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It says. What country X says is not the law for country Y. I really fail to see why this fact is so hard to accept. Last time I checked, entities of country Y are bound by the laws of said country and not of those of North Korea.
And? Does a French court have any say on Americans? Does a Russian? Does a North Korean?
While I'm sure that EU has no jurisdiction outside EU zone, ghost CEO is playing a high risk bet.
Moving your business to Singapore. No problem, just the old tax planning.
Keep living in UK, keep using DO Amsterdam to provide services to EU citizens and knowingly not charging VAT? That is tax evasion.
He is probably counting that hmrc won't give a shit about Ghost.
I hadn't thought of that, but fuckin' A! To hell with the Brits and their 21st century Stamp Act!
That context is definitely a bit more shady.
I realize that's how it works in most cases, but according to the EU that has changed for those companies selling certain digital goods and services to those located inside the EU. For those companies, the EU law applies.
I totally agree it's ridiculous and that's why many, including me, are amazed at the fact this law even got through.
They do when you physically do business in a country. For example, Starbucks has shops here and sells coffee, so they have to abide by the laws here for the business they do here.
The EU now says the same principle applies to certain digital goods and services. I can't change that for you, but I can only tell you that's the case.
I have no clue on how they are going to enforce this, or even if they are going to enforce this.
Regardless of what the EU may say, they do not have any right over the companies outside of the EU. It is not so much a matter of who the company is selling to, but rather who EU residents buy from. Can the EU say that VAT must be applied to overseas services purchased online? Yes they can. But it is hardly the legal responsibility of the overseas company to essentially be an agent to collect those taxes on behalf of the EU FOR FREE. And it doesnt matter what the EU might say, other countries have a say too. I follow the laws in the countries in which I live and operate.
In the UK, it doesn't matter where your company is registered. For the purpose of tax, if management/control is largely exercised in the UK, then the company is resident in the UK for tax purposes, even if the company is not legally registered there. There is good reason for this too. People think they can escape taxes by simply registering overseas, but since they themselves are still living in the UK, the company really isn't overseas. So if a UK resident wholly (or mostly) owns and controls an overseas company, and they don't declare and pay the tax, it is by definition tax evasion. No doubts in this.
1.) The american companies / people aren't the ones who pay the tax. It is the EU residents that do. The only thing being asked is to collect it for them, not pay taxes.
2.) VAT is applicable to all EU countries, not just the UK
. I know you know that but it seems discriminatory to single out the Brits 
No it's not. Small companies do not collect VAT at all. They also have to pay VAT. When their turnover reaches a certain point, they must begin to collect VAT (and include the VAT in their price), but they also get to claim back the VAT they already paid.
To claim that VAT is part of the price when no VAT is collected at all is technically fraud. A VAT registered company would not be able to claim VAT not paid if the company they bought from was too small to be required to register for VAT themselves.
In this case, it seems these guys are still technically a European company and just trying to avoid paying taxes.
However, it is also interesting to note that the unfair advantage could be nullified if the EU started charging VAT on exported goods and service. This would seriously level the playing field. Companies within the EU (if they are VAT registered) can essentially buy goods/services VAT free but if they have to charge VAT and their overseas competitors don't, then it would give an unfair advantage to said competitors. However if EU exports were also taxed, then the advantage would be less significant.
Why don't the EU do this? Simple, because they too what a competitive edge. So the EU want's to have it's cake and eat it too.
Nope! EU legislators, or Chinese legislators, or North Korean ones, can enact whatever laws they deem expedient. And they do. It does not follow that said laws apply to anyone! They may be unconstitutional, for example. Currently, there is a major flap of this kind in Poland, a great case study in constitutional law for decades to come. This is the reason for most democratic states having a Constitutional Tribunal, High Court, or what have you, to adjudicate laws enacted by elected representatives who often "know better" and get carried away in their zeal to do "good", in the name of "the people", of course
Now, the EU law in question is way out in space, that is stipulating obligations internationally. Problem is, while there are numerous treaties, conventions and international tribunals in existence, international law itself is not codified and there is no tribunal in place with authority to adjudicate compliance of local laws with… something that does not exist: an international constitution. Hence the relatively new crop of such inventive accounting… er, legislation - a trend started by the US with its infamous PATRIOT Act…
Okay, so legislators in Strasbourg woke up one morning and decided that I am (as Director of a HK company) obligated to collect VAT from my clients residing in the EU…? Perfectly understandable. With millions of migrants coming, they really need the money! Good job all around.
Now, for my job: complying with such foreign legislation, without reasonable compensation, would be acting against the best interests of my company and its shareholders. This is against the law in HK. In fact, ironically, it is a criminal offence in most, if not all, EU states as well. In order to comply with local laws, I am duty bound to ignore said foreign legislation.
What it boils down to, is enforcement by EU (or rather tax authorities of one or more member states) of their laws upon my HK company - inside Hong Kong! You see, I would never think of setting up a presence in any other jurisdiction, conducting business and/or holding assets there, other than through an independent local subsidiary or agent (read: at arm's legth). C'mon, it's a no brainer
Tax authorities wield incredible clout in their respective jurisdictions. And getting more power by the day! But across the frontier, not so much. They are paper tigers with no teeth. They must ask respective local authorities for assistance. Hence, subject closed for lack of legal basis for such assistance in most jurisdictions outside EU.
From HK perspective, there is an additional line of defence: HK tax authorities, even should they be somehow bullied to render such assistance (which is conceivable in case of PRC), have no authority whatsoever to issue decrees or titles of execution. They need to go to court, where the first question the Magistrate asks you is: how do you plead? Most empathically, NOT guilty Your Honor!
Where he lives makes no difference in this case. You would have been correct if he was a solo dev. But Ghost is bigger and more diverse than that.
Good point.
You are a host in Peru - you rent your racks from GVH America. A German customer registers with you.
Exactly when did you do business inside EU jurisdiction?
Unless you are a registered business in Germany, you are a non-entiy there. Hence, no jurisdiction. Starbucks in Germany is a German company. Full jurisdiction for them. You can't do business locally if you're not a local company. When a French buys from Amazon.com, he imports goods. Amazon.com is not doing business in France in this case. If Amazon wants to do business in France (e.g. open Amazon.fr, get employees/warehouses) it registers as a French company.
Which is as much valid as Putin asking you for 50% income tax for Mather Russia because you breath air that has passed over Russian territory, having been enriched by the country's culture in the process via osmosis. You are free to choose to give half your money, but you are not obliged by the law in your coutry.
@deadbeef,
I think part of the context there (wrt Ghost) is that the head developers were in the UK since the inception of Ghost and have continued to be up until now. They've probably claimed tax relief and what not... is the argument that 'a significant part of their business has a presence in the UK/EU'.
If they did indeed bugger off out of the EU, Im sure they'd be fine, even if they rent a bunch of servers from EU companies. I just wouldn't holiday here... I'll be on the lookout for them
@ricardo
We’re a distributed company: we have no business premises, and our staff are all over the worldPersonal income will still be taxed wherever each employee/stockholder is a resident.
Reminds me of the Aether.
Good thing they're not US citizens.
According to this new law, now it is.
According to this new law, the second you sold to someone from Germany.
I get and understand everything you are saying and no matter how long we are going to keep this discussion going, it's not going to change the fact that the law is as was described by many (and by me in this thread). Whether it's legal, sustainable, etc., etc., etc. I have absolutely no clue. Is it being enforced? Haven't seen it. Will they? Wouldn't know. I'm not a law-maker nor a legal expert of any kind. I'm just reiterating what others have stated in the hopes of making people understand how this law was meant to work.
100% correct. Except that in Peru, providers can ignore it. In fact, should they choose to comply, as I have laid out in more detail before, it may well be a criminal act under Peru law!
I'm sorry but that statement is patently false. Just because drinking alcohol in Saudi Arabia is a crime, doesn't make it a crime in Europe, no matter what the Saudis may say.
And no matter how many times you repeat this statement, it doesn't change the FACT that law isn't law unless there is authority to enforce said law. The FACT is, laws pertaining to EU VAT are NOT recognized outside of the EU, and so hold no authority, and therefore are not actually a law.
I could make up all kinds of laws, but unless they are recognized, or I have means to implement those laws, they are about as real as the flying spaghetti monster.
So Jonny consolidated both GVH North America and GVH South America into GVH America? Interesting.
The other day I had a visitor from the UK come to my web site and I PUT A COOKIE ON HIS COMPUTER WITHOUT HIS CONSENT.
Suck it, MI-6.
That's nice of you going all over the Atlantic to mail a bag of Giant Strawberry and Chocolate Chunk cookie to your visitor. The Royal Mail should now have balanced the budget with the £3 mailing fee they've taken from you.
I thought real cookies (that you eat) are called biscuits in the UK.
Cookies are cookies. Bisciuts are biscuits. In the US, cookies are both!
Interesting point. I'm not conversant on muslim law, but given it's sources are religious, I suspect it is meant to apply universally. Hence, drinking alcohol in Europe is very likely a crime, without qualification, under SA laws. Should we fear extradition to SA for having a binge in Paris? Nope, as this particular activity does not constitute an offence in France… well, perhaps I should add "currently", as this is subject to change, given the ongoing muslim "invasion" and the crazy appeasement trend with respect to muslim sensibilities on the part of authorities in so-called "Western Europe".
For literally hundreds of years prior to PATRIOT Act et al, laws were interpreted to apply to everyone in a given jurisdiction only and all its subjects (citizens) everywhere. Hence, a Saudi drinking in Berlin, would be subject to prosecution in SA, but not his German "accomplice" he shared drinks with. Inventive legislation cropping up in the US and EU is literally crossing borders and changing all that. Hence, were I a drinking man (in Europe in public) and a person of interest to the Saudis, I wouldn't travel to SA anytime soon to test their particular brand of justice
Don't confuse law with law enforcement. Laws are valid, unless striken down by a higher court in the same jurisdiction. This is highly unlikely with respect to the case in point. The so-called "World Court" (ICJ in the Hague) requires another UN member state to file a case, which is equally unlikely to happen.
I agree with your sentiment, but bad example - you have no delegation to legislate laws in your jurisdiction
Nyah...foreigners drink in SA: http://news.bbc.co.uk/2/hi/middle_east/1160846.stm
Hmmm… how about using Google and translating the text into your native language before posting and making a fool of yourself…? Just a thought
FYI: this here discussion is about local laws and possibility of their extraterritorial enforcement, not about smuggling and foreigners breaking local laws, which the captioned article is about.
I'm not forcing you to believe that that is the law as it was implemented. Like I said, just trying to help here.
I think what you mean is: "implemented"
If anybody wants to have a good laugh at how crazy this new law is, read this: https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers
That is pretty damn funny. To be fair though, the EU do have thresholds before registration.
https://www.gov.uk/vat-registration-thresholds
Presumably these are sales to the EU rather than overall sales. I.e if the threshold is 80k, and you sell 100k globally, but only 10k to the EU, then you need not register.
But if the sale of goods and services originating from outside of the EU must be taxed at 20%, why put the burden of collection on the overseas companies? Why not force a 20% surcharge on card transactions or compel people to declare in their tax returns.
Or more sensible, apply VAT to non EU exports! EU exports are worth over 3 trillion. In theory, with average VAT being 20%, that should raise a very handy 600 billion or so
.
This 'law', which apparently transcends jurisdictions, is totally unenforceable unless a company has significant presence in the EU and the EU actually has a means of penalizing them, it's totally unenforceable and without any legal standing.
That being said the Americans do something similar. Income tax is incurred on non-resident citizens, and those who renounce their citizenship for the purpose of tax may find themselves never able to return. Or if you run a legal gambling site in the EU, and do not take extreme measures to prevent Americans from playing, then you can be arrested the moment you set foot in the US. Or even worse, when EU citizens are extradited to the US for copyright infringement, but are not even charged at all in the EU. Scary!
VAT MOSS is a lot of work to keep up, you have to basically keep books for every EU country when paying VAT. For NixStats I'm looking into taxamo.com which automagically calculates tax and creates the invoice when payment is made thru braintree.