2015 EU VAT rules ("MOSS")

[telebunke]

iTunes / Amazon music downloads becoming 20% more expensive, due to those companies' tax-avoiding methods being blocked)

Hmmm, does that also apply to movie sales on iTunes?
But iTunes prices for movies are usualy more expensive than the physical product (e.g. the DVD) in the local store. (at least over here in Germany).

[Compyfox]

So a 1,49EUR song in Germany would now cost 1,78EUR, or rounded up 1,99EUR so that it's not a crooked price.

Way to go to evade TAXes...
Now I know why I do not buy single tracks through such services anymore.

[Wildfunk]

So a 1,49EUR song in Germany would now cost 1,78EUR, or rounded up 1,99EUR so that it's not a crooked price. Way to go to evade TAXes... Now I know why I do not buy single tracks through such services anymore.

Common that's cheap! Try to buy a track (wav) on Beatport:

[Compyfox]

And another "portal" I'd rather not use.

So the "new rules" are not fair after all... The companies this was aimed at, shrug it off and raise prices. And those that really hit it hard are forced out of the market.

Thank you once more for nothing, EU regulations.

[chaosWyrM]

im sure theres a reason why its not possible...

but can someone explain to me why a small online only business cant just use a domain outside the eu and circumvent the whole thing?

i mean i know that im supposed to collect vat on eu sales even though im in the us...but f**k that...make me. you cant. the eu has zero authority over what i charge or what kinds of taxes i collect.

hell...if i wanted to really be a dick i could charge the vat and keep it.

i dont understand how any of this is enforceable.

[msorrels]

If the US ever sorts out it's own sales tax collection system the next logical step will be for the US to make a deal with the EU so that merchants on both sides start to collect & remit the sales tax or VAT. This will happen sooner or later. Especially as more and more things go digital. In the meantime however the EU has a few choices:

The Great Firewall Wars
Basically if there was a non-EU company selling a great deal of digital product into the EU and they weren't willing to collect and remit VAT, it wouldn't be a big stretch for the EU to order every ISP to block that company's IP addresses wholesale. Border control in the real world isn't different than border control on line. A US company completely blocked from access to the EU might decide that collecting & remitting VAT isn't as big a deal as the loss of millions of dollars in sales. Right now though there really aren't any US companies doing major digital business in the EU that don't have some sort of EU presence. So this never ending game of cat and mouse isn't necessary, yet. But the bar for "major digital business" will get lower and lower every year.

We Own The Banks
This seems like a very likely attack vector. It wouldn't be hard at all for the EU to pass laws requiring Visa/Mastercard/Amex/Paypal/etc to only provide merchant services for EU related purchases/consumers to companies that collect & remit VAT, even if the company is only in the US. If they cut off the banks, most US companies would quickly decide that collecting VAT isn't that big a deal. The credit card companies and banks could even be pressed into service to collect VAT. Would take some law changes but I could see them doing it. So along with that currency conversion fee, they would add in VAT. And if it was a B2B transaction the customer would have to do paperwork to get it back.

Right now though, the EU is going to find that companies without a EU presence aren't going to sign up for their tax collection plans. But there are too many EU businesses that will moan and grown about US companies having an unfair advantage and too much money on the table for things to stay that way. New and creative ways to collect taxes are the future!

The real question is who are the companies without an EU presence, that are selling digital products and generating multiple millions in revenue? I'm not sure who fits that mold, but they will be the ones to watch.

[chaosWyrM]

If the US ever sorts out it's own sales tax collection system the next logical step will be for the US to make a deal with the EU so that merchants on both sides start to collect & remit the sales tax or VAT. This will happen sooner or later. Especially as more and more things go digital. In the meantime however the EU has a few choices:

The Great Firewall Wars
Basically if there was a non-EU company selling a great deal of digital product into the EU and they weren't willing to collect and remit VAT, it wouldn't be a big stretch for the EU to order every ISP to block that company's IP addresses wholesale. Border control in the real world isn't different than border control on line. A US company completely blocked from access to the EU might decide that collecting & remitting VAT isn't as big a deal as the loss of millions of dollars in sales. Right now though there really aren't any US companies doing major digital business in the EU that don't have some sort of EU presence. So this never ending game of cat and mouse isn't necessary, yet. But the bar for "major digital business" will get lower and lower every year.

We Own The Banks
This seems like a very likely attack vector. It wouldn't be hard at all for the EU to pass laws requiring Visa/Mastercard/Amex/Paypal/etc to only provide merchant services for EU related purchases/consumers to companies that collect & remit VAT, even if the company is only in the US. If they cut off the banks, most US companies would quickly decide that collecting VAT isn't that big a deal. The credit card companies and banks could even be pressed into service to collect VAT. Would take some law changes but I could see them doing it. So along with that currency conversion fee, they would add in VAT. And if it was a B2B transaction the customer would have to do paperwork to get it back.

Right now though, the EU is going to find that companies without a EU presence aren't going to sign up for their tax collection plans. But there are too many EU businesses that will moan and grown about US companies having an unfair advantage and too much money on the table for things to stay that way. New and creative ways to collect taxes are the future!

The real question is who are the companies without an EU presence, that are selling digital products and generating multiple millions in revenue? I'm not sure who fits that mold, but they will be the ones to watch.

thank you for that, and yes it makes sense for larger companies. my question however was specifically about small online only business who do not sell a lot. there has been a lot of talk about small places simply going out of business rather than jump through all the new hoops. your comments explain what could be done to larger companies...but not what will be done. what you propose requires a great deal of international cooperation and more than a few changes in laws in multiple countries.

and while you may be right...i disagree with the assertion that it wouldnt be difficult to force cc companies and paypal to do that. i think it would be very difficult indeed. but again...a small time online only operation (like a preset/patch maker) could very easily have a non business paypal account which would remain unaffected by any such law.

what is preventing a small time patch/preset maker in london from getting a colombian domain for his website right now, setting up an online shop, connecting it to a "personal" paypal account...and not collecting vat?

[msorrels]

what is preventing a small time patch/preset maker in london from getting a colombian domain for his website right now, setting up an online shop, connecting it to a "personal" paypal account...and not collecting vat?

There is never anything stopping someone from committing a crime. Anyone living in the EU setting up a shop outside the EU for the purpose of avoiding the collection and remit of VAT may be breaking several laws. By and large most tax collection always has a trust but verify component. eCommerce money is very traceable. Would they find you and audit you? Most likely not, unless you were making millions. But creating a external company to dodge some paperwork is a lot of paperwork. Banks tend to be very picky about letting people setup accounts. Paypal may not be as hackable as you'd think. I'd bet if you setup a fake external Paypal account and regularly transferred money to a personal Paypal account after a month or two they would flag both accounts and shut you down. Paypal shuts down honest businesses all the time just because it's raining in Seattle that week. Getting a real merchant account usually involves at least a on-site/in-person interview (well at least in the US 20 years ago it did, I'd imagine it's the same most places).

The small time patch/preset maker could just license his work to an actual US company and have them do the sales/deal with whatever taxing authorities. Which would be legal and would survive an audit. Of course that's the same end result if they just used a UK/EU company do the same thing. In the end the small time producer is pretty much forced into using another company as part of their sales chain or they have to step up and do the tax management themselves. Or they ignore it all and just hope they don't get audited. Which way makes the most sense depends on the specific business.

[chaosWyrM]

what is preventing a small time patch/preset maker in london from getting a colombian domain for his website right now, setting up an online shop, connecting it to a "personal" paypal account...and not collecting vat?

There is never anything stopping someone from committing a crime. Anyone living in the EU setting up a shop outside the EU for the purpose of avoiding the collection and remit of VAT may be breaking several laws. By and large most tax collection always has a trust but verify component. eCommerce money is very traceable. Would they find you and audit you? Most likely not, unless you were making millions. But creating a external company to dodge some paperwork is a lot of paperwork. Banks tend to be very picky about letting people setup accounts. Paypal may not be as hackable as you'd think. I'd bet if you setup a fake external Paypal account and regularly transferred money to a personal Paypal account after a month or two they would flag both accounts and shut you down. Paypal shuts down honest businesses all the time just because it's raining in Seattle that week. Getting a real merchant account usually involves at least a on-site/in-person interview (well at least in the US 20 years ago it did, I'd imagine it's the same most places).

The small time patch/preset maker could just license his work to an actual US company and have them do the sales/deal with whatever taxing authorities. Which would be legal and would survive an audit. Of course that's the same end result if they just used a UK/EU company do the same thing. In the end the small time producer is pretty much forced into using another company as part of their sales chain or they have to step up and do the tax management themselves. Or they ignore it all and just hope they don't get audited. Which way makes the most sense depends on the specific business.

who said anything about crimes or fake accounts?

what i suggested is not illegal (the off shore domain part i mean). im allowed to purchase a domain from anywhere that will sell me one. if my domain is in columbia...and my online store is run off that domain...then my store is in columbia. its certainly not illegal to do that, and its a fairly common practice.

as far as paypal accounts go...i never said anything about a fake account. i sell things on line...and i use a regular old paypal account to do it. i dont have a merchant account, and im small enough to not need one. i opened a regular bank account specifically for my paypal activities. i keep my paypal bank account entirely separate from my "personal" accounts, even though to the bank its just a regular personal bank account.

now if you want to say people shouldnt do that because, you know...laws...thats a different conversation. the only aspect of what im talking about that is technically illegal is the non collection of vat...but thats the point.

as weve already gone over...right now im supposed to collect vat even though im in the us. there is no way the eu can force non eu stores to collect vat. i could for instance sell things right now all day to people in europe and never collect any vat at all.

and why should i? im not subject to eu laws and have no intention on collecting their taxes for them. the eu cant simply decide that non eu vendors are subject to eu laws. they can say all they want that if the buyer is in the eu then the transaction is in the eu...but that is simply not accurate. if the server the transaction takes place on is outside the eu...then the transaction takes place outside the eu.

people do this kind of thing to avoid taxes every day. its not illegal. for instance, i refuse to purchase items from online places that charge me new york state tax (because they are located in new york and they MUST collect those taxes if shipping to a new york address). if i purchase the item from new jersey...i dont have to pay new york state taxes on it (or new jersey taxes because i dont live there).

its not illegal to do that...its smart.

[Wildfunk]

what i suggested is not illegal (the off shore domain part i mean). im allowed to purchase a domain from anywhere that will sell me one. if my domain is in columbia...and my online store is run off that domain...then my store is in columbia. its certainly not illegal to do that, and its a fairly common practice.

Of course it's illegal! You have no real business in Columbia, only a domain. But i doubt that you have a real company at all... you are just a private person who wants to make money (without doing the legal stuff and without paying taxes).

and why should i? im not subject to eu laws and have no intention on collecting their taxes for them. its not illegal to do that...its smart.

Smart? What's your problem? If you want to sell stuff you have to pay taxes. Period.

[chaosWyrM]

what i suggested is not illegal (the off shore domain part i mean). im allowed to purchase a domain from anywhere that will sell me one. if my domain is in columbia...and my online store is run off that domain...then my store is in columbia. its certainly not illegal to do that, and its a fairly common practice.

Of course it's illegal! You have no real business in Columbia, only a domain. But i doubt that you have a real company at all... you are just a private person who wants to make money (without doing the legal stuff and without paying taxes).

and why should i? im not subject to eu laws and have no intention on collecting their taxes for them. its not illegal to do that...its smart.

Smart? What's your problem? If you want to sell stuff you have to pay taxes. Period.

im not sure what you dont understand about this. its not illegal to have an online store on a server outside of the country you live in...companies do it all the time.

i never claimed to have a "real company" whats your point?

whats my problem? i dont have one. ill pay MY taxes...but im not paying (or collecting) european taxes. i dont live there...why should i?

and try not to misquote me again ok? thats not what i said.

[Wildfunk]

its not illegal to have an online store on a server outside of the country you live in...companies do it all the time.

But they usually have an overseas branch there.

i never claimed to have a "real company" whats your point?

Then just go ahead with your "i-have-no-company-but-i-want-to-sell-stuff-without-paying-taxes".

whats my problem? i dont have one.

Lol, that's why you consider registering a domain in Columbia

ill pay MY taxes...

For what?

but im not paying (or collecting) european taxes. i dont live there...why should i?

Sorry, but i doubt that you collect taxes at all. No matter for what country...

and try not to misquote me again ok? thats not what i said.

Misquote? Lol! It's just the truth.

[chaosWyrM]

1. "usually". that is neither accurate or relevant.

2. again you are using quotes. not only did i not say that...i never even implied it...at all...in any way shape or form.

3. im not considering anything. try to keep up. i never said that i intended or needed to use a colombian domain. it was a hypothetical example for a person in the eu and wouldnt even apply to me...you do understand what hypothetical is yes?

4. for what? we all have to pay taxes...i dont understand the question.

5. you may doubt whatever you like...it hardly matters to the facts what you doubt.

6. yes...misquote...you know: misquote, verb, to inaccurately quote a remark or text. which is exactly what you did. you edited my remarks out of context to make it look like i said something i did not say.

ill take it then that you have nothing substantial or in fact relevant to add to this discussion. say what you will, ill not be responding to you further.

[Wildfunk]

1. "usually". that is neither accurate or relevant.

I'm talking about REAL companies, not private persons like you. You know: REAL BUSINESS!

i never said that i intended or needed to use a colombian domain. it was a hypothetical example for a person in the eu and wouldnt even apply to me

And i've said it's illegal. Accept that.

ill take it then that you have nothing substantial or in fact relevant to add to this discussion. say what you will, ill not be responding to you further.

Thank you! Please buy a book about business and come back later.

[msorrels]

people do this kind of thing to avoid taxes every day. its not illegal. for instance, i refuse to purchase items from online places that charge me new york state tax (because they are located in new york and they MUST collect those taxes if shipping to a new york address). if i purchase the item from new jersey...i dont have to pay new york state taxes on it (or new jersey taxes because i dont live there).

its not illegal to do that...its smart.

Please look up New York State Use tax rules and get back to us on how smart that is.