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Again, this is not a big surprise they are a USA registered company this caught most EU companies by surprise, same thing applied to them as applies to Linode, they will just build up a huge VAT liability.
How it will be enforced I have no idea.
They can't enforce it outwith the EU that's the thing. The co-operation required between agencies will be significant, too significant for agreeements to be reached over access to provider records to prove what they would owe.
I really can't see many US providers loosing sleep over a very EU centric tax issue.
Lets look at it the other way round.
The IRS decides that by law, all none USA and USA companies has to collect a standardized sales tax on e-services at 11% on all sales to USA citizens starting January 1st 2015.
I have owned hardware in Phoenix and Miami, trade contracts with USA based companies and am actively selling to USA citizens after 1st January without collecting the e-services sales TAX.
1) What methods do you think the IRS would employ to recover the lost sales tax revenue?
2) How long do you think the USA based companies will be allowed to continue to trade with me?
3) How long do you think it would take to get multiple reports put in to the IRS by competitors in the USA if I was an EU company the size of Digital Ocean or Linode considering that USA based competitors are obeying the law as they feel they are at a disadvantage on their home soil because I can sell 11% cheaper by simply ignoring the law?
This is essentially a mirror image, if anything I would say many EU governments act faster and more aggressive as a whole than the IRS having had experience with both sides, do you honestly think they wont take direct action if it is possible to do so?
I expect it will be a letter, followed by a threat, followed by an argument, followed by a final demand, followed by a settlement or the removal of assets and trade abilities.
Some EU states are allowed to fine something crazy like €340,000 for missing payment of €1, the fine however will be a minimum of double the liability.
I completely agree, however this changes when said company has EU assets. then you should be seriously losing sleep if your not going to comply.
I have generally found over the years that the USA deciding to do something and enforcing it on business outside the USA is usually quite full on, the EU on the other hand tend to handle enforcement outside the EU in a much more lackluster way.
£10 right now says US companies when and if they are forced to comply will be given a "ok, start charging now and we will say nothing about the past due amounts" type of deal.
I just read some info, they are only now 2 weeks away starting discussions with the USA regarding enforcement and voluntary compliance which means that even if the USA agree's it will be years away.
The net result is that a USA has a considerable price advantage over EU companies when selling within the EU, how fucking stupid is that.
This world ran by inbread greasy twat bastards really pisses me off, not a single ounce of common sense,....
This will end eventually, the taxmen are sneaky bastards and like to hand out fines and collect money. For instance if they can't collect taxes from Linode, their suppliers will be made liable for the taxes, i.e. the DC in London that Linode uses can be made liable and will have to pay these taxes instead of Linode. So sooner or later Linode will comply too. At least the big fish will start complying.
Look for instance at GoDaddy - they are USA based company, but they do and will collect VAT.
Yeah. I remember playing this online game and all of a sudden they added 19% taxes for EU customers.
OVH announced today via mail to charge VAT complying with the new law from 2015
(not really a suprise after all)
but they already did that before, at least for german customers, which got their invoices from the german department of ovh... ;-)
They also do that for the UK.
If they have registered the company in more countries, it will be easier for them to solve the VAT issue.
Slightly old hat, but this MOSS guide from Barclay's does spell out the rules in very simple language, also a good flowchart from HMRC that sums up the MOSS effect -
https://www.connector.barclays.co.uk/article/VAT-MOSS--The-everything-you-need-to-know-guide/26355
https://www.connector.barclays.co.uk/static/docs/articles/vat-moss-flowchart.pdf
123-reg.co.uk charge me VAT even I am not from UK/EU Country so this will good for them.
Many of websites now asking to update country like themeforest,etc.
Interesting read. (In regards to US Companies)
http://www.happybootstrapper.com/2014/im-us-whatll-happen-just-ignore-eu-vat-changes/
It is looking very likely that Andrus Ansip (European Commission Vice-President) is going to scrap or extend the requirements for small businesses anyway as it has now been proven it is impossible to comply for the vast majority.
Better late than never... But this is a mess, I think even Romanian AVAS would have not tried this, and they are really-really incompetent.
Got a source bud?
http://euvataction.org/updates/ has the overview, you had to be following the twitter storm and actions groups updates really.
The UK guy Vince Cable (I think) is being asked to resign over the failure to correctly communicate with UK business regarding this over the last 6 years.
Paypal have confirmed they cant even comply as well FYI in the vast majority they cannot provide the info that small businesses need to comply with the DPO.
Anybody heard any more about this over the last couple of days?
Ha its Christmas as if anythings going to happen now
Forgot anyone mentioned this put HMRC changed there rules on this a few weeks ago and stated that UK Businesses can still use the £81,000 limit, just for UK sales. Still have to use MOSS for any other European sales though, although you have to set it up as a separate registered entity, just for the EU business.
http://euvataction.org/updates/
I expect it to get squashed by the 1st.
I dont, I only expect more clarifications, definition update, maybe a threshold from which it applies, i.e. more than 100k a year or so.
That is kind of what I meant by being scrapped as in my eyes that is the only important element.
Just more paperwork. Yay, my favorite thing. Get used to it. The US is proposing similar legislation that might go into effect in a year. That will probably be split up by state so you have potentially 52 tax rates to charge. EU only has 28.
28 member states, 70+ VAT Rates
How do you get 70? Are you also doing medical and dental care as part of your hosting service?
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf
lol, I am not but that's a good idea!
I was referring to the global market rather than industry specific, however some islands have different rates to their main body I think.
Not just Island's think there are a few 'city states' that also have their own VAT rate, due to being historical special snowflakes. It was lunacy to try and bring in legislation like this before trying to harmonies VAT rules (and probably rates) across the EU.
Hmm, time to hire a intern in America to buy all my products. Or even better just use US VPN and use US details of a friend.
What does VAT stand for?
Value-Added-Tax
Adding 20% is not making it good value anymore!
An unverified paypal account would help too. If 500 Eur are enough for a year, why not, go for it. However, maybe next year, they will add US tax, so, make sure your "friend" lives in the lowest rate state.