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by Mithaldu 3946 days ago
Looking at the invoices, they invoke the reverse charge procedure, which is also mentioned in your link, and the german ยง196 MwStSystRL. That looks safe to me. What do you think?
1 comments

Not an accountant so i can't really have an opinion either way, and i really don't know squat about German tax laws, if they do a reverse VAT charge than it might be fine, but making claims that you don't charge VAT, especially online is a bit risky ;)

You can usually contact the tax authorities in countries you do business and ask for their procedures, HMRC at least is really good at helping people out regardless of where they live (UK, EU/EEA, rest of the world) since they see them selves as a "business enabler" and have their services aligned to achieve just that.

VAT is largely harmonized across the EU - which brings it's own issues for specific local situations - I'm sure his accountant is up to speed on it.
Clearly not, the rates differ from each country and country and heck the new regulations confuse things even further in many EU countries books is 0%, Ebooks in many countries are considered books, under the new EU regulations Ebooks should be taxed so what do you do? ;)_

On top of that you have to prove source of supply and source of consumption which is very tricky for allot of small businesses.

People in the EU can move allot some one might register with their account with a UK address and pay with a German credit card, heck what happens if they pay with a non-EU card? What if they use Paypal or another payment provider? What do you use to prove source of consumption in that case?

Proof of supply well GL on that with how the internet works these days....

Say you are a small business that sells Ebooks in Chinese, you are a UK registered companies, the books you sell are serviced from a partner you have in China, you now need to be able to define where your customers are based, register for either the HMRC Union VAT MOSS(As far as i can tell the only country that actually built one) figure out what VAT rates need to be taxed when and adjusted it from your inclusive amounts, which means that your customers will still pay the same price but the VAT portion will vary from customer to customer based on their country.

This is the most simple scenario and it's not that simple you have to be able to figure out the point of consumption (to a satisfactory level according to the new regulations which isn't well defined) then update your software to deal with all those cases and to ensure that it will keep up with VAT and regulation changes, then you need to have to keep records for VAT returns for each state and file them separately for each state you have costumers in if you are a 1-2 man business this isn't going to be easy, cheap, or even doable....

A 1 man business working with 20 EU members states now has to keep 20 VAT accounts and manage their books according to 20 different VAT regulations at this point even a good and expensive cart won't help you that much since the book keeping alone can bring you under so you are left with either switching to a 3rd party market place losing upto 80% revenue, defining a narrow market say UK, France and Germany and geoblocking everyone else or if you are lucky and big enough pay a hefty sum to update your eCommerce platform and get a good accountant....

Oh and to top it up if you are a non-EU member company you have now to register in the EU to provide digital goods to EU member states, yep I'm sure all those small businesses from the developing world are really exited about that....

This was probably the most obscene tax mandate the EU has passed so far it does virtually nothing besides put people in a hard place heck they've even managed to some how ads into this since "advertising space on a website" is now digital goods apparently... Heck if you supply a bundle of a physical and a digital product now you have to charge VAT differently as digital goods and GL on estimating the amount you have to charge for them since before that it was a bundle this can include stuff like a technical journal with supplementary online content, a DVD with access to online streaming of content or a music CD with digital download.

So if i was an artist selling my music on CD's and allowing people to also download my songs once they bought a CD well now I have to start charging separate VAT on both, and since the regulation states that i need to charge VAT at each "delivery" well what does it mean that every time you download my music I'm supposed to charge you VAT(And I've actually asked a couple of accountant friends and they don't know either, I've also asked a couple of them what happens if I'm a German that is buying an Ebook with a German payment card while visiting the UK from a say Danish company where does the VAT goes? well round round and round it goes where does it should no body knows was pretty much the answer i got....)?

And this is just the tip of the iceberg of insanity and the worse part since the regulation is so poorly defined now one actually can tell you with good enough certainty if you are complying with it or not.

Yes the rates, and the categories to which different rates apply, are subject to national law. But the law on VAT is still largely harmonised. (I recommend looking at the VAT directive - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV:l...)

As for the the rest of your text, I know these new rules bring difficulties with them when dealing with customers. But my point, that the rules for VAT are mostly the same across the EU and any capable account will know them, still holds true.