User upgrades and new EU VAT regulation re: digital services

[RobinHood]

Apparently so.

Back to burning discs or posting out USB keys it is then!

Alternatively someone could start a business that installs digital kiosks in every coffee shop around the world.
When I want to distribute my updates to customers they'll all get an email notifying them an update is available and to head to their nearest distribution point.
They can then pop down to their local coffee shop kiosk, log in and have their files burnt to a disk or transferred to a usb key there and then. Sort of like a vending machine.
They can then head home, with both parties safe in the knowledge that nothing was directly digitally transferred from supplier to customer all the while knowing that the future is finally here!

I'm sure that will definitely be the most cost effective and hassle free way for small business to deal with this problem

 

[Russ]

The fact of the matter is most larger online retailers have a presence in the EU and that's why they are required to pay VAT on sales.

I highly doubt small US based businesses will be required to collect VAT. Heck, they don't even have to collect sales tax for other states in most cases. So collecting for the EU would be out of the question and unenforceable.

I think Santa has a better chance of making it to all the nice kids houses on Christmas than them enforcing it on every single online seller who even has one customer that would require the VAT.

 

[TPerry]

I think Santa has a better chance of making it to all the nice kids houses on Christmas than them enforcing it on every single online seller who even has one customer that would require the VAT.

I can see it now
Them:

Dear Mr. Perry, we see that you sell upgrades to your forum and have several customers based in the EU. Due to the fact your upgrades allow additional content you are responsible for submitting X amount for payment of VAT.

Me:
Go Pound Sand.

 

[FredC]

Heck, they don't even have to collect sales tax for other states in most cases. So collecting for the EU would be out of the question and unenforceable.

This... Ive already put this EU VAT nonsense out of mind..

 

[SneakyDave]

No taxation without representation!

 

[Andy.N]

No taxation without representation!

people from DC want to say that for years.

 

[TPerry]

people from DC want to say that for years.

Well, they get a large benefit of the taxation of everybody else that the rest of the nation doesn't get... so I count it as a wash for them.

 

[FredC]

I hope developers give a heads up before they start pulling their plugins from the RM.

I doubt that anyone will do this.

I doubt anyone would do that, if anything I see some people denying sales to the countries that require the tax.

Not sure if this is related but it is kind of what i feared.. Just one developer can leave a rocking hole in the Addon department..

Regardless of the reasoning i hope to see those plugins make a return eventually.. Hopefully the reasoning isn't as nefarious as it looks.

 

[Snog]

Not sure if this is related but it is kind of what i feared.. Just one developer can leave a rocking hole in the Addon department..
View attachment 93211
Regardless of the reasoning i hope to see those plugins make a return eventually.. Hopefully the reasoning isn't as nefarious as it looks.

I don't think he's jumping ship. I think he's just cleaning house and removing old add-ons that aren't supported any more.

 

[Bram]

Life is a good in the new EUSSR super state. More rules please

 

[TPerry]

Life is a good in the new EUSSR super state. More rules please

Would you like a dollop of lack of representation with that?

 

[Lord Squishy]

What happens if the content can't be emailed as an attachment?

Say it's too big or contains a file type that some email providers wont accept.

For example I tried to send a zip file to myself earlier today containing an exe file only to be told by Google I can no longer do this. So I sent myself a dropbox link instead.

Would that constitute a download link and therefore fall under this legislation, just because google wouldn't let me email it?

If the file is a 30mb zip file and you can't attach it to an email you have to send a download link to each client. According to the last line of Russ' post that would be covered by this new legislation. This could also have an impact on graphic designers and photographers that create digital content, especially those that produce large files.

View attachment 93106

I have to admit it seems like HMRC's chart is a little misleading. If you read the source they're referring to, the EC's explanatory notes, they don't make the distinction between "document automatically emailed by seller's system" and "document manually emailed". The note generally refers to "...services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology..."

(It then goes on to say that that specifically includes "the supply of digitized products generally, including software and changes to, or upgrades of, software").

It seems to me, however, that the distinction HMRC is trying to draw is between a product, already created, which is automatically supplied to the consumer and a product which is fundamentally offline which happens to be sent via email to the consumer. Note specifically for example 3(i), which says "services of professionals such as lawyers and financial consultants who advise clients by e-mail", 3(j), "teaching services where the course content is delivered by a teacher over the Internet or an electronic network", 3(o), 3(u), etc.

Just taking something that used to be automatically emailed and then manually emailing it instead would seem not to change its status under the Regulation (because it does, in fact, allow "minimal human intervention", probably to block exactly this loophole).

(full disclosure: I am a lawyer, with knowledge of EU commercial/IP law. I am not your lawyer, and this is not legal advice. Pay one of my colleagues instead.)

 

[wedgar]

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?

You should have no problem if you are a US based supplier selling overseas.

 

[Mr Lucky]

It's not just slightly more complicated.

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.

In order to not have to jump through take impossible hoops of registering in each country, the best option is to register VAT MOSS. However until recently this was not possible for non VAT registered small time traders e.g. under the 81K threshold.

They have amended this so if you don't need to charge UK VAT, you can now register for MOSS, but first must register for VAT, but do not have to charge it for your UK customers. This helps a bit, but as Brogan pointed out, merely being VAT registered (whether you have to charge the UK 20% or not) means much more complex accounting procedures, and as you likely to need a bookkeeper, more expensive.

Without VAT it's easy enough to prepare your own annual accounts as you don't need to document each and every tiny transaction, but with VAT MOSS it is very much more complex. I have registered at Taxamo which takes care of the transaction accounting for my store site, but all the forum site stuff, ie upgrades and donations, will need to be entered manually. Nightmare.

Without a specific addon like I have with my Wordpress store and cart, this means that tax cannot be added per transaction based on country, so basically even if I can get the relevant location info (via PayPal?) I have to pay theBAT myself out of the gross amount, instead of adding it per country.

 

[Mr Lucky]

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

I'm not sure about that:

http://www.hmrc.gov.uk/manuals/vatscmanual/vatsc50400.htm

 

[Mr Lucky]

The biggest issue that will involve most xenforo users who do not sell resources is of course the use of member upgrades, which fall under the criteria.

I have started a suggestion that xenforo include an automatic way to add EU tax to user upgrades in the EU:

https://xenforo.com/community/threads/eu-vat-automatically-applied-to-upgrades.90272/

Without this we have the choice to:

• Stay legal and stop having paid upgrades
• Use a clunky manual workaround
• Continue with paid upgrades and not declare the tax (illegal)

I have just registered for VAT and will register for VAT MOSS, and failing a better way will have todo the clunky workaround: manually search out the EU upgrades and swallow the VAT by paying it myself.

At least with VAT MOSS, you do not have to charge UK VAT if you are under the threshold of £81,000 turnover

 

[Paul B]

For the reasons I posted previously, I don't believe forum user upgrades are covered.

I'm certainly not changing how I do things.

 

[Mr Lucky]

For the reasons I posted previously, I don't believe forum user upgrades are covered.

They are according to my accountant and HMRC (with whom I spoke at great length yesterday). If they pay for and receive a benefit or increase in service on the website via an automated system, then it is covered. It is not relevant that they do not download anything.

 

[Liam W]

Well this is a rather large can of worms...

Hmmm.

 

[Paul B]

I'm guessing that the number of forums which have stopped user upgrades is in the single figures.