that don't mind loosing some sales channel control.

The intermediary company selling to the customer will charge them VAT and handle it. The intermediary pays the software creator whatever proceeds from that sale and no further VAT needs to be paid by either party. Obviously corporation or personal income tax has to be paid on the proceeds.

[itoa]

Thanks! I think this is a good workaround

[sonigen]

2) For all sellers (I think). It looks like people who fulfil their sales manually won't be affected by the MOSS rules at all. So long as their systems don't automatically populate emails and run automatic license generators, they can escape the whole thing because their sales won't count as 'electronically supplied' even if they're sent via email. Check out section 2. I had to read a couple of times, and I'm still not convinced I've got it right, but my accountant said he agreed with my interpretation there.

Here's my take...

Adding a " human clicking a button" to an otherwise automated system does not avoid the new rules.

Emailing a download link even if the email is written by a hand does not avoid the new rules. (See the last example.)

In terms of software the only way to avoid the new rules is to email the software by hand. You would actually have to attach it to the email. A download link is no good.

[aMUSEd]

Is this going to affect donationware too?

[coincidental]

You're absolutely right in your interpretation regarding manual emailing, Matt. Personally, I can dodge the bullet for now thanks to this concession. Though I was going to automate delivery on my own server - but no longer...

It only works for small files though - most patch banks, key files or licence codes will be fine, but sending a link for a download will require registration (yes, you read that right Chris), so no sample sets or Alchemy soundsets or larger DLLs.

And, of course, manual fulfilment puts smaller businesses at a commercial disadvantage.

However, while tinkering at the edges and throwing a bone to me, at the same time the latest UK guidance says that holding the necessary data to trade will require registration as a data controller. The poor ICO may crumble under the pressure!

And anyway, "manual" delivery is not an option for many sellers, either because of the size or nature of what they're selling or because they can't be be permanently online and responsive enough to meet customers' expectations (they may be disabled, be a carer or have small children, for instance), so the regulations still suck.

The other options are not great: http://davewalker.cc/vatmoss-cartoon/.

And really, is any of this appropriate regulation for businesses that might consist of a single mum earning an extra £400 a year to pay for school trips by selling knitting patterns from her laptop?

As HMRC wring their hands and say "But we did our best, honestly", the whole affair has revealed a gaping hole in government's knowledge of what people are doing these days to make ends meet and - even more - how things work on the internet. I strongly suspect they're all still using Windows 98. Or nice Remington typewriters that go bing a lot.

As far as the intermediaries go, some are taking on the responsibilities - though at a price ranging from small-ish (Digital Goods Store) to eye-watering (Amazon) - and others are doing the data collection and per-customer VAT charging only (though you have to trust them to do it right, because you'll be the one registering and responsible for your VAT returns). Several (Selz, Big Cartel) are offering the option to block sales to the EU. We wait to hear what Bandcamp proposes...

For customers, this is likely to mean higher prices, slightly longer checkout procedures for everyone, and people asking for your address constantly. Don't blame the seller when it happens to you! It may also mean the end of VAT-less purchases for EU residents from American sellers - we'll see.

For sellers this may translate into fewer sales thanks to higher prices and more tortuous checkouts, or lower profits if you prefer to absorb the VAT, but the real kicker is the data acquisition, verification and retention rules, which make it pretty much impossible for a sole trader to sell off their own website any more without hiring in some sort of third-party expertise in the form of a cart or an intermediary.

If you fancy taking some action, http://euvataction.org/ is a new site being set up by some small business owners with lots more info. There's a petition too - please sign and urge others to do so to! http://euvataction.org/take-action-now/ ... -petition/. There's a twitterstorm planned as well (I only just found out what that means ).

[liquidsonics]

A lot of us are, or could be, selling via PayPal. They make the VAT side easy as you can just set up per country VAT rates, and of course they can select which rate to apply automatically because they know where the customer is. What they don't do is give enough detail for the data retention, but it turns out that it's easy to record the customer IP using php on the product page and pass it as custom data though a Buy-Now button and that then flows through into PayPal's records. A custom cart would also provide that and more. From a practical perspective that isn't really that much of a big deal technically so I don't really think people have to use a third party provider unless they very strongly oppose to being VAT registered.

[kp]

https://twitter.com/Aron_Mason/status/5 ... 28/photo/1 - so true

[Blue Cat Audio]

By the way, has anyone found a way to get notified automatically when VAT rates change (or even better, retrieve the rates from a web-accessible database that is kept up to date)?

It seems that the only official source for EU VAT rates is a pdf file... Not good!

[Angus_FX]

What if you use an automated system to call up a human being who then creates an email by hand? Amazon's Mechanical Turk and the like. Sounds like a nice little earner for somebody in a poor but technically literate part of the world.

Emailing a download link may not get around the rules, but there are a dozen shades of grey between a generic download resource (account system or URL) and a full MIME attachment. Mozilla FileLink, personal dropboxes, other cloud storage. The concept of delivery is nebulous (and should be treated as entirely irrelevant in the eyes of the law) when the good being traded isn't really the IP itself but permission to use that IP. When you buy software, what you're paying for is something more akin to a contract than a bunch of 1's and 0's.

Have the authorities even considered demoware? In that scenario the delivery takes place in advance of the transaction.

And as above, I'd love to know how some VAT auditor can determine (looking at an email history file, say) whether the orders were sent out manually or automatically. It's a Turing test in reverse.

[coincidental]

it turns out that it's easy to record the customer IP using php on the product page and pass it as custom data though a Buy-Now button and that then flows through into PayPal's records

That sounds like an interesting approach. There's still the problem of how to cross-check information before the purchase is completed, and what to do if it doesn't match. Dealing with it after the sale seems like a recipe for non-compliance. However, a home-grown solution may be possible, and I'd guess that people reading this forum might be better placed than most to implement something (remember to include an automated way to keep track of changes to VAT rates in the various Member States though).

More generally, though, the point I was making is that the costs of compliance (server support, scripting know-how, troubleshooting, ....) are not linearly scalable - they apply to someone selling 3 PDFs a year to Europe the same as they do to someone selling 30k of software or 100k of online training, ,which is not the "level playing field" that they said the regulations were designed to create.

And, of course, most people affected don't know any PHP, don't know what API stands for, and some may have no access to server-side stuff at all.

By the way, has anyone found a way to get notified automatically when VAT rates change (or even better, retrieve the rates from a web-accessible database that is kept up to date)

You're not the only one to wonder this: http://www.euvatrates.com/.

Also, I wonder - is anyone using this? https://www.vat-check.eu/api/ - theoretically, B2B supplies need to be to a confirmed VAT number or be treated through checkout as B2C?

... Mechanical Turk ... Mozilla FileLink, personal dropboxes ... demoware ... VAT auditor

Yep, it's regulation constructed on a principle, rather than on an acquaintance with (internet) reality. HMRC is trying to backpedal and find loopholes, which just obscures the principle yet further and makes a #VATMESS.

No one likes being taxed more, but this is a new area for legislators - internet-related law requires a broader consultation than just the usual local businessmen. That's the cause for half the mess - the implementation. The other half arises from the policitians' uneasy tango with the multinats over taxation - but who is leading?

[MeldaProduction]

Well, I'd say, let's start companies on Banana islands or something it will be a big win for us and a big loss for EU . That's the only thing EU deserves...such a mess... I'm ok paying taxes, but they should at least try to make it simple, not overcomplicated as it is now. My accountant is so mad every year as he needs to read a whole new thick book of riddiculous changes to the policy...

[liquidsonics]

I don't really buy the argument that it kicks people selling a tiny amount really hard. If somebody is only selling a couple of PDFs or license files a month they will likely be fulfilling by hand. As soon as doing that becomes onerous they're likely selling enough to make some additional costs tolerable (if they can't work it out themselves), a growing business doesn't remain as 100% profit and 100% focused on the fun bits for long.

Cross referencing an IP with the country claim from PayPal isn't hard, just do a geo-lookup on the IP (free tools to do that exist) and don't fulfil right away if there is no match. Then you can automate an email to the customer asking for more information (I think that's what HMRC recommends) or just immediately refund before sending the goods with an apology if that's too much like hard work.

[Angus_FX]

@ liquidsonics the "fulfil by hand" thing is a recent & welcome clarification from HMRC. If the ICO exempt the required data from their registration requirements, that will also help.

The creation of liability without any corresponding ability to enforce (for non-EU vendors) is and remains a mess. And the pricing issue: in the US, prices are advertised ex-tax, and variable rate state sales tax is applied afterwards as appropriate. In the EU, most vendors advertise a single price & that must, by law, be *inclusive* of tax - yet the tax due varies between 8% and 28%. For us it's not too bad, as nearly all our sales happen in countries where the VAT is 20% +/- 2.5%, that's a tolerable margin of error on an international transaction - but if you sell a lot in Hungary or Luxembourg it's more important.

[coincidental]

Quick update that will be of interest to anyone selling music rather than plugins etc. Bandcamp have released some guidance on how they're handling all this: https://bandcamp.com/help/selling

I think I'm right in saying that the gist is:

• They will be functioning as a full intermediary - handling all the VAT on behalf of sellers - or, at least that is the plan for some time in the first half of 2015.
• In the meantime they will charge VAT correctly (not sure if they will collect and store compliant data - I would think so) and prepare data for sellers to simply complete their VAT returns - but all EU sellers will need to VAT register (unless they're below a threshold in their country) - oh, and (in theory) all Bandcamp sellers worldwide will need to regiater for the MOSS if they happen to sell into the EU (no country blocks available).

Without a change in the regs, this is the best that sellers can get (apart from Jan-Jun) - and they fact that a smart, quick-moving company like Bandcamp will be late complying in the way envisaged by the regulations only underlines how woefully poor the communication about all this has been.

[Ivan_C]

An interesting read :

https://gigaom.com/2014/12/16/eu-tax-ch ... providers/