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I still find it annoying nobody can seem to give a straight answer to this...
@frank so based on that you don't have to pay via MOSS or whatever if <£70k?
@wych Yes. The thresholds still apply
, also think this may have been overblown for everyone, as think the distance selling limits apply to each country, and it seems every country has one of those and they are minimum 35,000 Euros - which is more than enough for 90% of the hosting businesses, never mind LEB ones.Although, rereading it may only apply for in country sales now so in my case I dont need to do it, but if you have even one sale to another EU country you have to register, really needs clarification.
Edit: Here is UK HMRC's talk on it -
https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop
Further edit: Key bit - it ONLY applies to sales to Private Individuals, so if you only deal with businesses it doesn't apply at all.
It's really a big mess. A couple of weeks ago our accountant officially asked the local revenue agency office for clarification of some questions regarding the new EU VAT rules. The response she got was basically "we don't know yet".
I see, looking at UK explanations, they are for VAT registered people.
Our Iperweb LTD is not VAT registered being under the threshold, so it may look like the regulations do not apply to it.
It does apply to everyone, sadly. Nobody outside of EU is VAT-registered either. Your logic would mean that companies without VAT-number wouldn't need to comply with this. Yea, that would be nice, but not true unfortunately
Thats what I'm taking it as but as nobody has confirmed it im not 100% sure im getting the right end of the stick.
@wych isn't there a way to officially ask your HMRC for clarification and get an official answer from them?
In theory yes, but in reality they don't seem to know.
This Section from this link is fun -
https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop
So the only 3 that would work for a host are the Billing address, Bank location (unlikely to have as via CC) and IP address for where the sale was made. So guess you have to store all Billing Addresses and the IP address the consumer used to make the sale on, and then keep that data for the next 10 years. As you can assume that they are located in that country as per the Billing Address but if you get audited you can guarantee they will want other proof as well.
This whole legislation really does seem like it wasn't intended for hosting etc services, and was meant for music, videos, etc purchased via the internet, yet they fucked up the wording and have encapsulated tons of electronic services.
Very much agree. Of interest to some in Australia - I asked our accountant, they were obviously not aware of it given their response. At this stage we wait and see how this pans out I think.
Unless Paypal assumes the responsibility I don't see this tax working. Instead of being burdened with thousands of dollars of responsibilities people will find loopholes, probably evading local takes (i.e Australian GST, Income tax, etc) that they would otherwise have paid.
Net loss for everyone.
Sadly, the same applies here.
As for the thresholds not applying in some countries, well, tough luck, the change in legislation does not mention anywhere national rules are abolished, i.e., any threshold will not longer apply and we all align to the lowest denominator. That will not hold in court, the only thing that might is if the changes do include overriding the national thresholds which will mean that has to be clearly specified and I could not find it anywhere.
Thresholds will still apply. If you are registered in the UK you don't have to pay VAT on the first $xx.xxx within the UK. You still have to pay VAT to other countries. It's what my accountant told me, but it's still not 100% clear how this is going to work in the real-world.
@Maounique does Iperweb LTD has accountant in the UK / bank account / Paypal tied to UK address and bank account? Because after this it's going to be virtually impossible to deal without it.
Thresholds do not apply is you go the MOSS route.
You need to stop thinking about this in terms of "in the UK" or "in my country" none of that matters now and that is the whole point.
Example:
UK Registered business, revenue: £70,000 which is below the UK threshold.
What that means for the 1st Jan VAT Changes is that you have 2 choices if you want to continue to provide service as you currently do.
1) Register for MOSS, the advantage is that it is a standard rate and single reporting platform, the disadvantage is that VAT registration in your own state is mandatory in order to use MOSS even if you are below the threshold of your own member state/ country.
2) Register for VAT in all EU states you trade with, the advantage is that you can still enjoy the threshold for your own domestic market, this means you still don't charge VAT to your UK clients if you are below the threshold in the UK, the disadvantage is that you have to to up to 27 different quarterly VAT returns all with different authorities etc.
It really is that simple, the only difference from country to country in terms of where your business is registered is the threshold from state to state.
The fines are INSANE for not following the rules, member states will co-operate and no doubt the IRS will allow cross border investigations.
Who thought this would be a good idea?
The EU as a whole circa 2006
@AnthonySmith is right
Looks like a massive PITA to me.
Its not that hard really, I am seriously angry about the whole thing but in terms of work its not that hard.
You just get Xero or an accountant that is a Xero partner, install the WHMCS <> Xero bridge, set up your 1st and 2nd level VAT Rates in WHMCS and thats pretty much it.
Xero is MOSS aware, put your MOSS details in to Xero and then your VAT liability is calculated in real time for you.
I would strongly suggest you keep a separate bank account and transfer VAT liabilities at the end of each business day or at the very least at the end of each week.
That's the same as saying Thresholds don't apply if you voluntarily register for VAT, which is the current situation, i.e. if your below the threshold you don't have to register for VAT.
The difference is now that if you have any none business EU resident customers outside your own country you have to either register for MOSS (voluntary) or register for VAT in those countries irrespective of those countries thresholds. Along with keeping their order history for 10 years, which in the case of orders where you cant guarantee the persons address also means keeping the bank details or the IP address of the order.
Its a mess, and there has to be money made in fixing it :-)
@AnthonySmith yeah I had been looking at Xero. Good point on the moving funds however.
What if a business i getting less than this? Is this just a made up number?
@frank what I mean is that if you want to use MOSS then VAT registration is no longer voluntary.
Xero is epic but you really really REALLY need an accountant to do the initial set up
The number is made up, I think the VAT threshold in the UK is about £81,000 right now I just picked a number I knew to be below the threshold.
Yup £81k as of now.
So just to be clear, businesses earning less than the threshold wont be affected?
No that is completely 100% wrong
If you do trade with other countries within the EU then you are affected, my whole point was that the threshold does not matter even if you are below it.
As Anthony says, it will be, VAT registration becomes compulsory. The thresholds, while not removed explicitly, only apply if you only do business in your country, since almost nobody here is in that situation, it does affect us.
Thanks for clearing that up...
@AnthonySmith is Xero supposed to be used by accountant or us? The way I see it Xero allows accountant to get data / excel table(after it's configured and data imported from whmcs) which would help them to do accounting on their end afterwards, right?
if someone wants to become an overnight multi millionaire all they need to do is to setup a gateway service that works a lot like fraud record in reverse with user detail hashing, they take the payment on behalf of the host then register the hashes only with the host charge a 0.5% fee on top of every transaction and handle all the VAT reporting then I promise almost every single host will start using that service instead
You are not subject to the 1st JAN changes if you collect payments via a gateway and cannot accurately determine the the location of your end users (all you get is a hash + name + email), this then shifts the responsibility for the VAT reporting etc on to the gateway service.
Kind of like itunes, apple does the accounting for you and you never get your complete end user / listeners details.