Forum Moderators: buckworks
According to the new European directive, all internet firms trading in western Europe must now charge VAT on services and products sold from their sites, if the sellers live in a European country.
This does not sounds like a good news to me.
Does anyone know where further information can be founded?
Pixels
This is correct. If you are outside the EU and sell online services to EU citizens then from July 1st you must either;
i) Obtain their VAT registration number and not charge them VAT
~ or ~
ii) If they don't have a VAT registration number you must register with the VAT collection agency in the EU state of your choice and collect and return VAT to that collection agency on behalf of all EU citizens you sell to.
More details at:
[hmce.gov.uk...]
It's stupid.
If the United Kingdom is the EU state in which you choose to register, then the registration and payment gateway for non-eu companies selling e-services into the EU is here:
[secure.hmce.gov.uk...]
What's the matter with these people!
Thanks for the info dmorison.
Pixels
And they said it only applys to the e-services which means,
web hosting, downloading of music, software, e-books and not supply of physical goods like books, toys & foods etc.
It will be effective from 1st July 2003.
Pixels
Our website indicates that on all international orders, taxes are the responsibility of the consumer.
If we were reponsible for observing every law in every country, im sure we all would be in jail by now.
I wish that governments realize that their jurisdiction ends at their International border.
This may be a simplistic approach, but hey im Canadian, and when im in Canada I will obey Canadian laws, when I visit another country, I will respect their laws and customs, despite how repulsive their laws may be.
If you sell an e-book through say, CJ or Clickbank to a customer in the UK, are you responsible for VAT on the commission from CJ or are you simply providing a service to CJ by introducing a customer to them?
Technically from 1st July they will be obliged to if they wish to sell a subscription to a citizen in the European Union who is not VAT registered. Ditto Webmaster World.
I'm with lgn (see his post above) however, and have opened a dialog to that effect with my MP here in the UK and HM Customs and Excise.
My fear is not the situation now (as it doesn't affect me as UK merchant - I just pay V.A.T. on my digital product on behalf of my UK customers - both now and after 1st July). What i'm worried about is other countries copying this ludicrous legislation and having to study VAT law in every country I wish to sell online to. :(
Hell even states in the US can impose their own TAX legislation if they wish.
This has all come about because the EU have determined that the place of enjoyment of the product is at the place the service is used, and therefore tax is collectable. Because consumers are not generally registered for VAT it falls to the merchant to collect it, and submit a return back the EU.
It's an absolute farce, and in the interests of noise reduction that's the last you'll hear from me on this topic at WW.
Yeah, I'm in the same boat, subscriptions ranging from (cough) $1.50 USD/month upwards, which are now going to be subject to VAT for around 1/3 of my customers. It's a nightmare. It wouldn't be *so* bad, if it were a single rate, but it varies from country to country, widely.
I am going to start collecting (and reporting, and paying) VAT on applicable transactions, which I suspect will cost me a significant chunk of B2C business. I just wish there were a halfway practical way of charging the variable-VAT-by-country thing on a PayPal subscription.
[edited by: dmorison at 4:44 pm (utc) on June 9, 2003]
From: [hmce.gov.uk...]
"Example: A USA business registers for the Special Scheme in the UK. Its customers are located in the UK, Italy and Spain. The USA business charges UK VAT to its UK customers, Italian VAT to its Italian customers and Spanish VAT to its Spanish customers. The business enters the VAT for each country on the appropriate line of the electronic declaration. It sends the declaration electronically with payment to HM Customs and Excise, who retain the UK VAT and pass on the Italian VAT to the Italian authorities and the Spanish VAT to the Spanish authorities."
The references to "UK VAT", "Italian VAT", etc suggest to me that, in the above example, sales to UK customers would include 17.5% VAT, sales to Italians 20%, and sales to Spanish 16%.
Switzerland seems to have the lowest VAT at 7.5%.
Anyone?
That's not how I'd understood it, but it'd be great if it was true. (crosses fingers)
Sorry - you are correct, it is not true.
You have to charge at the rate of their country. Struth.
I almost hear the answer I don't want to here :(
For the sake of one kind of gift voucher you sell online... one needs to re-think.
Pixels
HM Customs and Excise are not to be messed with, its that simple.
HM Customs and Excise are not to be messed with, its that simple.
If it's that simple please explain it...Let's say I am VirtualWidgets Inc of Delaware and I am selling e-services all over Europe and European residents are paying me with their credit cards and I haven't registered with the VAT people....what happens next?
We are now supposed to pay 17.5% VAT on our 'Pay As You Go' phone cards, restailers are refusing to sell them because they are the ones liable to repay the duty.
Sadly VAT has more power than the police and can seize property.
I wonder if your website and associated systems is deemed 'property' and therefore no matter where you are on this planet, our customs officers may be given warrants to levy distress upon URL's?
There's a horrible thought!
Pixels
Civil Servants? neither are they civil and the only thing they serve are papers!
From an Ecommerce perspective, aren't customers in the EU - the consumers affected by this ridiculous law - going to know that foreign services are subject to VAT, and expect to see something about it on ecommerce websites?
I think a website which is open (if perhaps apolegetic) about having to collect VAT on certain transactions would come across as more professional...
I do enought tax collecting for my own country. No bloody way am i going to collect it for the EU.
A friend of mine living in the UK got a speeding ticket in the USA - didn't pay because he was on vacation.
When he got home, he received a fine from USA, and another, and a reminder, then a demand - each time the fine gaining increase and threats.
He still beieved they had no jursdiction in UK, then a UK debt collector got in touch, then they visited him. The bill was eventually ten times more than original, he was told the fine dodging will be marked on his passport details and he will be arrested when he sets foot in the USA and the central database for hire cars will also record the incident.
... the long arm of the law!
I am not in the UK, and are not subject to UK laws. Our company has no physical presence in
the UK either, thus we have no NEXUS in the UK.
If we had an office in the UK, then yes we would be subject to UK laws.
Do you SERIOUSLY think that a small detail like that is going to stop a tax collector? The Inland revenue is the ONLY body in the UK that can legally search your premises (including your domestic premises) without a prima facie case. Even the Secret Services need to be able to show a probable cause, because they need a court warrant. The taxman can just turn up and seize what he likes as part of an ongoing investigation
The US and UK have many legislative bonds with each other, and I would not be surprised to learn that the IRS and HMCE co-operate in the matter of collecting due taxes regardless of the physical location of your business. The reciprocation treaties in place deal with many taxation issues, ie if you pay imcome tax in one location, you won't be liable for taxation in the other on the same income.
I'd guess that most overseas firms won't bother.
If I ran an ebook or downloadable music site in the US and had buyers in the EU, why would I bother collecting the VAT? Legally, there really isn't any way they can apply a tax to my business anyway. I have no physical or legal presence there, in any form. I'm outside of their jurisdiction, so they can't come after me here. They can't have the ISP on their end monitor all transactions, since they are SSL encrypted. I suppose they could legislate that ISPs there have to block sites that don't collect it, or some such nonsense. But I would guess that citizens wouldn't really like that one.
Want we really need is the Iraq Minister for Information to confirm that we will not act as tax collectors.
