User upgrades and new EU VAT regulation re: digital services

[HWS]

This affects small companies as well. Where does it say it doesn't?

They are already required to do this since some years (collect taxes from europeans). And despite this fact almost all small foreign companies haven't registered for a tax account in Europe and also do not charge taxes to europeans.

I doubt this will change unless the US IRS will force them to charge the european taxes and collect them. Until now the IRS doesn't care about this.

 

[Mr Lucky]

In the UK you don't have to register for VAT until you meet the threshold.
With this change, everyone selling these 'e-services' has to be VAT registered and submit quarterly returns, regardless of the total sales.

However if you are under the UK threshold, you do not have to add and collect the UK 20%, but you are correct you do have to now file VAT accounts.

See: https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop

Businesses currently below the UK VAT Registration threshold
Registration
These VAT registration arrangements are only available to you if you meet all of the following criteria:

• you are a UK-based supplier of digital services
• you wish to use the VAT MOSS
• your UK taxable turnover is below the UK-VAT registration threshold -currently £81,000

If you make taxable supplies of digital services to consumers in other EU member states, and your UK taxable turnover is below the UK VAT registration threshold, you can use the VAT MOSS to account for the VAT due in other EU member states, but you don’t need to account for and pay VAT on sales to your UK consumers.
I have a company for my main production work which is VAT registered, but also am a sole trader for my sales which is a fundraising sideline. Up till now the accounts for the sole trader business are very simple, I just need to show the total sales, the total expenses and that's more or less it. From now, even though I will not need to charge UK VAT, I now need to calculate for each EU country.

A good list of FAQs:

http://support.taxamo.com

(lower down the page after all the Taxamo intergration and pricing)

 

[Paul B]

It's just not worth the additional work.

Well done the EU and UK government!

/sarcasm

 

[Andy.N]

My US-based company offer online training for members throughout the world, many of them are in the EU.
Reading this, my mind is blown.

 

[Paul B]

I suspect very few people who are going to be affected are aware.

 

[Mr Lucky]

My US-based company offer online training for members throughout the world, many of them are in the EU.
Reading this, my mind is blown.

It seems this ruling is to collect more from the big companies such as Amazon, iTunes etc who typically use low or no tax countries as a selling base.

I'm sure small US companies will be under the radar: who knows what jurisdiction would give a Greek VAT inspector the right to pop over to Wyoming and start auditing people selling knitting patterns.

However some US companies are taking this very seriously. The IRS may have reciprocal arrangements in place so that they investigate US companies in return for EU govt departments checking up on US ex-pats income in Europe (oh yes, that's another can of worms)

For example my wife is a US citizen in the UK. She has a tax free ISA allowance here as we all do, but still has to declare and pay tax on the interest to the IRS. And guess what? The UK banks and financial advisers now insist on people declaring there US citizenship as they now inform the IRS. So the idea we can get away with such things is no longer the case. They are watching and they have their snitches.

 

[Daniel Hood]

My US-based company offer online training for members throughout the world, many of them are in the EU.
Reading this, my mind is blown.

Same. Not sure what I'm going to do. I was completely unaware and don't have much time to become compliant.

 

[Mr Lucky]

I rang up the UK VAT support line about 6 months ago. At that time, the person I spoke said something along the lines of "oh yes, I've heard about this. I'm not sure what is happening about that..." Then they started the VAT MOSS scheme, but only very recently did they allow small companies below the VAT threshold to join.

With 24 hours to go, I can imagine trying to speak to them now will be impossible.

Not wishing to scaremonger, but I just found this:


Anyone that wants to supply an eService has to do so over the internet. There are web bots – programs and things that can identify suppliers of services on the internet – that can trawl it automatically. We can then approach things on a risk basis, depending on what we find out from those searches.”

Andrew Webb, senior policy manager at HMRC, speaking at June’s EU VAT conference in London.

I will be registering for VAT MOSS

 

[FredC]

I foresee a few plugins disappearing from the RM over the next couple days.

Since im a US resident Im assuming My USA hosted Forums can still sell user upgrades and renewals to all members domestic and abroad without to much concern?

 

[Paul B]

Im assuming My USA hosted Forums can still sell user upgrades and renewals to all members domestic and abroad without to much concern?

As I understand it, automated user upgrades (to EU members) will be affected.

 

[FredC]

As I understand it, automated user upgrades (to EU members) will be affected.

But is this my concern or the customers? Who is supposed to handle the VAT charges? If i dont make any changes i will be un compliant with a law outside of my own country's borders?

 

[HWS]

Same. Not sure what I'm going to do. I was completely unaware and don't have much time to become compliant.

If I were you, I would continue to ignore this. This regulation (collect tax from europeans) was in place since years already. The only thing that changes 1/1/15 is that you should collect different tax amounts.

The only thing that may happen if you really collect taxes is that your european customers will buy at another store in the us which does not collect taxes. As said: Most don't (even if they should since years).

 

[Paul B]

It relates to you as you are the seller.

Read the links posted in the earlier posts on the first page.

 

[HWS]

But is this my concern or the customers? Who is supposed to handle the VAT charges? If i dont make any changes i will be un compliant with a law outside of my own country's borders?

By foreign (european) law, you are already required to collect them since some years and forward them to an EU tax office (where you need to be registered just for that purpose). However, no one can and will force you to do so. The IRS does not care.

 

[FredC]

Read the links posted in the earlier posts on the first page.

Thanks for the tip.. I actually have been reading up on this for a few weeks and am just getting more and more confused.. Im sure im not the only one.. Although i doubt i really have much to worry about.. I dont see this as enforceable inside the USA for such a small online community..

I wonder if this could be circumvented by gifting user upgrades after a donation is made?

 

[HWS]

after a donation is made?

Donations are also taxable by european law. You need to collect tax even for donations done by european people.

 

[Paul B]

I wonder if this could be circumvented by gifting user upgrades after a donation is made?

That is my current thinking and what I may end up doing.

It's a pain as it needs to be managed manually but better that than the alternatives.

 

[Paul B]

Donations are also taxable by european law.

Yes they are, but they don't require one to be VAT and MOSS registered, etc.

 

[FredC]

By foreign (european) law, you are already required to collect them since some years and forward them to an EU tax office (where you need to be registered just for that purpose). However, no one can and will force you to do so. The IRS does not care.

That was kind of what i thought to.. seems completely unenforceable.. Certainly the IRS doesnt care they dont even collect taxes on the internet unless the transaction is done inside the same state borders..

 

[Russ]

Really strange outlines:



So instead of having EU customers have immediate access to the download, technically manual emails could be sent out?

But yes... I couldn't even imagine the man hours that would have to be spent to even try to go after every online seller who doesn't "agree".