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Filemedia IT charging VAT to non-EU customers. Are you affected?
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Filemedia IT charging VAT to non-EU customers. Are you affected?

cosmicgatecosmicgate Member
edited January 2014 in General

Long story short, i noticed that filemedia included VAT in their invoice this month so i decided to write in to inquire about it. According to them they are/will be charging VAT to all clients with the justification that they are offering digital services and what matters is where the service is located.

What's your take on this? It's not much but I've never had to pay VAT (since I'm not from EU) before.

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Comments

  • I think only the Polish do this - they charge VAT to anyone. I've never heard of German company charging VAT to non-EU customers before.

  • It sounds ridiculous to me. I guess I'll start a hosting company and charge the full HST to everybody in the EU based on the justification that my servers are in Canada...

  • WilliamWilliam Member
    edited January 2014

    I'm not THAT familiar with German laws but:

    This depends on the company form, single person companies or non-EU VAT registered do not charge VAT but do not present it on the invoice either (not splitted). This is required to be noted on it (Kleinunternehmer something in Germany) IIRC.

    As a VAT registered entity (KG, GmbH, AG... can be any form), no, they should not charge VAT for non-EU customers - Only the Polish do this (VAT on anyone except EU VAT registered companies, and even then strange forms each year)

  • Here you see filemedia's reasoning:

    http://www.webhostingtalk.com/showthread.php?p=8379532#post8379532

    Naturally, others don't agree with him. ;)

    OVH, for instance, requires you to prove that you are not required to pay EU VAT, in which case VAT from your bills. See:

    http://forum.kimsufi.com/showthread.php?19495-VAT-TVA-outside-EU

  • This depends on the country, in Austria an order from an IP outside the EU and corresponding address settings are enough - If in doubt we ask for some sort of residence proof, but in reality this is not really any issue.

    France is stricter on that, Germany should (and as far as i know: is) like Austria.

  • I remember I wanted to hire a web designer from Belgium once (veerle), and she insisted on charging me VAT even though I don't live in a EU VAT-based country. :(

  • Less VAT for her to pay at the end of the year I guess? lol

  • shafireshafire Member
    edited January 2014

    Hehe.

    I would just charge VAT from anyone too ;-) It's easier for me: accounting is easier, finance authority and/or tax inspection can not piss me off, you support my country (:P), I do not need to audit the customer for tax reasons, ...

  • It probably goes like this: If they don't pay VAT when buying/renting their servers, DC space etc they have to charge all their customers VAT. Otherwise they could just rent the servers to a 3rd party outside of the EU, that 3rd party could re-rent the servers to someone inside the EU and noone would have to pay VAT.

  • Every company in the EU can decide if the charge VAT to non-eu customer or not when they provide the services in their country. The service must be located in the home country and digital service are located their.

    We don't changed this, all of our invoices includes VAT since 2008 and he saw it a few days ago...

    Thanked by 1Mark_R
  • @fileMEDIA said:
    Every company in the EU can decide if the charge VAT to non-eu customer or not

    That's different to what you stated at WHT; there you said that every service provider within the EU must charge VAT.

  • @Chumbi said:
    That's different to what you stated at WHT; there you said that every service provider within the EU must charge VAT.

    Nevertheless, he can decide, if he want to charge VAT from all customers or not.

  • krs360krs360 Member
    edited January 2014

    Just seems odd to me, isn't the basic idea something like:

    Pay VAT, charge VAT (assuming you're VAT registered and allowed to do so)..

    If you charge VAT out to customer's that are VAT exempt surely at the end of the year when you do your books you're saving yourself some money (potentially)?

    I'm sure someone from one of the reputable providers and/or someone in the know will correct me if I am wrong.

  • No, all VAT you collect - you give to the government. You (a company) can't keep a single cent of the VAT for yourself.

    Thanked by 1Mark_R
  • krs360krs360 Member
    edited January 2014

    Yes but if you pay VAT and charge VAT don't you pay the difference to the government?

    If you charge VAT to people you wouldn't normally, the amount of VAT you'd be required to pay at the end of the year would be less than you normally would, right?

    Thanked by 1tr1cky
  • You are just passthrough for the VAT, you get VAT, you pay VAT (to other companies). If you received more VAT that you paid - you give the excess to the government.
    If you paid more VAT han you received, the government returns the difference to you.

    Thanked by 1Mark_R
  • We charge VAT for all customers since 2008 and gave all collected VAT the finance government. It is easier for because you must send every 3 month a report to the government. VAT isn't something which stays in the company. All VAT do you charge go to the government.

    We charged VAT every time he paid the invoice but didn't saw it before or something other. So the price didn't changed it. All prices on the website include VAT.

    Chumbi said: That's different to what you stated at WHT; there you said that every service provider within the EU must charge VAT.

    Not must, it depends on the location which is the service. It's called "Leistungsort" in german. The service is located in germany so we can decide to charge VAT for non-eu customer or not. The "Leistungsort" isn't really specified for hosting because no thing is send to the customer. You always pay VAT in the supermarket when you go to germany. If someone wants back the VAT he must creates a charge-back request to the finance government.

    Thanked by 1Chumbi
  • said: What's your take on this? It's not much but I've never had to pay VAT (since I'm not from EU) before.

    You paid it before too. Look at your invoices, you pay 3.39€ that contains the VAT too. It changed nothing since you ordered the service. All prices on the website contains the VAT.

  • VAT charge-back request = Free invites for Tax Inspectors to your company. :))

  • No, we must send every 3 month all VAT related documents to the finance government. They check all..

    Thanked by 1Mark_R
  • @fileMEDIA thanks for the explanation.

  • @pbalazs123 said:
    VAT charge-back request = Free invites for Tax Inspectors to your company. :))

    The customer can request a VAT charge-back at our Bundesfinanzministerium.

  • @fileMEDIA said:
    We charge VAT for all customers since 2008 and gave all collected VAT the finance government. It is easier for because you must send every 3 month a report to the government. VAT isn't something which stays in the company. All VAT do you charge go to the government.

    We charged VAT every time he paid the invoice but didn't saw it before or something other. So the price didn't changed it. All prices on the website include VAT.

    Not must, it depends on the location which is the service. It's called "Leistungsort" in german. The service is located in germany so we can decide to charge VAT for non-eu customer or not. The "Leistungsort" isn't really specified for hosting because no thing is send to the customer. You always pay VAT in the supermarket when you go to germany. If someone wants back the VAT he must creates a charge-back request to the finance government.

    the EU regulation doesn't require non-EU customers to pay VAT on online service.
    Your comparison with buying something in a shop in Germany isn't valid.
    I am renting servers from Hetzner for years, I am in Norway, so outside EU, and I never paid VAT. Hetzner FAQ:
    wiki.hetzner.de/index.php/Payment_FAQ/en :

    " Do I have to pay the 19% VAT?

    "All clients pay the 19% VAT except those who live outside of the EU, or those who live in the EU but have a valid VAT ID.
    If you have a valid VAT ID you can enter it when you register for a Robot account. If you want to enter this at a later date that is also possible.
    If you don't live in the EU then you don't need to do anything special to have the VAT removed, it will be removed automatically. "

  • fileMEDIAfileMEDIA Member
    edited January 2014

    You MUST not, but you CAN. With digital goodies which stays in germany it is possible but no a MUST!

  • I don't see what's the matter here. As long as your accounting shows that VAT not collected on some transactions is for the non-EU customers, you are safe with the tax office. On the non-EU customer side, it's also easier, no need to claim VAT back.
    It's first time I hear a German provider charges VAT to non-EU customers.

  • Although I can't see the business sense in charging VAT to non-EU clients (as you are inflating prices and making yourself less competitive against other businesses) it is perfectly legal to charge VAT to non-EU entities as long as all of the VAT collected is paid.

    The only possible reason I can imagine is to make VAT compliance a little easier for the company.

  • Virtovo said: The only possible reason I can imagine is to make VAT compliance a little easier for the company.

    Yes it's easier that is the reason why we use it.

  • i think it doesnt depend if the service is from germany , what matters is that from where the customer is , and if outside EU no VAT in germany

  • @fileMEDIA said:

    You must be very afraid of the Taxman!

    Taxman: "Are you sure you've accounted your VAT correctly?"

    Filemedia: "Of course, we charge everyone VAT!"

  • fileMEDIAfileMEDIA Member
    edited January 2014

    Virtovo said: You must be very afraid of the Taxman!

    No problem, all inspection was passed from finance authority.

    ahmiq said: i think it doesnt depend if the service is from germany , what matters is that from where the customer is , and if outside EU no VAT in germany

    >

    That's not correctly. Read..http://www.hk24.de/recht_und_steuern/steuerrecht/umsatzsteuer_mehrwertsteuer/umsatzsteuer_mehrwertsteuer_international/367156/USt_grenzueber_Dienstleistungen.html

    I'm out here: Each customer can decide if they buy or not.

    Thanked by 1Mark_R
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