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Their business and their governments'.
Nothing, UK cannot afford to get out of the system, in theory, everything imported from outside EU must be charged VAT at the destination, i.e. the country where the customer is, if I buy from China I have to pay it at the customs.
In this idea, if UK completely leaves the EU VAT system and common market as they brag they will, everything they sell outside UK will be VAT free, i.e. HMRC will reimburse all VAT paid to produce the thing or service and the customer will have to pay own country VAT when importing it in EU.
This is such a huge complication many billions will be spent each year both sides of the border to maintain this system. Not to mention the losses with false declarations and other ways to "smuggle" goods and especially services, i.e. UK will reimburse the VAT, but the final consumer will find ways not to pay it to the local tax man or pay less, same the other way around, policing this will cost a lot and the current system is also very costly, but at least the losses are only once not multiple times. Not to mention people will be able to make fake exports and discharge VAT without a reason because UK is not prepared to track this, at least not yet. It will be a disaster for UK and EU taxes, but especially for UK as they will have to struggle to put up an infrastructure which was EU wide and the burden shared.
As an economist which worked in the "real economik" I know these things, same the governments and businesses, this is why they opposed Brexit through all the means, but the general public does not understand, they simply thought this will chase out the polish and romanian + (insert whatever EU nationality you particularly hate) people and increase wages because unemployment will fall.
Only who does not want to work does not find a job now, UK is at full employment, employers practically beg people to come out and work, but they are not moving because are not happy with the wages while employers cannot pay more due to low productivity.
Brexit will not solve anything here, will make matters worse, the businesses will struggle to compete when will have to pay extra to move things in and out of EU, for example the auto industry has to import and re-export parts for various operations and is not alone, so they will have to either move all operations in UK, which is costly due to low unemployment and high (for them compared to most EU countries) wages or move everything in EU, in countries like Romania where they can make the parts cheaper and would have to pay more or less the same taxes when bringing the full car in than exporting and importing parts and the same will happen with many other industries.
We will be free to put up higher taxes for cars from EU and keep the production at home? Not really, because then the Japanese will fill the gap, because, you know, we do not need the EU, we will negotiate deals with Japan and China, and they will want to something in return, we cant keep the same taxes as now.
Even IF we will have higher wages as employers will be forced to pay more given the lack of trained people due to low immigration AND they will not move abroad to follow cheaper manufacturing costs, this will mean higher prices for their product, inflation which will increase prices in general and will eat out the wage increases.
Wages are mostly a function of productivity, failure to increase that will keep the wages at the same level in real terms, even if nominally might be increased. Without an influx of qualified workers or a real effort to create qualified workers at home with an aging population and all, productivity will decrease, not increase overall, because the companies will not have money left for R&D...
Well, TL;DR Brexit is a disaster, but you already know that by now.
Yeah, I don't understand why it doesn't work the other way,
other than the fact that it would decrease an EU company's competitiveness if they charged US customers EU VAT.Edit: Rather, an EU company would charge a US customer the local sales tax of his/her state and then remit this tax to that state. Still don't really understand why the implementation so far is only one way (a EU customer pays VAT to a US company, whereas a US customer doesn't pay sales tax to an EU company), but perhaps this is a practical question of incomplete implementation (so far).
Yeah, we feel so bad when all this Christmas cards come back to us :-(.
Don’t provide fake details in the contract. It’s not only fraud, but also often grants you a lifetime ban with the provider.
It's not a effective or efficient system that is for sure.
Too new or that companies do not apply it does not mean you are not legally obliged to do it, you really need to get proper advice.
Agreed with @Lee and @Falzo. Thing is, it’s better to comply immediately, as when the crackdown comes this will surely be backdated to the moment legislation came in, which is over a year ago and each individual EU country will be able to levy their own penalties for not reported sales in their country.
The e-services like hosting have place of supply shifted to the residence address of the Customer.
I corrected what I said while you were replying. For the system to be coherent, an EU company would have to charge a US customer the local sales tax of the state in which the customer resides, and not EU VAT.
Anyway, I have to confess that I try to avoid US companies that charge me EU VAT unless they are properly registered/present in the EU (e.g., Amazon, though I try to avoid Amazon for other reasons).
I canceled my VPS with RamNode a couple of years ago when they beginning charging VAT. (This isn't intended a criticism of RamNode -- I just wasn't so enthusiastic about their deciding to charge VAT.)
Edit: I'll probably look at this matter differently when the implementation becomes more consistent and equitable.
I knew what you meant
Indeed, I took the same view.
I do not care if they charge or not as long as they are paying it to my country and not pocket it. From what I saw with aruba they charged french VAT and I am sure they gave it to the french at the beginning so I didnt want to give them anything.
Strange if Aruba does that, but I agree with you if they do that.
If I may ask, do Clouvider charge US customers the local sales tax of their state and then remit this tax to their state? (Ultimately, this is the sense of the legislation: it shouldn't only be EU customers who pay VAT to US companies, but also US customers who pay sales tax to EU companies.)
Any prove of such ?
Yes, technically you send the money to your GOV or a chosen EU gov that you pass your MOSS declaration to, that’s the point to make it easy, they then distribute it to the other countries as per your declaration.
I see, thank you, I always learn something new every day. My accountant is probably not aware of MOSS but I'll talk to him about this.
There’s no relevant system, as far as I’m aware, and it is my understanding that there’s no comparable place of supply rules in the US at the moment. One should ask a US based lawyer, but that’s the latest interpretation I have personally had.
I.e if you live in NY but purchase a VPS from a company based in Ohio, you don’t pay NY sales tax, do you ?
Thank you for your contribution, really helps understanding the whole thing. Our accountant manages everything for us, we've once talked about MOSS but he wasn't aware of it, looks like I'll need to poke him and see if he knows what it is now, although, it's normal that this happens in a very small country as Portugal.
We have an article/rule here that allows us to set any other country outside EU to be VAT exempt, same applies to individuals, so yeah.
The Interstate Commerce clause explicitly reserves taxation and regulation for the federal govt, and there is no federal sales tax in the US. This was the reason Amazon charged no sales tax for ages because they were shipping from a subsidiary in another state.
Hmm
You probably want to replace him/her, MOSS has been coming for years now, I cannot believe any competent EU accountant is not aware of it and ready to deal with it.
it is confusing anyway, because it's just a special part of services that are under that regulation.
on top of that, didn't you mention some times back that in portugal everyone has a (personal) VAT ID or something alike? so this might add up to the confusion very badly esp. about that B2B / B2C differences...
also in some countries in EU there are different regulations about small businesses that usually don't take part in the VAT-system directly (at least for germany that is). they wouldn't get a valid business VAT ID and have to pay there local based VAT even as B2B case. as said, very much confusing, though I understand the goal behind it.
but as @Lee said - any accountant should be well aware of MOSS and how his country has brought it into the national laws... just because he's most likely the one who would be held liable if your tax authorities are going to audit your business.
TLDR and still didn't get AIDS.
The VAT MOSS system is designed for countries/members of the EU. So it's initially only applicable to EU countries (there is a new rule for non-EU countries). The MOSS system is just an easy way of charging VAT.
Example: My company is registered in the Netherlands, here we have 21% VAT. But if I sell digital goods to a customer located in Germany, I have to charge the customer 19% VAT.
The VAT collected for this customer will be transferred to the tax authority in the Netherlands. (then NL and DE will do the rest)
I see that there is a different regulation for non-EU countries, they can also utilize the MOSS system, I don't know anything about the benefits though.
More info for non-EU countries: https://www.taxamo.com/blog/us-digital-companies-eu-vat/
They dont do that anymore, but when they launched the offer of 1 Eur a vps some 2 years ago, they were charging VAT of 20 % which was French VAT, not romanian which was 24 at that time. In the meantime romanian VAT got 19 and they changed their stance and are charging according to the law. In theory, I should have been happy as I got the best deal possible, when romanian vat was higher they charged french, but when romanian got lower, applied the law, but it is not supposed to work this way.
Agree, not to know about MOSS 2 years after VAT for electronic services started to be charged at the customer's location is a very serious lapse.
Also, keep in mind that if your accountant asks you to sign the declarations and stuff, it means you are the one responsible for the numbers there, if you do not know what you are signing, please take them to another accountant for a "mini-audit". This is serious stuff, not a joke.
It's a dangerous game to play for those who are ignoring it, I was speaking to someone months back who said they would deal with it when forced to and felt nobody could prove what would be due anyway.
Certainly, in the UK that is not a good game plan, HMRC can come along anytime and simply estimate what they think you have not paid, it's not up to them to prove you owe it, but for you to prove you don't.
Could well be years before it happens but not worth being in that position.
Perhaps I missed something, but I think that @MikePT's company is doing things according to the law. I mean, they're a Portuguese company, not a US company. If his company didn't charge EU individuals VAT for services according to their EU country of residence, then that would be a problem, but I think that his company is doing this.
Edit: What I'm also saying is that it's not so bad if @MikePT's accountant isn't aware of MOSS, because his company is a Portuguese company, not a US company. (Of course, it wouldn't be bad to be aware of MOSS nevertheless.)
A useful link -- thanks.
I guess that my personal problem with MOSS as applied to US companies is that
I dont follow...
As long as he sells in EU and does not send the money directly to all the respective countries he sells in, then he must use it. Also, unless he is very big, sending money directly is too costly and complicated, MOSS has been done with this purpose, to help people.
Sorry, I probably wasn't clear enough. I meant the legislation regarding MOSS in connection with US companies in effect since January 2015.
I can only imagine that his accountant knows about MOSS in connection with EU countries.
That's the point though, he stated his accountant knows nothing about it, there is no mistaking knowledge of MOSS within the EU and non-Union MOSS.
If that's the case, you're right, it would be time to think of a new accountant!
Can you name a provider that provides VPS service in Japan for a US resident for a reasonable price and will not wipe your entire account and all servers when receiving a copyright infringement complaint against a post or a reply on your forum?
I know Francisco doesn't, but he doesn't provide services in Asia either.
It's tough because several things are true:
I flat out refuse to pay VAT. For the same reason I don't block countries that consider my opinions to be illegal. It may sound totally unrelated, but it's not, it's a foreign government who holds no legal authority over me and therefore I have no respect for their laws.