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It will most likely be a clearing system, some countries will be net payers others net receivers, they dont know yet what a can of worms will this be, it'll be fun
@Maounique yes it's a huuuge mess as i see it. I hope the old system is returned (i.e. the company charges the VAT for it's country), but they just make the VAT for these kind of services the same in the whole EU. Would be much better and a fair system for everyone.
the new system claims to stand for fairness after all, at least regarding eu customers.
thus far from a country within europe charging higher VAT rate, as a business you had to compete with those from eu countries charging less or non-eu businesses charging no VAT at all. this way 22% can be a remarkable difference... and remember those 22% had to be transferred to the tax authorities.
(in theory) from 2015 now everyone has to charge the same VAT rate to the same eu customer, which should make prices more comparable.
@Falzo yes, in theory. In practice it will make the life very complicated for small companies in these markets. For the large players... they will manage it.
It would be equally fair but much easier for everyone if the EU had decided "there will be EU wide 20% VAT for digital services" and that's it.
agreed. at least from the competition point of view.
but than every country would jump in and would like to get 'their' taxes, (as it is/was probably now), because if there would be no clearing between them, it is not fair anymore.
think of ovh selling a lot all over europe... france would gladly accept to collect 20% VAT on all sold services from them...
to be fair again you would be in the need of the same moss-like system to have the businesses report their taxes to the different countries where they collected it from.
please don't get me wrong, I am far away from being supportive of the new system, just trying to reproduce, what brought us here ;-)
I also think that hosting should not apply, because services are not provided in the country of the subscriber, but where the servers are. He can connect to his rented server, space, etc, from home, but this does not mean the physical location is his country. Sure, selling games, books, accessories for them (ingame purchases) or other things such as online access to a service, for example pay per view, that is a service provided at the customer's location because it runs on his computer/tv/console, but hosting does not run on the customer's computer at all, he can connect to it like everyone else he just can have more rights than others, the VMs are not running on his computer also, etc.
Yes please!
you guys may be correct about the individual rates, that's not a big deal either way it is the single reporting that is the time saver.
this. i've done the registration form with MOSS, lets see how this will work out ;-)
When I read about MOSS on the Swedish "skatteverket" I understood it as:
You setup a VAT account where VAT should be paid from.
You report the number of invoices to each country to MOSS.
You deposit a "stack of money" into your VAT account.
MOSS calculates the correct VAT for each country and pays the correct VAT for each country using your deposited money.
What is left on the VAT account will be used next time or can be withdrawn by you.
Not sure about fines if there isn't enough money on the account.
Can anyone confirm that to sell to for example Norway, MOSS is not covered and you have to register your company with the tax authority there? That is how I understand it at least.
Norway is not a part of the EU and since it requires different types of paper pushing, I wouldn't be surprised at all.
Well, just dont sell in norway and switzerland, those people sit on piles of money, no need to complicate your life with them.
@Maounique that's the easy way, although there are EU rules which say that you cannot refuse services to people just because of their country, but who cares.
The question is - is it necessary? Nobody knows for sure yet i guess.
Norway and Switzerland are not in EU so does not apply.
I don't think this "no-discrimination" rule is just for EU citizens, i think we should apply it to citizens of any country. Though no amount of EU bullshit will make me accept orders from China for instance.
I think it is, for example i was a subscriber to lineage2 since 2004 or something, before 2007 they said bluntly they do not accept card payments from romania I had to buy prepaid cards, after 2007 they were still rejecting my payments but were making up reasons such as I was using proxy or other BS, they could not reject me legally.
Well I have spent the morning doing further reading now that the MOSS registrations are available the info seems to be a bit more current.
The key thing I have found here is:
You can escape the requirement for all of this mess if you can argue that your business does not fall in to the category's above.
So first of all, I cannot escape the "web-hosting" but I can scrap/ make free that element as honestly there has never been any focus on it anyway and is less than 1% of all business.
I do not believe that it would be appropriate for VPS/Dedicated servers to be defined as "web-hosting" as you are essentially selling a blank canvas for any sort of use that is not necessarily web hosting.
I suppose the further break down of the EU's definition of 'web-hosting' needs to be explored.
second part: "distance maintenance of programmes and equipment;
supply of software and updating thereof"
Well with a self manages service I am not providing any of that in terms of charging a customer directly for it with the exception of the handful of clients that took semi-managed, again something that represents about 0.5% of all revenue so that could be made free/ removed.
What that leaves is providing a service to customers that is considered un-maintained, changeable and multiple use, the use of which cannot be reasonably tracked by the supplier.
Anyone agree with that?
I would just like to add that additionally the guidance being now given to UK business is as follows:
Source: 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
@AnthonySmith that's... very thin ice
Unless you can get a written statement from your HMRC that VPS hosting is not included you would be putting yourself in a very risky situation.
Yeah, I have read that too, and was not considering VPSes qualify, hence i was raising the point before.
They can offer web hosting but that would be self-offered by people which rented the VPS as they install everything and manage it, if they sell web-hosting from it, then they should put up with the management.
In my unbiased view, I do not think a VPS qualifies because it does not run on the customer's device, the service is unmanaged too, same with dedicated servers. Does anyone know where to ask to get a relevant and definitive answer?
In the local version of the law the word "web hosting" is not used, it is a slightly different definition. @Maounique how is it defined in the Romanian law?
@rds100 I probably would have agreed with you when I started this thread however not so much now, I do agree that the ice is thin with this whole directive but the ice is present, I do not offer websites and excluding the direct shared hosting sales (which can be removed) I do not offer a web-hosting service.
I think I tend to agree more with @Maounique 's perspective now, I don't really see a VPS as any different to a dedicated hosting service in this context, I may well provide a platform for others to offer web hosting services and I may well offer a platform that is capable of hosting a website but I do not directly offer a web hosting service.
Going to draft up another email to my accountant for clarity, I have spoken to HMRC directly and they do agree with this but what they could not answer was who in HMRC could provide confirmation in writing.
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf
I believe the key word there is services. We simply rent something which is self-serviced. Web hosting implies the host sets up the server and manages some stuff whereas in a VPS the user has full root access and can manage everything.
It is thin ice but I am sure it will hold in a court of law. If not, you can always claim good faith.
Indeed, also http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs13550.htm is an interesting document that gives a good low level description on classification of services etc.
I read it initially thinking "hmm well people could use it for some of those things" however I need to keep reminding myself to take a step back, what people do with it is not of my concern and does not impact my accounting requirements, I simply provide a platform and that is all.
Make sure to get everything in writing, most likely HMRC will not interpret the text as you do.
I've benn in talks with the Swedish version where we didn't see eye to eye on things and I lost every time.
Have any of the big players like Amazon, OVH, Hetzner, etc. announced any changes in the way they collect VAT yet? You could use that as a starting point.
Hezner is the key here, VAT is 19 there and they have no interest to charge higher. If they do not change anything, then we have a bingo.
Couldn't the big players just absorb the tax costs though?
No, Hezner is on thin margins and would fight this. Others, maybe, but not likely.
They have to display it correctly in the invoices.