Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!


Hetzner begins to charge tax for US clients?
New on LowEndTalk? Please Register and read our Community Rules.

Hetzner begins to charge tax for US clients?

Here is an email I received from Hetzner today

Dear xxx
We are obliged to charge tax on products and services for clients located in the US. Hence, our end-users there will be required to pay the regulated GST.

Clients who can provide us with a sales tax exemption certificate won't be charged with sales tax.

Therefore, please send us your sales tax exemption certificate via email to [email protected] as soon as possible.

For more information about tax exemption please visit your local Department of Taxation and Finance website.

If you have any questions, please let us know and we will be happy to help.

Kind regards

Hetzner Online GmbH

I googled it online but can't find any information about it. So is it just me or it's a quite new policy applied?

Thanked by 1jar
«1345

Comments

  • jarjar Provider

    First of all, there is no US sales tax. The office that controls my local sales tax is down the road. This isn’t very high level stuff. There have been laws passed to help facilitate interstate sales tax collection, but that’s not relevant to a company in Germany. So my guess is they’re about to, if they haven’t already, incorporate in the US.

    Would’ve been nice to announce it alongside no longer making me pay the USD to Euro conversion, because this is going to drive my roughly $4k/m business out of Hetzner. I’ll pay taxes gladly, but not on top of that conversion.

    Thanked by 2adly MikeA

    "Note that Romania has laws agains all the illegal activities just like US, including copyright. Is not the Dracula's country or no man's land as you thought." - Random email from someone I don't know, about nothing I've done or said

  • friendhostingfriendhosting Member, Provider

    Yes, this is Hetzner's policy. They also withhold VAT from Russians and transfer it to the Russian budget.

    Hurry up! Sale of ssd kvm vds in Europe and the USA.

  • @jar said:
    First of all, there is no US sales tax. The office that controls my local sales tax is down the road. This isn’t very high level stuff. There have been laws passed to help facilitate interstate sales tax collection, but that’s not relevant to a company in Germany. So my guess is they’re about to, if they haven’t already, incorporate in the US.

    This makes a lot of sense. I remembered there was some news about the future expansion of Hetzner to the US last year. Hope it's true and then it would be good news

    Would’ve been nice to announce it alongside no longer making me pay the USD to Euro conversion, because this is going to drive my roughly $4k/m business out of Hetzner. I’ll pay taxes gladly, but not on top of that conversion.

    I'm not a business owner myself, just like to play with Linux/VPS/Dedis this kind of stuff as an amateur. So I guess I'm more concerned with the tax rate to be charged. Hope it won't be too high.

  • As far as I can see, Hetzner's website hasn't yet been updated to reflect this, but as @jar has just said, this is a sign that Hetzner is soon going to become a taxable entity in the US.

    Thanked by 1webcraft

    "Linux will run happily with only 4 MB of RAM, including all of the bells and whistles such as the X Window System, Emacs, and so on." (M. Welsh & L. Kaufman, Running Linux, 2e, 1996, p. 32)

  • @friendhosting said:
    Yes, this is Hetzner's policy. They also withhold VAT from Russians and transfer it to the Russian budget.

    This is quite surprising to me. I always had the impression that Hetzner does not charge taxes for clients outside the EU, i.e. US.

  • Not sure if they pay out these taxes back. Welcome to capitalism World :blush:

  • deankdeank Member, Troll

    Once you become big enough, you start to worry about taxes.

    H has become big enough, I guess.

    Thanked by 1jenkki

    If you wish to join Nigh sect, adopt my avatar as your own and believe in the end.

  • jarjar Provider
    edited October 11

    I'm already paying someone's salary at the IRS and I'm not complaining. But there's no service tax in Texas, we don't collect taxes from entities with no physical presence in Texas, and I'm not paying local taxes in Euro lol.

    They better get an education for their accountants real fast before they lose the salary for one of them.

    "Note that Romania has laws agains all the illegal activities just like US, including copyright. Is not the Dracula's country or no man's land as you thought." - Random email from someone I don't know, about nothing I've done or said

  • You guys realize that starting to operate in the us is like killing your company for europeans?
    No they will not start operate in the us, maybe they create a new independent company in the US, but Hetzner Online GmbH will never operate in the us.

    Thanked by 1jar
  • Hetzner's current page on VAT (sales tax) is:

    https://docs.hetzner.com/accounts-panel/accounts/payment-faq/#how-much-vat-do-i-need-to-pay

    What surprises me more than Russia is that Belarus and Singapore are also the list.

    "Linux will run happily with only 4 MB of RAM, including all of the bells and whistles such as the X Window System, Emacs, and so on." (M. Welsh & L. Kaufman, Running Linux, 2e, 1996, p. 32)

  • friendhostingfriendhosting Member, Provider

    @user54321 said:
    You guys realize that starting to operate in the us is like killing your company for europeans?
    No they will not start operate in the us, maybe they create a new independent company in the US, but Hetzner Online GmbH will never operate in the us.

    In fact, it is also difficult for an American company or any other company to become a VAT payer in the European Union. Formally, this is possible and some companies do it, but it is quite difficult organizationally.

    Hurry up! Sale of ssd kvm vds in Europe and the USA.

  • Texas Taxes Tex Taxi

  • user54321user54321 Member
    edited October 11

    @friendhosting said:

    @user54321 said:
    You guys realize that starting to operate in the us is like killing your company for europeans?
    No they will not start operate in the us, maybe they create a new independent company in the US, but Hetzner Online GmbH will never operate in the us.

    In fact, it is also difficult for an American company or any other company to become a VAT payer in the European Union. Formally, this is possible and some companies do it, but it is quite difficult organizationally.

    this is not about tax, it will kill the company because then us rules apply to all parts of a company and they can force a german company to surveil germans that way, this is a big no no for every big customer of Hetzner. That is why you never operate as a european company in the us and europe but instead create two independent companys. Sure if you are small and don't have customers with a legal department which reviews that stuff it doesn't matter, but Hetzner is to big to go that route without very big damage for them.

    Thanked by 3jar friendhosting adly
  • MannDudeMannDude Member, Provider

    Thanked by 2jar TimboJones

    [ IncogNet LLC ] [ CloudLinux Shared | KVM VPS ] [ No Personal Details Required, Crypto Accepted ]

    AMD Ryzen and NVMe powered KVM Servers in the Netherlands and Finland.

  • I've had a couple EU providers tell me that they had to charge VAT to non-EU residents because services are rendered in their country (/within EU) so tax advisors required them to charge it to everyone.

    I guess that's the same advice that Hetzner just got?

    I mean, I can sort of understand the logic they're running on - not sure if it's what the law says though. Like if it was just an exported item it wouldn't make sense, but if you visited the country and ordered a service (rendered locally) you'd still have to pay VAT as a foreigner.

    🐴 $2/mo 512MB KVM - Unmetered bandwidth. $1.25 for 256GB Block Storage - from BuyVM (aff)

  • jarjar Provider
    edited October 11

    Them charging me taxes for their obligations in Germany would make sense. Because I don't think anyone in Marshall TX is accepting a check from a foreign entity on behalf of the local government lol

    But their email said to see my local tax office so I don't think it's that. I think they're actually unintelligent or justifying a price increase.

    "Note that Romania has laws agains all the illegal activities just like US, including copyright. Is not the Dracula's country or no man's land as you thought." - Random email from someone I don't know, about nothing I've done or said

  • deankdeank Member, Troll

    Alternatively, you can try suing.

    If you wish to join Nigh sect, adopt my avatar as your own and believe in the end.

  • YmpkerYmpker Member
    edited October 11

    This ( https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm# ) pretty much confirms what @jar said. Then again, I am a small business owner and don't charge tax in general, so I wouldn't really know. Additionally, nfa so yeah.

  • dev_vpsdev_vps Member
    edited October 11

    @deank said:
    Alternatively, you can try suing.

    Not likely to be a favorable result, IMHO
    disclaimer- my personal opinion and not to be considered as legal advice by any means.

  • FalzoFalzo Member
    edited October 11

    @Harambe said: because services are rendered in their country (/within EU) so tax advisors required them to charge it to everyone

    we had this discussion around here multiple times and it seems that there are different opinions on that. that's also why you see some being more relaxed about it (so far) and others making distinctions between companies vs private customers and might require proof of that (because within the laws there are regulation that might place 'fulfilment' differently, depending on being a business or end customer)

    however, the mail is about GST - aren't this local sales taxes within the US that might differ from state to state? and not neccessarily european or more specific german VAT...

    @jenkki said: Not sure if they pay out these taxes back

    this is nonsense, if at all then only very small businesses would even think about risking their company by skimming off something obvious like those taxes pass authorities.

    they for sure only go through all the trouble of changing their system, because they are forced to pay these taxes to the according authorities.

    one could rather suspect like @jar said, that they might not have all (possibly different) regulations for each state on their agenda... I'd also expect that only those who have local sales taxes would be required to pay them, so if there are none in texas, clients there shouldn't be asked for anything.

    @jar you most likely know your state laws and tax specifics much better then them, have you already reached out to Hetzner and try to clarify? could well be that a paper about your incorporation might be enough already as an exemption? outcome would be interesting...

    Thanked by 4Ympker jar w_ho_ami adly

    UltraVPS.eu KVM in US/UK/NL/DE: 15% off first 6 month | Netcup VPS/rootDS - 5€ off: 36nc15279180197 (ref)

  • jarjar Provider

    Aye I'll be sure to share the results of my outreach ♥️

    "Note that Romania has laws agains all the illegal activities just like US, including copyright. Is not the Dracula's country or no man's land as you thought." - Random email from someone I don't know, about nothing I've done or said

  • @Falzo said: however, the mail is about GST - aren't this local sales taxes within the US that might differ from state to state? and not neccessarily european or more specific german VAT...

    GST is not American tax phrasing though, but I look up German taxes and it says VAT/GST.

    If this is them charging US state sales taxes because they're shifting US customers under some new Hetzner USA entity, then this is the most botched announcement ever.

    Thanked by 2jar Falzo

    🐴 $2/mo 512MB KVM - Unmetered bandwidth. $1.25 for 256GB Block Storage - from BuyVM (aff)

  • ArkasArkas Member

    Who Checks If Hetzner actually sends taxes to foreign countries like the U.S. and Russia? Can they prove they are sending your taxes back?

    Thanked by 1jenkki
  • Taxes can be charged only for those who physically visiting destination country and buying local product inside country. How they trying charge taxes for virtual goods from other country? Just curious system.

  • dev_vpsdev_vps Member
    edited October 11

    @jenkki said:
    Taxes can be charged only for those who physically visiting destination country and buying local product inside country. How they trying charge taxes for virtual goods from other country? Just curious system.

    Any legal reference to your statement?
    If not, then clearly state that is just your “opinion”

  • jenkkijenkki Member
    edited October 11

    @dev_vps said: Any legal reference to your statement?

    If not, then clearly state that is just your “opinion”

  • dev_vpsdev_vps Member
    edited October 11

    It seems you missed the keyword in OP
    “regulated GST”

    This is the same reason for paying local sales tax to NetFlix for any streaming services. No physical goods involved here either.

  • jarjar Provider

    @dev_vps said:
    It seems you missed the keyword in OP
    “regulated GST”

    That plus local tax office means it just doesn't logically make sense.

    "Note that Romania has laws agains all the illegal activities just like US, including copyright. Is not the Dracula's country or no man's land as you thought." - Random email from someone I don't know, about nothing I've done or said

  • @jar said:

    @dev_vps said:
    It seems you missed the keyword in OP
    “regulated GST”

    That plus local tax office means it just doesn't logically make sense.

    I have edited my post to include NetFlix example

  • FalzoFalzo Member

    @Harambe said:

    @Falzo said: however, the mail is about GST - aren't this local sales taxes within the US that might differ from state to state? and not neccessarily european or more specific german VAT...

    GST is not American tax phrasing though, but I look up German taxes and it says VAT/GST.

    If this is them charging US state sales taxes because they're shifting US customers under some new Hetzner USA entity, then this is the most botched announcement ever.

    I see, maybe I understood it wrong then, and it is really about the VAT then. I'd be optimistic though, that proving you're a registered business will help with getting exempted anyway.

    this would also make me assume then, that they might have had a clash with the tax authorities around here about US clients. if that'd be the reason for them start charging these taxes in the future, they probably had to pay a bigger amount of taxes (they did not charge before) out of their own pocket already.

    TL;DR; VAT is complicated sh*t, lucky are the ones who don't have to deal with it.

    UltraVPS.eu KVM in US/UK/NL/DE: 15% off first 6 month | Netcup VPS/rootDS - 5€ off: 36nc15279180197 (ref)

Sign In or Register to comment.