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"Google says it is investigating alternative methods of payment"
Ever heard of a bank-wire?
I just know what I see...
[adwords.google.com...]
"All AdWords accounts with EU billing addresses will be subject to VAT after the new rules take effect as of July the 1st 2003"
The good news is that VAT registered businesses will get 21% more bang for their buck over those who aren't registered. Suits me just fine!
Yes I´m paying VAT for Adwords, for a long time. And in my tax revenue model, I don´t "mess" with VAT, so when I pay "Google´s VAT", it´s just money down the drain...
That isn't really true because you can also take an extra 17.5% on B2C sales that a VAT registered company has to pay to the VAT man.
So if I sell something for £235.00, I only get £200. If it costs £117.50, I only pay £100.
So for me: (£235-£35)-(£117.50-£17.50) = £100 Profit, £17.50 to the VAT man.
For you: (£235)-(£117.50) = £117.50 Profit.
If you are so worried about it, then become VAT registered.
Your VAT registered company name is Widget Ltd. You set up Widget Ads Ltd that serves as an ad handling company. WAL buys ads from Google to advertise WL. WAL invoices WL every month for its services. WL does not advertise with Google directly. Provided WAL's turnover is less than the VAT limit it would not need to charge WL any VAT. There would of course be the extra cost of submitting accounts for a second company but considering it has only 12 sales invoices and approximately the same number of purchase invoices that shouldn't be too onerous. There will be the £15 a year company house fees and one or two other incidentals but they wouldn't cost anywhere near what the VAT would.
Or is there a flaw in this plan?
All I've got to do now is make some sensible ones ;-)
TAX, you might just alert the Taxman, have you considered paying tax and not just claiming VAT back?
WAL will file returns every year showing £0 profits. No profits, no corporation tax liabilities. The tax man won't like it but I can't see how it's not a valid, legal setup.
Question is - is there any benefit to doing this at all?
[edited by: Macro at 1:40 pm (utc) on Jan. 12, 2004]
How people in the UK can be made to pay tax in Ireland I'll never know.
Because both are in the EU. Products and services bought by a resident (tax-payer) of one EU state from a provider in another EU state are liable for VAT at the rate applicable in the country of purchase.
I'm assuming that WAL won't pay VAT to Google as it is not a VAT registered company.
Yep, they will pay VAT, but will be unable to claim it back. If VAT regisetered you can claim it back, if not you just wave goodbye to it. So basically it is just a bookkeeping/tax returns issue, a pain but not an increase in the charge.
One thing is for sure, I will lose out on the exchange. Its a good thing the dollar is so weak.
The problem is that I don´t sell anything!
So if my competitor from "Country without Vat" wants to "buy x visitors", he pays $100.
If I want to buy the same visitors, I´ll pay $119.
A guy from Sweden will pay $125.
Just this simple... I´ll pay more $19 for the same service.
But I´m used to injustices, and no I don´t want to deal with the VAT man. That only brings headaches...
The problem is that I don´t sell anything!
Brilliant! Then get registered for VAT. You can register voluntarily even if you don't have the minimum turnover for cumpulsory registration.
The good news for me is that everytime I order from Amazon I can claim back 17.5% on all my DVD orders at the end of the year.
Can someone give me an example,
I am guessing that VAT is the same as Sales Tax in the US, is that right. If so is anyone in the States paying anything like the rates in Euroland?
Someone here wrote"
"Because both are in the EU. Products and services bought by a resident (tax-payer) of one EU state from a provider in another EU state are liable for VAT at the rate applicable in the country of purchase."
I think, that it is different:
{taken from site mentioned above)
"For individuals, VAT liability was incurred "by transactions," as it is under a national system. This meant that individuals could purchase goods and pay VAT on the goods in a Member State other than their own (i.e., at origin)" BUT
"While private individuals have benefited from origin-based VAT, companies have been subject to various destination-based methods. Though tax controls at frontiers have been abolished, businesses are required to maintain detailed records of purchases from, and sales to, other Member States, and the system is policed by administrative cooperation between Member States’ tax authorities." AND
"Non-EU companies that export to the EU are taxed at import"
Any coments?
And since I'm already paying VAT in the EU for the services I sell (I'm VAT registered), can I deduce my paid US VAT from the VAT I would have to pay on selling my services?
Complicated. PHP is easier :)
This is how it has been in the past, but VAT has been changing, you may need to check if this is still true. (This is why imported cars into the UK are cheaper than buying a UK car. Manufacturers tried to set the price the same in EU countries, including VAT. But if you buy one from Holland or Belgium, where they pay 50% VAT on new cars, and end user can claim the 50% back and then pay the 10% new car tax plus 17.5% VAT in the UK)
> But I´m used to injustices, and no I don´t want to deal with the VAT man. That only brings headaches...
People always think that this is going to be difficult - like a UK tax return, page after page after page. But it is not.
There are 9 boxes to fill in. Two relate to supplying and buying from other EU countries. Two are for total sales and total purchases and a further four are the total VAT for each of the totals above. The last is a simple subtraction.
Eg)
Sales: £100,000
Purchases: £50,000
VAT on sales: £17,500
VAT on purchases: £8,750
(Same four boxes for EU purchases)
(Last box tells you which boxes to subtract, assuming EU are all zero, box would be £17,500 - £8,750 = £8,750)
That's it!
(This Inland Revenue complicate the issue, VAT is like child's play by comparison!)
More complicated:
Sales: 100,000 EUR (in Europe)
Purchases: 100,000 $ (from US)
Assumptions:
1 EUR = 1 $
VAT Europe = VAT US
Can I deduct my US purchases from my Europe sales so that I don't have to pay VAT at all?
The more complicated answer is that imports from the US into the EU should be charged VAT at point of entry, this is reclaimable. Certain software downloads also may be VATable and that can be reclaimed.
