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Here is the new list Australia, Austria, Belgium, Finland, Greece, Portugal, South Africa, Switzerland, and the UK
They are saying also that we can try the system but also say that in the end it will be compulsory.
I was just wondering what anyone thinks about this, is it a good thing or is it just another way of cutting out earnings.
Any thoughts? Thank you.
I can confirm I see it as an option in my account (I'm in Belgium).
I think there are two sides to it:
I'm now mostly wondering what happens to my old reports and from there I would like to choose my timing to make the switch at the best possible time.
I'm no accountant, but as I understand it, Google employ the reverse charge mechanism, which means the buyer (Google) pays the VAT, not the seller. This is different if you reside in the country from where the funds are issued, Ireland (where those registered for VAT must send Google a VAT invoice), but that's obviously not the case as we're talking GBP here. Income tax applies as before.
Now, I presume this is because the new sterling reports have, according to Google, been calculated using daily exchange rates, rather than converting the total months' revenue in one fell swoop at the end of the month.
However, based on the reports that I have looked at it does seem like, for most of the time, I would be better off with monthly conversions rather than daily conversions. Although I guess this would depend on the direction the pound is taking against the dollar.
For the last six months or so though I would have lost quite a lot of money with daily conversions, which is a little worrying...
[edited by: SophieUK at 12:42 pm (utc) on June 16, 2009]
The payment methods available to you will remain the same. For example, you will still have the option to receive payments in US Dollars by cheque.
So I can still receive in US Dollars...yes.
Please be aware that once you have updated the currency in your account, we cannot reverse the change.
Just like some of the other things they cannot reverse engineer! However...
WE WILL also require this change in future so we recommend that you update your account soon.
So which is it?
I can receive in Dollars for now BUT in future I can only receive in Sterling...errr...no option to receive payments in US Dollars?
I can't get my head round why they are forcing us to make the change soon. There has to be a motive behind it and my guess is that it has to do with money. I just hope that there are no tax / VAT implications. The whole area is so complicated that a definitive answer (which won't come from the tax man) would cost a fortune in advice. And even then, it would always be covered by "as far as we are aware".
(which won't come from the tax man)
Am I the only one who does not have a problem with this?
I am self-employed and my AdSense earnings are treated as income just as my normal commission earnings are. Any expenditures made can be offset as usual.
I am also zero rated for VAT which means I can reclaim valid expenditures in full.
Why are so many having this complication?
Both my VAT and Inland Revenue offices are very clear on these issues and this is the way I have been running my self-employed books for 15 years and I have passed several inspections without a single query since they're the ones who told me what to do.
Handy to have it in UK pounds as it gets rid of an exchange rate calculation, but my historical records are going to be a pain to update. Might try to find a week by week exchange rate record and multiply everything to get close without going through everything again.
Why are so many having this complication?
I am guessing it's because there are some who do not want to declare to the taxman any income generated via adsense. Especially in countries where there is already high tax, like the UK for instance. People in the USA complain about $3 a gallon for gas (petrol), yet people in the UK would love to pay that. Same goes for fags (cigarettes). So it is understandable that some do not want to declare, and because it is going to be paid in local currency, they (adsense people) think that they will be found out.
I could be wrong.
Lame wolf, wrong as far as I'm concerned.
I hope I am. I have spoken to a number of UK based webmasters. They didn't mind when it was in USD, but are worried now it will be in GBP.
I declare it all £ or $ because they will find out eventually.
How will they find out ? Google doesn't report it.
I do understand why you are suspicious.
[edited by: Lame_Wolf at 6:42 am (utc) on June 17, 2009]
does anyone know if there are any tax / VAT implications with agreeing to the new terms and showing in Sterling?
Where is GOOGLE coming from doing that?
Those of you who declare and pay taxes MUST visit an accountant.
Google is forced by the Eurpean Comission to move its business address to Europe to pay its taxes here.
The bad news for us is these taxes are paid by publishers.
If you, into the EU have a contract with an american company you are exporting your services and you must no pay VAT/IVA; your incomes are the 100% of the Adsense cheque.
If you change your contract to an european company, you will need to send every month to Google an invoice where 16% is VAT/IVA (16 here, in Spain; other countries may have another tax percentages) and your net income is the other 84%. Every quarter you must pay the 16% of your invoices to the Government of your country (because advertising is excluded from the standard location rules of VAT/IVA in the European Union; only publishers in Ireland will receive so an invoice from Google). That's what Google don't want to tell us.
Being clear, IF YOU CHANGE YOUR CONTRACT TO GOOGLE IRELAND, 16% OF YOUR INCOME WILL BECOME PAYABLE TAXES AUTOMATICALLY.
I'm so far behind that I'm not even sure who our (in the EU) current contact is with. Ireland or the US. Anyone know?
A note for those who don't declare their income. One look by the tax man or the VAT man at their bank accounts will show Adsense money coming in. Maybe it would be unlucky to be randomly investigated in that way but it does happen. If the tax man then goes back eight years and asks for the back-tax, you can be in real serious trouble.
“Google” means Google Ireland Limited
As far as I understand it, G will employ the reverse charge mechanism, which means you do not have to pay VAT. If they drop this, they will then have to pay you VAT on top of your current earnings, but only if you are VAT registered. This shouldn't affect earnings, but does mean more admin.
Your payments are being made by Google Ireland, a company incorporated under the laws of Ireland, in accordance with the terms of your agreement with Google. The services provided are subject to the reverse charge mechanism and so VAT is to be accounted for by the recipient, Google Ireland, per Article 196 of Council Directive 2006/112/EC
Should you want more info, a quick trip to the Inland Revenue's site continues the theme ...
Under the reverse charge accounting mechanism, it is the responsibility of the customer, rather than the supplier, to account to HMRC for VAT
To clarify what services can be provided under this mechanism, again from IR's site ...
Services of the type included in paragraphs 1 - 8 of Schedule 5 to the VAT Act 1994, when received by a customer in the UK for business purposes
If you don't have that to hand, trust me when I tell you that Schedule 5, Paragraph 2 consists of just one word.
Until I hear from a higher authority I'm gonna run with that.
I think I'll let them push it for me
I agree. I've stated that those of us who are VAT registered need not raise VAT invoices, I wouldn't go so far as to say earnings will remain unaffected because at this stage I have no idea. Got the GBP offer some months back and have been waiting ever since for the complete rollout and subsequent feedback. For now the button remains unpushed.
You do not charge Google VAT on your adsense income, so you don't have to hand what you collected on behalf of your government to your government ...
Google pays the VAT on it to the Irish government and then immediately can recuperate the VAT, so for them it's a non-issue.
Same as it is for you: it's just like you did with the VAT while it was a contract with the USA. Only difference is that you now need to mark is as inside the EU, but no VAT due to Google having a VAT number in Ierland and it being marketing (which means it's assumed to be charged Irish VAT in Ireland (and since you cannot do that Google has to do it themselves).
It's the same rule as for selling goods inside the EU, not the standard services rule (the exception being "marketing services").
My reference to advertising being applicable to the RCM is a domestic issue (I believe the UK maintains the broadest application of the RCM internally compared to other EU members), and was meant to simplify the issue. I suspect I may possibly have caused confusion instead.
Anyway, appreciate the eloquent summary, I'm sure those here that were in the process of raising VAT invoices have put their pens away.
There was one point when I was getting fed up with declining earnings and made a change. Turns out I actually near an all time high at the time! Oops.
Glad I'm in local currency now - less chance for confusion.
Search was funny last week for me too. Looking better now.
Lexur says that we will need to be paying the VAT (is that right?) & swa66 says nothing will change and that Google Ireland will be paying the VAT (under some kind of reverse charge mechanism).
So if I do change over will I need to pay the VAT on these payments or will nothing change and Google will pay the VAT?
Sorry for being dense with this, I just want to be 100%.
One advantage in changing is the high and lows of currency variations thoughout a month get evened out by daily exchange rates being used.
I.E. You don't get your $US at the invariably disadvantageous exchange rate at the end of a month. [Murphy's Law]