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I just waited on hold again earlier for 30 minutes to speak to a VAT specialist advisor (pretty sure it was just the general call center through) .
I explained my concerns, described my business, she then said but your not VAT registered right now correct? I said yes, she said well you don't need to worry about it, this only concerns VAT registered organisations...
I obviously said that is not at all how I understand the information delivered by HMRC and even suggested she did not really understand the new rules herself, so she just said write in for confirmation if you want confirmation.
Letter being written now, if they say the same that is good enough for me.
What? Now I'm even more confused...
you and me both......
Here is my take after that call, they don't even know what is going on themselves, if I can get written confirmation from the revenue collections service that what the agent said to me is correct I have made a reasonable effort and could not be held to account after the fact.
Why are you asking for advice from the revenue collections service? This is what accountants are for. Administrative staff at these bureaucratic organisations aren't tax law experts/specialists.
It was the VAT advice section, it is fair to say that if the body enforcing the legislation has a department that has specialists in VAT i.e. the very thing in question that any advice they give me on the matter should be correct.
I take your point though.
edit: I also started the conversation with: "I would like some guidance and advice on the January 1st 2015 VAT changes specifically the place of supply of services and what implications it has for me as a none VAT company in the UK, can you help with that"
The answer was yes.
@AnthonySmith This clearly affects web hosts.
Companies like mine are on the border line, and it's only after speaking to my accountant that it becomes apparent that the company should stop providing services to EU countries (non UK) after 1/1/15.
And yes, completely agree that you shouldn't be asking HMRC for tax advice. Big red flag from their end, and the guys who pick up the phones aren't experts anyway.
@AnthonySmith again Anthony can you actually link/paste the current EU law that says that right NOW US companies don't have to charge VAT (according to the customer's location) for EU customers and that you can "choose" the point of sale?
All I read everywhere is that now and starting 2015 things will remain the same.
Why non-UK? It will affect all 28 member states, including the UK.
But I still wonder what the legal basis is. Why should a non-EU business comply with foreign taxation?
Even bigger mess will be when someday Canada decides that some day EU companies should charge GST from Canadian customers. And when USA decides that EU companies should charge US sales tax from US citizens. Don't foget that sales tax in USA varies by state and even by city.
The whole point (if you can call it that) of this nonsense is to move the place of sale from the seller's region to the buyer's. Therefore, in our case, we have decided that we will stop selling services to those in the EU but outside the UK on 1/1/15.
I take it you are not based in the UK (otherwise this wouldnt be relevant anyhow). So why not stop selling to the UK as well? You will have to charge them VAT too.
I am based in the UK and the UK is in the EU. I think you need to re-read this thread.
@sandro http://www.hmrc.gov.uk/posmoss/ & http://webarchive.nationalarchives.gov.uk/20110202144320/http:/customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000922
Strictly speaking non-eu companies should be charging VAT however because of the point of sale rules they are getting away with it.
Sorry, but I am afraid I'll have to pass this advice back. This thread is mostly about non-EU companies having to charge VAT (which still puzzles me). You had to charge VAT already now, the only thing that will change is the rate that you have to charge based on the customer's location instead of yours.
This thread is about the new VAT rules, it has been converted into about non-EU businesses and the effect of MOSS at the end of page 1 / page 2 all of which is still relevant.
Anyways, it's probably time to sit down and read the below for us hosts:
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/one-stop-shop-guidelines_en.pdf
I read the 2003 article but I still don't see this point of sale thingy to avoid charging any VAT.
That's roughly what I have been told too. Anyone have a good source on this can you PM me names/contact details?
I read
But then in 2003 it said
The opposite!
@sandro it is there by omission
2003:
Why is this scheme being introduced?
This new scheme is being introduced alongside the changes to the EU place of supply rules for electronically supplied services, which also take effect from 1 July 2003. From that date, these services, when supplied by non-EU businesses to EU consumers,
Who may use the Special Scheme?
You are eligible to use the Special Scheme if:
you supply electronically supplied services to consumers (private individuals and non-business organisations) belonging in the EU
you are not established within the EU
you are not registered for VAT under the normal rules in any Member State
Example: A USA business registers for the Special Scheme in the UK. Its customers are located in the UK, Italy and Spain. The USA business charges UK VAT to its UK customers, Italian VAT to its Italian customers and Spanish VAT to its Spanish customers. The business enters the VAT for each country on the appropriate line of the electronic declaration. It sends the declaration electronically with payment to HM Customs and Excise, who retain the UK VAT and pass on the Italian VAT to the Italian authorities and the Spanish VAT to the Spanish authorities.
This assumes the place of supply is a country within the EU, until January 2015 you can consider the place of supply for digital goods as the USA if you are a USA company.
Not every USA company did however which is why hostgator charge VAT now as an example, i.e. not very clear or at least unclear enough to get away with it.
As of 2015 that changes, the place of supply is being specifically said to be the place it is enjoyed, i.e. in your home if you are in an EU member state.
I am not going to be able to find you a document that says outright "If you are in the USA you dont really have to charge VAT on EU sales" or anything similar, thats just not how legislation works
One thing is for sure, clearly no one knows or is making publicly available to specific impact on the hosting industry and world wide implications.
That's messed up.
Here are a couple links that seem to explain things quite clearly:
http://www.forbes.com/sites/janetnovack/2014/05/15/european-vat-10-things-online-sellers-need-to-know-about-taxes-on-digital-goods-and-services/
http://www.taxamo.com/2015-vat-changes/
For people who don't believe that this is a requirement for American businesses, here it is straight from the US government (the fourth report down, MR-161, has a very good overview):
http://export.gov/europeanunion/marketresearch/sellingusproductsandservicesintheeu/index.asp
@Dylan I guess its irrespective of the nation. With the new rules, it will be everyone who has to pay VAT. I am consulting accountants here to see how will this effect us. He is saying its best to wait till end of Oct / Nov. Then we can go with the flow.
So are you guys preparing for this? We are only a month aware this. The worst thing is even some accountants aren't aware how this is going to work. May also increase accounting costs. Especially for small USA businesses dealing in EU.
Many hosts are going to find themselves in hot water with this.
For ultra lowend, its just not going to be cost effective to offer services to EU customers. The additional headache will destroy the few pennies in profit these types of hosts make.
Maybe an EU 'levy' - 100% on top to cover the VAT headache
from eu point of view: the same... at least for europe based non business customers...
VAT has alway been a pain in the arse to deal with for small businesses in europe.
e.g. if I order services from an us located business I have to pay VAT to my local authorities for that in a procedure called 'reverse charge' - which is: I have to pay VAT (of my country) on top of the invoice and at the same time I can get it back because it's related to my registered business. so after all I have to pay 0,- but I have to declare it two times...
but whats worse: to be able to do so, I am required to get an invoice containing the words 'reverse charge' and my european VAT-ID ... that is something most small non-eu businesses doesn't know nor even care about - invoices are generated via whcms or else and therefore often contain in no way information which are required here.
upcoming 2015: the easiest way for non eu businesses probably should be to register with MOSS in UK (because of the language), so AFAIR they will get an VAT-ID and are able to do their taxes...
https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop
maybe someone should bring this up to all of those invoice-generating shop-systems around, so they will add functions which generate proper invoices depending on customers status and location.
OK, I think I understood the issues here all but one: If you are under the threshold required to get a VAT number, do you still have to collect and pay to the countries you have end users in? I think you should not, but maybe someone read more in depth.
the issue is that no one really knows how to handle this.
One interpretation is that if the buyer needs to pay VAT in his home country the Company selling the service has to report it to that countrys tax office.
The only thing that is clear (for me) is that the answer to this question depends on which expert you talk to.
Aren't there some countries that don't have a threshold and VAT is mandatory?
edit: Nice chart showing all the VAT limits in the EU states -
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/traders/vat_community/vat_in_ec_annexi.pdf
I am just grateful I only deal with UK based clients so I don't have to deal with this mess and the associated increase in accountancy bills.