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Hey, this is where some people get their entire end to end business advice. Why you think so many providers on LET make it!
We took our advice after consulting a tax attorney. Why would you just assume because a bunch of people made a fuss on LET that we decided to comply with the law? There is a lot of unknowns about this whole implementation and any business that wants a future should play on the safe side.
The "tax is collected for my country" argument is so bad. The gap between rich and poor is rising and rising in my country and it won't stop by collecting TAX from people that aren't considered rich. Meanwhile my government steadily lowers the top tax rate and rich people contribute less and less.
Awesome, good to hear that you got some solid advice. Are you sure the advisor is actually looking to optimize your business vs "playing it safe" and billing you for BS advice though?
Just one question though; what law are you following? There is no such law in the USA that any of my advisors can find that require collecting of foreign nation's sales taxes, nor a law that says that the EU's definition of "place of supply" now supersedes that of the USA. The personal income treaty between the USA and UK for example is for dual citizens, or non citizen residents etc to avoid double taxation. But f**k me if I can find a law that says "EU place of business/supply laws supersedes Texas' place of business/supply laws."
I'll send you a $1,000 when you can quote the US law that stands as of today that requires me (as a USA only entity with no place of supply in the EU, our datacenters are USA only) to collect EU taxes. Feel free to pass on that offer to your Tax advisor.
My point is, the EU is the EU, I live in 'merica.
@Incero but you service EU customers and the EU wants you to follow our regulations. So in the paper they could act even if you don't want to comply (ordering payment processors to block transactions from your European customers).
Sure, that's not going to happen, but still you are breaking those regulations in a place where you have assets (customers).
Can you guys argue about this in the VAT thread Anthony created?
My advisors disagree. Until I see a law in the USA that says that I need to ignore US laws about place of supply, and now need to follow EU laws, I won't.
We wont be breaking any regulations, as we have no place of business/place of supply in the EU and accordingly are not under any EU jurisdiction. Just because the EU has changed place of supply to be the destination/customer nation/State, doesn't mean we (Texas based business) care.
The EU could of course impose an import/use tax, which they should, which declares that EU citizens need to declare their foreign service use and pay the tax/do the work themselves. A Texas based business is under no EU jurisdiction whatsoever.
Incero, I'm sure your advice was sound. Agree RE: jurisdiction.
If you were looking to sell your company though, it's not helpful that you/they have a potential large tax liability and have to steer clear of doing business with an entire continent. And who knows how laws may change in the near future. 'play it safe' is indeed just one way to go.
Agree with the above poster who says this thread is no longer about [one company starts charging VAT]
@Nick_A: If I were to buy a VPS for 6 months on Feb. 20 or 25, would I have to pay EU VAT (I'm in the EU) or would it only apply to orders from March 1st onwards?
Right, that's one line we heard from aforementioned tax consultants. Not that we have any such plans to sell, but it's definitely worth consideration for the long run.
Anyway, here's the VAT thread I mentioned - http://lowendtalk.com/discussion/35101/the-elephant-in-the-room-vat-rules-jan-2015/p1
Not trying to stifle the conversation, but I think anyone looking for more information on VAT's impact on hosting would prefer just having one reference on this forum.
This was our primary concern along with if we were to ever open up a European location, what would happen then? It has nothing to do with what will the EU do to an American based company, they obviously have no jurisdiction and I completely agree. However, situations change and a company should always be prepared for the future whether that is through mergers, expansions or acquisitions, not to mention laws change just as frequently as the direction of the wind. A non-liability can quickly become a liability tomorrow.
I think being prepared for anything that might crop up in the future is important. @Incero obviously our business plans are completely different and I concede, the EU has no teeth to bite an American company, at this time, if they have no European locations or any future plans to have a European location. However not to consider all possibilities is narrow minded at best and not a good way to run a company.
Keep in mind RamNode has a Europe location and thus, not complying with EU laws will affect their business sooner than it might affect others.
@Nick_A I apologize for derailing this thread further than it already has been, it wasn't my intention when I replied to your original question of who else was charging VAT to EU customers.
Gordon made that point himself earlier when Anthony expressed surprise that any US company would comply. I think he's speaking more generally at this point.
When acquiring a company I'd suggest you acquire the assets not the LLC. You never want to inherit previous liabilities. One of the whole points of running an LLC is the limited liability, which you let die with the company, when it's assets are sold.
Anyway, someone tag me when they find the law that applies to USA companies.
Good thread.
It's depending on what they call "effective residence". Which comes down to "where you actually live more than half of any given year".
I guess, though, that most providers (and reasonably so) would just accept any residence you tell them/fill in, as long as you are reasonably linked to that residence and, for instance, would actually receive a letter to you at that address.
There also seems to be a misunderstanding. That (shitty) new eu rule applies to anyone anywhere, incl. usa, micro polynesia or whatever. Which makes it a administrative nightmare for sellers because for eu countries there is a common "tax exchange" site (which makes it simple) but who the hell knows the applicable VAT for a gazillion of countries and states and who the hell is prepared to actually file and transfer VAT to all those tax jurisdictions?
Because, yes, seriously that new eu rule says that if your (e.g. hosting) client is in Palau-Palau you are actually supposed to find out the applicable Palau-Palau VAT rate and to file all necessary tax administration and tax declaration with Palau Palau and to finally transfer those 1.23$ to the banking account of the Palau palau tax authorities.
It seems the eu was set to make sure that eu companies will be virtually excluded from many places on this globe ...