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? - Page 5
New on LowEndTalk? Please Register and read our Community Rules.

All new Registrations are manually reviewed and approved, so a short delay after registration may occur before your account becomes active.

Hetzner begins to charge tax for US clients?

1235

Comments

  • friendhostingfriendhosting Member, Patron Provider

    @Hetzner_OL said: It is not about the place where the customer is currently located but about where his business is registered.

    That is, your newsletter concerns only companies and does not affect individuals?

  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    I guess someone tell OVH they need to mail a sales tax check to my boys in Harrison county before we send a state trooper up to Canada to arrest them during their breakfast at Tim Hortons. Turns out we have jurisdiction everywhere now. London better get our old embassy ready. We ride at dawn!

    I paid $700 from just the Euro to USD conversion rate this month. If a German company wants to pretend it's a US company, I'd like to pay with my currency. Converting euros back to dollars to send money to my neck of the woods don't make a lot of sense. I'm gonna put a few miles between myself and this whole thing, especially after a week of silence.

    I pay taxes, boy do I pay taxes. About 1/3 of payroll is just taxes. All in all this is a huge price. Increase. I'm out. These roads ain't worth that much, we hardly every even fix them. The DMV workers definitely ain't worth it, the bastards just try to find every reason to kick me out every time I walk in the door. The trash pickup is worth it, but that's already paid for separately, those are some hard working motherlovers.

    Thanked by 1sgno1
  • verovero Member, Host Rep

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

  • jarjar Patron Provider, Top Host, Veteran

    @vero said:

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

    My money is all in USD so when I pay the invoices it gets converted to Euro.

  • verovero Member, Host Rep

    @jar said:

    @vero said:

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

    My money is all in USD so when I pay the invoices it gets converted to Euro.

    So how do you actually lose those $700?

  • jarjar Patron Provider, Top Host, Veteran

    @vero said:

    @jar said:

    @vero said:

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

    My money is all in USD so when I pay the invoices it gets converted to Euro.

    So how do you actually lose those $700?

    Let's say 1 euro is 1.2 USD. That means on a 1 euro invoice I pay 1.2 dollars. And this isn't a static value so next month it could be worse.

  • verovero Member, Host Rep

    @jar said:

    @vero said:

    @jar said:

    @vero said:

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

    My money is all in USD so when I pay the invoices it gets converted to Euro.

    So how do you actually lose those $700?

    Let's say 1 euro is 1.2 USD. That means on a 1 euro invoice I pay 1.2 dollars. And this isn't a static value so next month it could be worse.

    You mean you lose $0.20 while converting to 1.00€? That has nothing to do with conversion, just in dollars server price would be higher than in euro. You can check, e. g. Contabo pricing in $ and €, they will be different.

  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    @vero said:

    @jar said:

    @vero said:

    @jar said:

    @vero said:

    @jar said:

    I paid $700 from just the Euro to USD conversion rate this month.

    What kind of expense is that? Where do you exchange currencies?

    My money is all in USD so when I pay the invoices it gets converted to Euro.

    So how do you actually lose those $700?

    Let's say 1 euro is 1.2 USD. That means on a 1 euro invoice I pay 1.2 dollars. And this isn't a static value so next month it could be worse.

    You mean you lose $0.20 while converting to 1.00€? That has nothing to do with conversion, just in dollars server price would be higher than in euro. You can check, e. g. Contabo pricing in $ and €, they will be different.

    Right but they'll be static. Contabo, like any other company I've seen pricing a service in USD, won't have their price page dynamically generated by the current currency conversion rate. With currency conversion the prices are variables, and that variable is significant at scale. While Hetzner's server prices aren't changing, what I'm paying for the same items could go up by hundreds of dollars from one month to the next. While sure I'm receiving some payments in the opposite conversion from my customers, it's not enough to say that everything is equal regardless of the change in variable. If I pay $100 in January and $120 in February, that's a very important thing for me to take note of.

  • verovero Member, Host Rep

    @jar said:

    Right but they'll be static. Contabo, like any other company I've seen pricing a service in USD, won't have their price page dynamically generated by the current currency conversion rate.

    Just checked Contabo - their exchange rate is a pure rip off (~$1.35-1.40/1.00€). And their taxation, as I tried them few years ago was complete mess - they charged the same no matter if you are VAT payer or not and support gave blurry answers (intentionally, I suppose), so I decided to stop my trials right there. You would and you are benefiting from variable exchange rate.

    Hetzner is still dirty cheap for the level of service you get. Yes, IPs became a luxury here and I'll have to think how to deal with this.

    Thanked by 1jar
  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    @vero said:

    @jar said:

    Right but they'll be static. Contabo, like any other company I've seen pricing a service in USD, won't have their price page dynamically generated by the current currency conversion rate.

    Just checked Contabo - their exchange rate is a pure rip off (~$1.35-1.40/1.00€). And their taxation, as I tried them few years ago was complete mess - they charged the same no matter if you are VAT payer or not and support gave blurry answers (intentionally, I suppose), so I decided to stop my trials right there. You would and you are benefiting from variable exchange rate.

    Hetzner is still dirty cheap for the level of service you get. Yes, IPs became a luxury here and I'll have to think how to deal with this.

    I can't call it a benefit. The reason I point out that the difference between USD and Euro was $700 this month is to say that I'm finally at a scale where that variable is a liability. Toss another 8.25% on before the conversion and we're increasing my scale and therefore the size of the liability. I run a low priced service very intentionally, and it means making tough choices from time to time. I can't have my server bill varying by a few hundred every month when most of my revenue isn't dictated by the same variable.

    So if Hetzner wanted to keep me, which they don't and it's fine, they'd need to meet my scale with some increase in predictability. That's where I was already at when they hit me with "now we're going to add taxes on it, not tell you clearly what tax it is, and then ignore you for over a week." It was a last straw kind of thing. Fortunately for me, OVH has stepped up it's game in appealing to businesses and that predictable billing is a game changer for me right now.

  • @Hetzner_OL said:

    @Falzo said:
    using the term GST in the initial mailing lead to quite some confusion here, because it seems that it's nothing people in US would use, when referring to their local sales taxes (see the discussion on the first two pages).

    Yes you are right the term GST was used incorrectly here and has led to confusion. I am very sorry for that!

    it should use the term
    GST / VAT / Local Sales Tax

    Hetzner customer in US states with no sales tax are likely not be paying any tax.

  • MannDudeMannDude Host Rep, Veteran

    @Hetzner_OL said: No, it is not a question of demanding taxes only from large businesses. Every state in the U.S. has its own sales tax laws, which we also have to comply with.

    Ah, gotcha. Well, I'm not sure why more American based businesses aren't setting up their businesses in states that reduce or eliminate the bulk of their tax expense.

    Once of the many reasons why I'm happy with our choice of registering in Wyoming.

  • FalzoFalzo Member
    edited October 2021

    @jar I understand where you are coming from over all, however bringing the conversion rate into play compared to taxes seems a bit like stretch to be honest. if you check the volatility of it over the last year it's always been in the range from 1.16 to 1.23 USD per €

    so of course you are right it could change month to month but there won't be really big jumps anyway and it is not really something that depends on Hetzner or could be influenced by them.

    I understand that a fixed value would be preferable esp. if you want to be able to plan your expenses better - yet I'd assume that with (european) companies which offer that it might be to their advantage ... e.g. contabo translates 8,99 € to $11.99, or 14,99 to 19.99 which both is 1.33 USD per Euro. (@vero beat me to it)

    so doing the actual conversion rate through your bank seems more fair (depending on fees of course). in any case, this got nothing to do with paying taxes or not ;-)
    that an added local sales tax won't help your calculation is of course a bad thing especially if you can't claim it back or get an exemption (for instance in Germany I have to pay VAT but as a business can claim it back from tax authorities, so it just runs through in a circle)

    let's see if an american business/incorporation of Hetzner comes to light soon and maybe with that they also change their pricing policy to a more static approach 🤷‍♂️

    Thanked by 4adly vero jar iKeyZ
  • verovero Member, Host Rep

    @Falzo said:
    e.g. contabo translates 8,99 € to $11.99, or 14,99 to 19.99 which both is 1.33 USD per Euro. (@vero beat me to it)

    Just took price from their front page: VPS from 4.99€ - $6.99 (x1.40), but they all are different indeed.

  • verovero Member, Host Rep
    edited October 2021

    @vero said:

    @Falzo said:
    e.g. contabo translates 8,99 € to $11.99, or 14,99 to 19.99 which both is 1.33 USD per Euro. (@vero beat me to it)

    Just took price from their front page: VPS from 4.99€ - $6.99 (x1.40), but exchanges rates are different for different servers indeed.

  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    @Falzo said: bringing the conversion rate into play compared to taxes seems a bit like stretch to be honest

    You have to get in my mind in a fairly linear fashion. I was already disliking the variable bill as I never stopped to take the time to consider what it would cost me at scale, and how that might compare to the pricing of other outfits over time. A typical human error, thinking about now and not later. Now that later was here, this was on the top of my mind. The tax email was the icing on the cake of an existing issue that sent me over a line I was already standing next to. So it's really about the progression of issues relevant to me.

    Thanked by 1Falzo
  • @jar said: So it's really about the progression of issues relevant to me.

    fair enough.

    Thanked by 1jar
  • Suggest to remove their ,,Top Provider,, tag and replace to ,,US Tax Invader,, :wink:

    Thanked by 1sgno1
  • Our contact person @ Hetzner sent our ticket to billing and they came back with some clarification. They are quoting this Wayfair memo

    So there we have it. Unless you are a 501(c)(3) y'all on the hook for this. No other vendor is charging us thus far but that doesn't mean Hetzner are wrong. First reaction was screw Hetzner, we shall pack up and leave. But nah. Going to stay put. They have been good to us over the years.

    It does say in there _Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. _ which per se Hetzner do not have right now. Then further down in the text it says if your gross sales are over 500k a year in Texas you automatically have a nexus.

    Thanked by 2Falzo iKeyZ
  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    They never replied to me which solidified my decision. The value isn't there, the retention effort zero. I was already on the fence I just needed something to knock me one way or the other and this served that purpose.

  • @spambait said: Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. _ which per se Hetzner do not have right now. Then further down in the text it says if your gross sales are over 500k a year in Texas you automatically have a nexus.

    Germans now operate with taxes in US? And they consider who pay in Texas? Just curious. WW2 still up.

  • jarjar Patron Provider, Top Host, Veteran

    @jenkki said:

    @spambait said: Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. _ which per se Hetzner do not have right now. Then further down in the text it says if your gross sales are over 500k a year in Texas you automatically have a nexus.

    Germans now operate with taxes in US? And they consider who pay in Texas? Just curious. WW2 still up.

    They're going to spin up a US company, just watch.

    Thanked by 10xbkt
  • bikegremlinbikegremlin Member
    edited October 2021

    @jenkki said:

    @spambait said: Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. _ which per se Hetzner do not have right now. Then further down in the text it says if your gross sales are over 500k a year in Texas you automatically have a nexus.

    Germans now operate with taxes in US? And they consider who pay in Texas? Just curious. WW2 still up.

    Yeah - they state it as a "war damages charge." :)

    @jar
    That's good reasoning on your part IMO. I've faced it the other way round - paying US $ from a EURO account. Currency conversion rates vary, but also our local banks always take some extra commission when doing the conversions (that part can not be controlled by the service seller, it's banks' policy), which easily go up to about 5%.

    Not sure about other countries (including the US) banks, but if I have dollars in my account, it gets even worse! Haha. :) To pay 100$ invoice from a dollar account, my dollars get converted to euros, with some 5% worse exchange rate than the official, then the euros get converted back to $, again with a 5% worse exchange rate - so the bank eds up taking over 10% commission for the service. Ending up at around $110.9 charge. It's beautiful. :)

  • @bikegremlin said:

    That's good reasoning on your part IMO. I've faced it the other way round - paying US $ from a EURO account. Currency conversion rates vary, but also our local banks always take some extra commission when doing the conversions (that part can not be controlled by the service seller, it's banks' policy), which easily go up to about 5%.

    Not sure about other countries (including the US) banks, but if I have dollars in my account, it gets even worse! Haha. :) To pay 100$ invoice from a dollar account, my dollars get converted to euros, with some 5% worse exchange rate than the official, then the euros get converted back to $, again with a 5% worse exchange rate - so the bank eds up taking over 10% commission for the service. Ending up at around $110.9 charge. It's beautiful. :)

    I recommend you avoid using traditional banks for these kinds of things, as they rarely offer a good value. I've had pretty good success using Transferwise (now called Wise). They have local accounts in many different countries and will do the conversion for you at a discount compared to what banks offer.

    Thanked by 1bikegremlin
  • vyas11vyas11 Member
    edited October 2021

    @bikegremlin

    Your experience reminds me of my coffee wat Milan Airport, a 3 Euro coffee cost me 9 US Dollars.

    The Reason? Double exchange

    I paid in Dollars, the guy at the counter took the dollars, converted to Euros (worked out to 13 or 14 Euros IIRC after exchange rate and fees…)deducted 3 Euros (I believe VAT wasn’t around, something else was).

    Next, he converted the balance euros into dollars again, and again deducted for exchange rate. And I got 11 dollars back.

    I have never had a coffee at any international airport since :-)

    @bikegremlin said:

    @jenkki said:

    @spambait said: Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. _ which per se Hetzner do not have right now. Then further down in the text it says if your gross sales are over 500k a year in Texas you automatically have a nexus.

    Germans now operate with taxes in US? And they consider who pay in Texas? Just curious. WW2 still up.

    Yeah - they state it as a "war damages charge." :)

    @jar
    That's good reasoning on your part IMO. I've faced it the other way round - paying US $ from a EURO account. Currency conversion rates vary, but also our local banks always take some extra commission when doing the conversions (that part can not be controlled by the service seller, it's banks' policy), which easily go up to about 5%.

    Not sure about other countries (including the US) banks, but if I have dollars in my account, it gets even worse! Haha. :) To pay 100$ invoice from a dollar account, my dollars get converted to euros, with some 5% worse exchange rate than the official, then the euros get converted back to $, again with a 5% worse exchange rate - so the bank eds up taking over 10% commission for the service. Ending up at around $110.9 charge. It's beautiful. :)

    Thanked by 1bikegremlin
  • @aj_potc said:

    @bikegremlin said:

    That's good reasoning on your part IMO. I've faced it the other way round - paying US $ from a EURO account. Currency conversion rates vary, but also our local banks always take some extra commission when doing the conversions (that part can not be controlled by the service seller, it's banks' policy), which easily go up to about 5%.

    Not sure about other countries (including the US) banks, but if I have dollars in my account, it gets even worse! Haha. :) To pay 100$ invoice from a dollar account, my dollars get converted to euros, with some 5% worse exchange rate than the official, then the euros get converted back to $, again with a 5% worse exchange rate - so the bank eds up taking over 10% commission for the service. Ending up at around $110.9 charge. It's beautiful. :)

    I recommend you avoid using traditional banks for these kinds of things, as they rarely offer a good value. I've had pretty good success using Transferwise (now called Wise). They have local accounts in many different countries and will do the conversion for you at a discount compared to what banks offer.

    Yes, definitely. I am using foreign services for USD payments (the optimal choice for me, for now, is Payoneer, with all the pros and cons of alternatives considered).
    I'm not sure whether companies are free to use foreign bank accounts as easily as individuals.

  • verovero Member, Host Rep

    @bikegremlin said:
    To pay 100$ invoice from a dollar account, my dollars get converted to euros, with some 5% worse exchange rate than the official, then the euros get converted back to $, again with a 5% worse exchange rate - so the bank eds up taking over 10% commission for the service. Ending up at around $110.9 charge. It's beautiful. :)

    I use CC to pay in foreign currencies and exchange rate is almost exactly the same as the official. Never noticed my bank would charge me additionally for that.

  • @vyas11 said: Your experience reminds me of my coffee wat Milan Airport, a 3 Euro coffee cost me 9 US Dollars

    Sue them for a fraud attempts.
    I have currency in Rubles on my Debit Card and never pay more than official exchange rates

    @vero said: I use CC to pay in foreign currencies and exchange rate is almost exactly the same as the official. Never noticed my bank would charge me additionally for that.

    Me too.

    Thanked by 1vyas11
  • Hetzner_OLHetzner_OL Member, Top Host

    Hey LET readers, I talked with a colleague today from the Accounting Team to try to clear up a few things.
    For the moment, the only US state that is affected is Texas. Customers in Texas will be expected, starting on 1 December 2021, to pay a rate of 8.5%. If you are affected, and you have a tax exception certificate, you can write to our team via a support mail and send us your tax exception certificate.
    Customers may be soon affected in Arizona and Utah, where the sales tax rates are apparently quite different from local municipality to municipality. So, depending on what specific location customers have in those states, they will pay different rates. We will notify those customers when that happens.
    All other US states are unaffected at the moment. If and when that changes, we will notify the customers who are affected.
    (I will be adding this information to our Hetzner Docs article as soon as I can find a few free minutes.)
    I am not going to try to answer other comments so far in this thread simply because I am not an expert of taxes. If you're a customer and you're affected, please feel free to write us a support request via Robot/konsoleH/Cloud Console, and our team will do their best to help you. --Katie

  • jarjar Patron Provider, Top Host, Veteran
    edited October 2021

    As much as I try to be I'm not an expert either. Tax law inside the US is much more complex than other topics and it's not uncommon to perceive contradictory language, often because it's actually written in exactly such a way.

    Though I am confused by a single figure for the whole state. Mine, for example, is actually 6.25%. Though I usually spend 8.25% because most business isn't conducted in Harrison county. But 8.5% doesn't match anything I'm immediately aware of.

    Doesn't matter much. I've never successfully convinced an accountant to change their mind on anything. Not about to beat a dead horse.

Sign In or Register to comment.