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New update on this and one thing has changed, UK HMRC will accept paypal customer address as proof of place of Supply till end of June, which is a temporary work around for that mess at least. -
http://euvataction.org/2014/12/29/hot-off-the-press-concession-from-uk-hmrc-will-enable-more-firms-to-keep-trading/
HMRC has done as much as it can, its all down to the EU to fix this mess and they seem not willing to.
With only 2 days (and a few hours) to go before the rules come into effect there are going to be a LOT of people unhappy.
Our prices will start excluding VAT from the 1st.
I am very worried about this because the EU have not done nothing apart from mess they have caused! :-(
I still have some hope that it will be fixed by the end of January so prices will remain the same and Inception hosting will absorb any VAT for January.
Sadly reading through this thread still makes it look like a huge problem for us at least, Exactly what to do is something I have no idea yet, because the cost of following this would be so much we would be making losses, not trading within the EU and only to the non-EU countries would cost us probably even more... Urgh.
Online Just finally announced their changes, 2 days before they come into effect.
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Been with accountants today, finally in a position where we are considered to be ready to roll come what may, it's taken quite a bit of testing over the past few months and despite strong disagreements from one grumpy host on LET
it's come together reasonably well.
It will of course re-shape itself over the coming months but it's better than having done less or nothing at all.
If they decide to be nasty WHT/LET will be prime picking for the inspectors looking to nail a few small guys or make examples of non-EU companies trying to get away with it, not to mention hosts shopping other hosts after March.
That's a fair point, could prove more effective than the standard DDoS if the new regs are fully enforced.
@AnthonySmith There will be a reliance on people shopping others, and as you say it will happen here, we both know that.
@AnthonySmith why bother going after the small guy when they can try and seize expensive assets from companies like Linode or Digital Ocean?
Because kids operating out of a bedroom probably won't put up much of a fight?
And also there is nothing to take from them, i.e. they don't have any assets, especially in the EU?
To set an example, to prevent a future headache in terms of audit and compliance as I would think tracking 100,000 small fish costs a hell of a lot more in staff time and man hours than the small team that it will take to nail DO to the wall.
It depends if DO only lease there equipment in Europe, then it gets into murky waters and they normally cant seize them. While any operator who is legally based in Europe who doesn't follow the new rules will be an easy catch - its them the will go after before DO and Linode most likely.
I think in UK it will be the Cometition and Market Authority who will get involved with caces against the big players like DO & Linode before the HMRC., since these companies would have unfair market advantage when competing with local UK companies on selling services to UK citizens on servers based in the UK.
THANK YOU!!!!!! i appealed and appealed this point for the UK and for all EU states when they wanted a top 10 issues list for the changes, apparently this one did not make the cut.
Could be used as a PR exercise, easy wins on the board to scare big business into compliance perhaps?
@Maounique can I ask a question about the new VAT rules. I have been a Prometeus/Iwstack customer for a long time. Up till now, have I paid Italian tax on the service I have? So with the new VAT system, the new price for me will be €X + Norwegian VAT - Italian VAT? So the difference will be maybe 5%. Or will the new price be the current price + 25% Norwegian VAT?
If all my hosting cost goes up with 25%, I have to take a hit, loosing 25% on my current price (thats a loss of €890/year), or increase my price to my customers with 25% (that will make them unhappy).
@mykhen what? Norway is not in the EU, you souldn't pay any VAT.
To clarify it will be the cost of the service + Norwegian VAT.
So currently you pay €5 + 22% (Italy VAT) which is a total of €6.10
From January you'd pay the €5 + 25% (Norwegian VAT) which is a total of €6.25
You won't pay the current cost with Italy VAT + Norwegian VAT
Just the cost of the service + Norwegian VAT as explained above.
EDIT - as @rds100 said Norway is not in the EU, you shouldn't pay any VAT.
@rds100 @rmlhhd Norway is in the EEA, so we must follow all the EU rules, but we are not a member of the EU.
It's several years since the Norwegian government demanded that all foreign companies trading with goods/services that there is VAT on, registered them in the Norwegian VAT registry. Large companies like Microsoft, Apple, Amazon, Ebay etc has done it. But not any of the small host I have used/using for my business. But with the new VAT rules, I'm sure Norway will have their money. (like that we don't have too much money already)
@rmlhhd
But I don't think I pay Italian taxes today, since iwStack/Prometeus write this on their page:
22% VAT will be added to listed prices to Italian customers and EU customers without a valid VAT ID.And what with the US based companies like DigitalOcean and Vultr? I don't pay any tax there now, but with the new rules I most likely have to pay 25% VAT.
Well, the current MOSS system only applies to charging and reporting VAT for customers from the 28 EU member states (27, since we don't need MOSS to charge VAT domesticly).
Now if we need to make separate VAT registrations in Norway and Switzerland we will just not accept any customers from these countries and be done with it.
This is getting better and better...
@myhken in theory as of the 1st January you will be charging the VAT to your customers (all assuming EU of course) also so you should not be losing much anyway perhaps a few percent based on where you are.
In Norway small business like my "company" can earn 50.000 NOK (around €5.400) per year, and not be registered as a VAT company. So I can't collect VAT from my customers, if I don't want to VAT register my "company". Then I also has to get an accountant and send in my tax returns etc, costing around €1200/year.
So to collect €700+/year in VAT from my customers, I have to add €1200 to my expensive.
Therefor my option is to increase the price I take for each customer I have, but they are already paying a pretty high price for my services (around €400/year), so adding €100 more per year per customer is not a good option.
Yep, appreciated, it is the same in the UK £81,000 however as of 1st January that threshold only applies to domestic sales within the UK, if you are saying that all your customers are from Norway then I understand.
If you have a customer in the UK for example though you need to charge him/her 20% VAT as you are trading in the UK according to the new rules.
You are absolutely correct though, there is no way customers can see this as anything but a price hike, it is terrible.
TBH we do not know what to do yet. If we will register for MOSS which is very likely now, we will do what everyone seems to be fine with, even though we do not consider VPSes are electronic services, but until someone challenges that in court and we have a precedent, we will have to do whatever the tax authority says, and so far they say we must take the burden. This seems designed to drive small companies out of business and bring a bigger market to the big ones and in return those agree to pay more tax.
There's so little information about this that I really wouldn't know where to go either. This hasn't been properly announced by our tax authorities and the announcement that is in place is, as is tradition, written in Klingon.
as a business you are responsible for keeping up to the laws by youself or at least supposed to get someone who will take care for you. ;-)
sure this is a mess especially for small businesses, but I would not suppose this to be a competetive drawback at all.
at least everyone is supposed to charge the same VAT on his service if dealing with customers from the same country (within EU)...
this way the prices should be more comparable from a customers point of view, cause of no more vat-related differences.
(...as far as every business will go straight after the new rules)
lets make this clear once again: I am VAT registered so I already had to offer my price+vat to local and european customers. on european market I had an advantage over businesses from countries where VAT is higher than 19% and a disadvantage to the ones with lower VAT.
the other way round I had a big disadvantage on local market compared to companies outside EU which would not need to charge VAT here...
so from tomorrow on all local customers must be charged 19% VAT by every company (theoretically) and in other european countries everyone including my business has to charge the VAT of that country... seems relativly fair to me, at least in theory :-)