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Then we need a none German but EU Hetzner customer to go and ask them if their prices change next year. As would assume they know their policy by now given its only a month away.
I think that the practice to include VAT in prices will no longer work now, if they have to charge the VAT in the customer's country.
Exactly my point. If that hypothetical customers prices are changing next year due to a VAT change then they are saying it does apply to servers, if not then a lot of people can possibly breath a sigh of relief (although still definitely affects web hosting).
I wonder if let will allow <$7 for services ex VAT or if it would have to be under $7 including the highest VAT price.
@mpkossen had any thoughts either way?
@wych it has always been $7 excluding any taxes (like VAT).
Useful to know, hadn't seen clarification.
@AnthonySmith we received an official written answer from our revenue agency that VPS and dedicated servers are "electronic services" and should be taxed according to the new rules for place of supply (MOSS, etc.)
Place of supply a dedicated server is the datacenter. That reply is standard here too, the taxing authority always uses the most strict and incorrect way to interpret the law. Of course, if Bulgarian law includes those in their version, that is indeed correct but they cannot, all EU countries must have the same law otherwise it will not work. Any lawyer will be able to make a case in court, wait for the to sue you and you will recover the costs too.
The spirit and the letter of the law does not come even close to dedicated servers, they are about electronic services like those that run on the user's computer, such as games, for example, books, maybe a website, streaming services, but in no way a dedicated server.
@Maounique honestly we don't care what VAT we will charge, it will not be a big difference for us. We just needed an answer so we know what to do and in case of a future audit they ask us "why are you doing it this way?". Now we can just show them their official signed, stamped, numbered, etc. answer and it's not our problem.
And besides "the most strict and incorrect way to interpret the law" - it would be in their (the revenue agency) best interest if we continued to charge Bulgarian VAT since it is more revenue for them.
I did not say in the interest of the state, but in the interest of the employees there. They cannot threaten fines and then be "convinced" to drop them for a tiny fraction of those in their foreign bank accounts. They need to show they honestly believed that is the law and applied it everywhere the same.
The Ivanova and Ivanov which come to negotiate their share do not really care about the court procedures they will not go to big companies with those claims will go for the low hanging fruit which does not a specialized legal division.
It was like this in Romania until some 10 years ago, the company where I worked was small enough to be prone to pay and not go the legal way but my employer was determined to fight it and let them illegally confiscate big industrial equipment in the port valued at some 2 mil $ forcing the company to order another and take costly loans and almost lose the customer, but the lawyer fights it for some 7-8 years and each appeal they do costs them more as the penalties for the interests and costs with the loans are getting higher. By now, those are already damaged due to poor storing and older less efficient models, so the state will probably pay them in cash if not already because they exhausted their attack ways.
The guys which tried to get a lot of money from it counting on the fact it is not possible to get others and fulfill the contract, there was a deadline, the legal costs were too big, no longer work there. You must fight for your right, otherwise the same practices will continue unabated. Soon there will be legal precedents but you already registered for MOSS and they will come to ask you to pay VAT to the bulgarian authorities and recover it from MOSS which is obviously impossible, but they will be able to ignore it for the right price. Better go with the law from the start.
Here is Hetzner's billing FAQ - http://wiki.hetzner.de/index.php/Payment_FAQ/en
It seems they will charge VAT according to the new rules.
I suppose that seals the deal then................... sigh
what else? that's the law and messing with tax authorities around here can be very... exhausting ;-)
Worth signing this to give it more exposure: https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products
The only concern i have right now is how to deal with possibility that clients from EU countries will just start lying and submitting false addresses and countries in billing systems of hosting companies to avoid being charge this value added tax.
What I love is that the UK HMRC has done little to publicise this but they are creating a new task force of about 50 people initially to start tracking down anyone not complying. Pays them to start enforcing right away of course, the £ signs are flashing away before them.
@W1V_Lee might be some light at the end of the tunnel: https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products/u/8992991 and https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance
A little bit of back tracking already, possibly more to come.
Yeah, I seen that, might be something.
There is no mention of dedicated servers, unless they are considered hosting services. I am sure the legislator did not intend this.
I just want to know after these new rules come into effect, will US or Canadian citizens will also have to pay tax/vat to European companies like OVH,Hetzner etc?
No. The point of the thread is regarding the requirement to charge VAT at the rate of the purchasers country of residence. As the US/Canada do not charge VAT, they are unaffected.
I agree but they clearly do consider it hosting, rds100 got confirmation and big companies are falling in line.
The fines are unlimited in most cases and a minimum of double the liability, it would be crazy not to comply.
@AnthonySmith IMHO the best thing you could do is ask your HMRC for an official written answer on this matter. Then you will know what to do.
its fine, I will be registered by march at the lastest for the final reports, I am happy to take the liabilities on the chin on until then.
good progress is being made with the petitions to government they have already relaxed the rules initially allowing uk companies to vat register as identity only without the need to charge vat on domestic sales and that was the first step pre review which they are doing now.
honesty there was never any way I was getting through 2015 without registering anyway.
@AnthonySmith still if the hmrc decides that for the kind of services you provide you should be charging UK VAT instead of foreign VAT you would be liable for not charging / paying the UK VAT then. So it is best to have a document from them telling you what you have to do - then if they decide something else later, it's not your fault - you did what they told you to do.
Think the biggest issue with the whole legislation has still to be fixed, and its mentioned in the Change update - You have to prove place of supply, which is as per the legislation where the customer is not where the server is located. The problem is that they require 2 forms of this for proof, and only 3 are possible for hosting/VPS/Server orders -
Oh and you have to store that information for 10 years
So hope you all already geared up to gather, validate and store that information.
@frank i don't think this is such a huge issue, at least doesn't seem to be.
First you have the paypal account country, which should be as good as bank details.
Then you have the IP address.
Then you have the billing details the customer provided
Then you have their phone number (hopefully you do phone verification).
Oh, and we already have to keep such information for 10 years and do it. We keep copies of all invoices for 10 years, printed and stored in locked cabinets. Granted we are not in the UK.
I notice Iceland isnt on this list: http://wiki.hetzner.de/index.php/Payment_FAQ/en
So I dont have to pay VAT? :>
@emilv of course, since Iceland is not in the EU you would not have to pay VAT.
I often wonder what life is like in Iceland, completely off topic I know, always wanted to visit but pretty sure it is just a much colder version of the far north of England, which is not a good thing