User upgrades and new EU VAT regulation re: digital services

Brogan said:
I responded to your ticket.
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Yes, I got that thanks. I'm mentioning it here so more people get to know about what is potentially a big problem for many of us.

Having decided to be compliant as opposed to illegal or stop trading, I am constantly finding more and more hurdles, mostly from HMRC's lack of consistent information and paypal's vagueness.

I have installed the country flags addon, which will help us identify people's location and manually account.
 
I have made an addon request here:

https://xenforo.com/community/threads/eu-vat-automatically-applied-to-user-upgrades.91937/

I have suggested something that integrates with taxamo.com which makes the accounting very easy.

Please like it if you think this would be useful.

HWS said:
However they have only small chances to force them to do so.
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Unless they decide to cooperate with each other. Something that historically they have not done, but these days is now very possible and lucrative.
 
Tracy Perry said:
Good luck on collections. Luckily there doesn't exist an international tax agency.
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International agreements and collect6ion agencies exist. Not sure if they will be used or not. Probably they will just wait until you travel to the EU and present you with the bill then.

This prank tops their cookie law. I'm glad I run a registered non-profit which is free of VAT and all user upgrades are rephrased as donations only. Which bypasses the whole thing.
@Waindigo sells his addons as donations which probably also sidesteps it.
 
Alfa1 said:
International agreements and collect6ion agencies exist. Not sure if they will be used or not. Probably they will just wait until you travel to the EU and present you with the bill then.

This prank tops their cookie law. I'm glad I run a registered non-profit which is free of VAT and all user upgrades are rephrased as donations only. Which bypasses the whole thing.
@Waindigo sells his addons as donations which probably also sidesteps it.
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Sorry... small matter of taxation w/o representation still exists - since I don't "do business" there and am based in the US, MY tax laws apply not theirs, even if they wished it were so. They will have about as much luck getting the US to force compliance as they would squeezing blood out of a piece of granite.

And since I have no plans (nor desire) to visit the EU within my life-span, they wouldn't have that avenue available to them either - which would be the case for many people.
 
Alfa1 said:
I'm glad I run a registered non-profit which is free of VAT and all user upgrades are rephrased as donations only. Which bypasses the whole thing.
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How do you do that?


Alfa1 said:
@Waindigo sells his addons as donations which probably also sidesteps it.
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You mean payment is always only voluntary?


Tracy Perry said:
Sorry... small matter of taxation w/o representation still exists - since I don't "do business" there and am based in the US, MY tax laws apply not theirs
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That's fine, you have no need to do anything if you don't sell to any customers in the EU.

However the US companies that do sell to the EU are still covered by this law sadly. It's that same as if you travel to England, and bring some alcohol in through UK customs that exceeds your UK allowance. It doesn't help to tell Johnny Customs Officer that you are American and therefore his duty doesn't apply to you.
 
Mr Lucky said:
However the US companies that do sell to the EU are still covered by this law sadly. It's that same as if you travel to England, and bring some alcohol in through UK customs that exceeds your UK allowance. It doesn't help to tell Johnny Customs Officer that you are American and therefore his duty doesn't apply to you.
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No, a closer analogy would be that I enter an airport here that has flights to the UK and even though I'm not leaving the airport trying to charge me custom fees for it.
Ain't gonna happen. Already been one arse kicking that ensued over something similar (tea ring a bell). The tax attitude still hasn't changed that much. Hell, even here in the States, I don't have to (currently) pay sales taxe for stuff I order from out of state as long as the business has no presence in my State.
 
Mr Lucky said:
How do you do that?
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In 2010 I have set up a foundation / charity and registered it as a non-profit. Its fully legit and comes with all kinds of responsibilities. One of the purposes is to have my big board survive independent from my existence.

Mr Lucky said:
You mean payment is always only voluntary?
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Unfortunately not. Its just framed as a donation. In reality its just paying Waindigo for developer time.
 
Tracy Perry said:
Sorry... small matter of taxation w/o representation still exists - since I don't "do business" there and am based in the US, MY tax laws apply not theirs, even if they wished it were so. They will have about as much luck getting the US to force compliance as they would squeezing blood out of a piece of granite.

And since I have no plans (nor desire) to visit the EU within my life-span, they wouldn't have that avenue available to them either - which would be the case for many people.
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You mean that their trying to get tax money out of you is like trying to poke hot pepper up a wild cat's back side? :eek:
 
Tracy Perry said:
No, a closer analogy would be that I enter an airport here that has flights to the UK and even though I'm not leaving the airport trying to charge me custom fees for it.
Ain't gonna happen. Already been one arse kicking that ensued over something similar (tea ring a bell). The tax attitude still hasn't changed that much. Hell, even here in the States, I don't have to (currently) pay sales taxe for stuff I order from out of state as long as the business has no presence in my State.
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You may be responsible though for use tax on purchases made out of state.
 
No, here in Texas, if the business has no local (Texas) establishment, I pay no sales taxes (pretty much the only "tax" we have as we have no income tax here and the only other is the gas tax).
If there is a business that tries to charge taxes as if I had walked in through their store doors - then it's I walk right out the same "store doors". I can buy the same item any where else. Now, if they roll that tax into their price and don't break it out at the sell time - that's on them as far as hiding the taxation (and I don't really think they would do that as it could be an accounting nightmare).

If you are referring to purchases made when traveling in another state, then yes - you are responsible.
As for the specifics of user upgrades, fees, etc that are charged for a forum - those are taxable at the Federal level and possibly at the state level (depends on the state(s) in question). But I don't ever see the US enforcing foreign tax laws... and if they did, I doubt that the critters would stay in office for long.
 
@Mr Lucky how do you handle it currently? If there would be enough interest i could imagine to develop such an extension. On the other hand i'd rather prefer to pay someone to develope this.
 
I have two sites, one is a xenforo forum, the other an ecomerce site using Woocommerce.

I joined the VAT MOSS scheme as a soletrder under the UK VAT threshold, so I do not charge and pay UK VAT at all.

The Woommerce site has a plugin (Taxamo) which automatically adds the tax to the country at the appropriate rate when there is a digital sale. This then prints exports the data ready for the VAT MOSS return.

The xenforo forum I have a very helpful moderator who handles it, she has written to all the members with account upgrades and collected their country of residence and noted IP address.

I then send her my Paypal statement and she adds a column giving the country code. I then give that to my bookkeeper who will work out the tax for any EU members and then add this to the VAT MOSS return.

Luckily there are only a few EU members, so it doesn't take up too much time, however the fact that xenforo does not do this automatically like Woocommerce is costing time/money - I really believe it is something they should address as it is a legal requirement for anyone who is offering account upgrades. I know a lot of people will just ignore it and hope they don't get caught. I prefer to stay legal.

My only cost (thanks to the mod offering her free time) is he bookkeeper's time in going through the xenforo spreadsheet and adding to the Woocommerce which I imagine shouldn't be more than £20 per 3 month quarter, but I will know in a couple of weeks when she's done the work.
 
Thank you very much @Mr Lucky for this well explained answer. This could be a way to go for me as well. I have only less user upgrades, round about 20/month. Think this can be done manually.
 
If it is only 20 it's nott too bad to do it manually, send a batch email to all subscribers ask for address. Those are 1 part of your evidence oin case you get an audit. Then the IP addresses should be sufficient for part 2 of the evidence.
 
Similar to what @Mr Lucky does, I'll be releasing an add-on that links XenForo with FreeAgent which automatically produce invoices when a user upgrade is completed, working out the appropriate VAT to charge as required. Currently FreeAgent doesn't submit the VAT MOSS return for you (although I expect this to be added soon as they automatically submit other tax forms for me), but they are able to provide an easy summary that makes filling it in yourself easy.

@Brett Chitty has kindly contributed to the development of this add-on. If anyone else is interested in contributing, please drop me a PM.
 
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Jon W said:
Similar to what @Mr Lucky does, I'll be releasing an add-on that links XenForo with FreeAgent which automatically produce invoices when a user upgrade is completed, working out the appropriate VAT to charge as required. .
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This sounds kind of interesting, though for me it would be useful for something that integrates with Taxamo as that is what my Woommerce site uses via their Taxamo plugin. It would be annoying for me to have two sites that use two different online accounting systems, but if Freeagant have a wordpress plugin then maybe I would switch everything over to that.

Edit: would your addon also collect the two items of location evidence required by HMRC?
 
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Mr Lucky said:
Edit: would your addon also collect the two items of location evidence required by HMRC?
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I will probably be offering different ways of collecting this data and the system would try and match two pieces of information. PayPal provides a country code through its API, which it suggests should work as one piece of information. There is also IP address information, which could be checked using my GeoIP by Waindigo add-on, and my User Upgrades by Waindigo add-on has an option that requires users to send their address information along with the payment. I'm not actually sure which combination of these would be acceptable to HMRC, but if there is conflicting information then some sort of manual intervention would be required.
 
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