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I do not see it. In Germany, prices are shown always with VAT included. So, there are no surprises later.
I am doing it like that:
Whoever needs to pay VAT or not, both clientele will get the same invoice amount from me. The first group with VAT included, the second without. But both pay the same amount ;-)
@filemedia: yes I did pay 3.39 but this month it was raised to 4.06 that's why I wanted to know what's going on.
I'm sorry I have no time to reply to this thread as I have a 16 hours flight to catch. Anything I will talk to you after I land.cheers.
I am not sure non-eu people can claim back VAT from their governments. Under which law ?
Say France pocketed my VAT (I am from US). Will I go to my IRS bureau in Texas and ask for the VAT that France got ? What will they do, send a bill to the France government to get it for me ? That's ridiculous.
There is no problem with charging VAT as long as you pay it to the government. You can charge even the people in EU which have valid VAT registered businesses.
At the end of the day, it is not like there is a lack of choice in EU regarding online services.
in such case when you can claim VAT back, you send a tax refund application to the given country. For instance for a merchant in France see here:
vosdroits.service-public.fr/professionnels-entreprises/R19511.xhtml
But anyway, sales of online/virtual services (not goods!) to clients outside EU is VAT free, the provider doesn't have to charge VAT to the customer.
The EU directive regulating VAT is here if you want to read through a hundred pages:
eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:en:PDF
on the accounting (provider's side) it's enough to mention "no VAT for online services provided to non-EU customer".
what filemedia does is very unusual.
If the EU provider hasn't an online form computing the VAT exoneration, then sending a proof of residence (utility bill) is all needed in any case.
VAT Should not be charged to non-eu nationals.
I lived in europe for a very long period and my family visited me often. They did their shopping in germany, netherlands, france, etc . No matter which airport they used to depart from europe they got the vat they paid, back at the airport !
It isn't a matter of choice, if a company/service is charging vat to non-eu nationals then its clear they are not remitting it to their country's tax department and are most probably keeping the amount for themselves. The german or dutch tax department will not ask for vat collected on items/service sold to foreigners(people who will not live more than 30 or 60 days in the said country).
If you are living in an eu country for more than 6 months then you are liable to pay vat since you will be most likely registered as a citizen in the municipality.
It is indeed a matter of choice. If invoices appear with VAT on them to non-EU residents, then it would be a VERY bad choice to not pay that VAT to the government.
If the tax department of your country is NOT asking you to collect VAT from non-eu nationals then why would one be collecting it ? The government is not expecting this amount to be paid by the business owner and knowing the German ethics I doubt the tax department would accept it in the first place even if they did how would they account it? VAT Paid By EU-Citizen John/Jane Doe ?
You do not know the German tax law. 75 % of all tax publishing is in German language.
@raza19
Do you even know, how to book? You have such no idea.
It's just: VAT paid? Yes or no. Who it was is not interesting.
All seems legal and above board .... HOWEVER, why would you chose to charge VAT to customers that don't have to pay it, it makes your services more expensive to them for no good reason.
Accounting compliance? seriously give me a flake man! you say to your accountant we don't charge VAT to none EU customers now, they deal with it, job done.
Christ on a stick, when will people stop being government tax collectors for no good reason.
This is one of the most lazy acts I have heard of so far in hosting.
Yes I am not a boekhouder (don't know the german equivalent) but I have had a company in Netherlands for 10 years now
and frankly everyone here who is knowledgeable enough knows the truth. This is no rocket science.
Besides I love @fileMedia's service I have a vps with them but I dont like the fact they are collecting tax from non eu nationals.
the entire point! There is no reason to !
I agree you dont have to, but 2 points:
It is their choice to make their products more expensive, who does not like it, as we say here, the pond has fish.
It's legal and they can if they want to but let's hope they report that outside EU VAT and not keep it for themselves
So the only really argument is because they can? great.
They can also require a copy of your credit card and mortgage statement before providing service, nothing illegal about asking for it, they could also just do this for people that have the letter S in their last name, nothing illegal about it.
The actual point is they are pointlessly taking money out of other nations economy's that cannot be put back and needlessly taking money out of peoples pockets because you know who cares about people, times are hard but meh... cant be bothered to do things properly so you need to pay for that.
It's not illegal no, but it is just plain f*****g rude.
I would love nothing more than to see 1000's of VAT claim backs dating back for 5 years, lets see which method was easier after that, some people could be owed €100's or more.
No that's not correct, you pay only 3.39€ as before.
Please look into the invoice.
ALL collected VAT goes to the tax office! Nothing stays in the company, all VAT are displayed on each invoice. All prices on our website contains VAT (german law).
But we collect them because it is extremely easier to manage because every free tax invoice must collected and send every 3 months with a classification if user have a VAT-ID or non-eu.
It would be far to risky for them not to declare it. If the taxman does an audit and finds that they have been charging VAT and not declaring it then they can find themselves with some very high and very real fines.
Not if they absorb the VAT loss in their pricing.
Example; Product A is an identical product across all companies and costs each company €3 to source. Company A charges €5 excluding VAT so makes €2 profit. Company B charges €5 including VAT and only makes €1 profit.
Tax man is happy and makes it easier for everybody.
or
Company A charges €5.00 + VAT and gets 30% more customers from outside the EU than it would have originally because they only have to actually pay €5.00
Company B cannot be bothered to set up basic tax rules so does 1 of 2 things:
1) absorbs VAT in to loss and charges it to everyone, no need and completely silly not only are you giving way more tax to the government than you need to you could (probably are) losing a fair bit of trade through needlessly artificial pricing.
2) Simply charges more VAT than is required and as such hits peoples pockets without any good reason.
It can only be 1 of 2 scenarios (legally) for company B, neither make a lot of business sense and one of them shows a complete disregard for actual people and customers.
I suppose the other reason could be that you are such a nationalist and believe your government is great so you do everything you can to bolster your own country's economy regardless of what is morally right or wrong.
In even more simple terms lets forget everything, we meet for the first time, you want to buy a cake from me, and my response is: OK well I can either sell it for €10 or €12 how much would you like to pay?
Maybe for various reasons they prefer to deal with customers from EU and this is a way to discourage people from outside EU to order their services, without outright denying them?
Maybe auditing who is from EU / from outside EU costs them too much work hours (and hence too much money), so they prefer to avoid the auditing by charging everyone with VAT?
Still i don't think it's a very smart move to do it (costs them lost sales probably), but maybe they have their reasons.
Well, nowhere it's fun to deal with (tax) authorities, and Germany isn't exactly a tax-friendly country last time I checked, and you really don't want to screw it up with them. So for whatever reasons he decided not to go into differentiating between EU and non-EU customers, I think ultimately it's filemedia's decision. Nobody is forced to sign up with their services... and looking at their packages they seem to be quite competitively priced (even with VAT included).
Exactly my point. Nothing wrong with someone taking precautions
I had this discussion with them before. I'm an EU-registered company with a valid VAT ID but they still wanted to charge me VAT. I decided not to order for that reason.
There is indeed no reason other than plain laziness to charge me VAT. I don't have to pay it in Germany, simple as that. I have to pay it here, regardless. So if I would order, I would have to pay both VAT here and in Germany.
In your case (business in a EU country, with.a valid VAT ID, buying a service in another EU country) filemedia attitude is even worse, goes against established EU commercial practice, because the EU norm is by default that the buyer is the VAT taker and therefore doesn't pay VAT by the sellers jurisdiction.Indeed.
Indeed, it is just pure laziness simple as that.
Agree with you guys - plain laziness. I know about taxes here in Mexico, I pay them too, and there's no reason to charge a tax to a foreign client.
Deal with it or move on, its not that hard, complaining about it is useless, filemedia obviously made a decision they stand by which is understandable.
German laws are nearly always (95%+) translated to english. ALWAYS. Even any high court decision in Germany is translated into English.
Even if not illegal (depends on state, Bavaria seems to not allow it for example, Helgoland is tax free at all) this is very, very uncommon and bad practice simply for the not required 19% they charge potential non-EU customers while others (like, we) entirely avoid this.
I'm also not sure why you would WANT to account/pay VAT for them, this makes things even more complicated once you need double accounting (GmbH and AG)
But, ok, sure, your choice.
/free business advice
I'm very sure that is illegal, it is at least something i have NEVER heard of before - even with Poland which is pretty much regarded the most complicated in the entire EU on VAT.
Could please someone ask the question here: http://www.frag-einen-anwalt.de/. I am willing to pay 15 EUR extra for legal security :-)
Check the explanation of the Hanseatic Chamber of Commerce:
Why not save the €15 and look it up yourself right at the source?
Access to European Union law is free, pretty simple and available in 24 languages.
Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:077:0001:0022:EN:PDF
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:EN:PDF
Council Regulation (EC) No 1777/2005 of 17 October 2005 laying down implementing measures for Directive 77/388/EEC on the common system of value added tax:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:288:0001:0009:EN:PDF
And in case you are particularly interested in Germany, there is a nice little booklet published by the German Federal Ministry of Finance: "An ABC of Taxes" (pp. 122-129 on VAT):
http://www.bundesfinanzministerium.de/Content/DE/Downloads/Broschueren_Bestellservice/2012-10-30-steuern-von-a-z-english.pdf?__blob=publicationFile&v=3
Well that's the actual problem, it is not understandable