[blibble]

> Btw, one of GDPR's key motivation was to take FB down.

this all seems very similar to the new VAT scheme, in that it was designed to target a foreign giant (Amazon), which was barely affected as a result, and instead ended up hurting the competitiveness of the EU's own small businesses

the EU Commission's response to small business concerns about that new VAT scheme? "we'll allocate some time to talk about that in 5 years"

fantastic

[dvfjsdhgfv]

That's not entirely true - MOSS actually works quite well, and preparing a sales report grouped by country should be trivial no matter what infrastructure you're using.

[therealmarv]

No matter what infrastructure you're using? You won't believe how many payment systems out there are not very MOSS friendly. If you are a developer and cannot use VAT MOSS logic as e.g. plugin you basically have to get IP country code, add country VAT tax and adjust the payment plan. Yeah... all really really trivial if the payment system is not used to dynamic pricing on different country of customers! I hope you see the irony. This is all very unpleasant for small businesses!

[dvfjsdhgfv]

Do you have to actually change the retail price? The way we do it is to keep the price constant for the customer. If their country has a lower VAT rate, they have to pay more. I'm not sure most even know/care how much VAT they pay, but they do care about the total price - and this doesn't change no matter if you change IP/user VPN etc. It also removes any incentives to cheat.

[therealmarv]

Good comment. Actually this is what I'm doing... move the logic to the book keeping side and deal with less income e.g. on Hungary with 27% VAT. Nevertheless why do I have to do all this hassle when somebody who sells e.g. a hardcover (vs. ebook) does not need to do this when selling cross border and they need to start thinking in this direction once they cross over 50 - 100,000 € on one country. Because I'm selling digital goods is much harder on my side.

[Xylakant]

If you cannot provide a list of sales by country, you maybe should not be running a business.

[therealmarv]

This is all stupid if you sell a really small amount of digital goods online. It all starts with 1€ (and less) on a ebook and in comparison: On normal goods there is a threshold of roughly ~100,000€ depending on country sales.

[dvfjsdhgfv]

Well, it's not that - before that law was introduced, you could simply ignore the country, since it's about digital downloads. If all you cared for was getting a payment, it was not unusual to have the transaction list in the forms of e-mails. Now you need much more information.

[Xylakant]

A customer is entitled to an invoice and a full invoice requires an address. Most businesses that offer digital goods and services should have had that even before. All the people I know that were affected by the VAT changes certainly had all customer adresses.

This is not a cash sale in a local book store.

[therealmarv]

This is wrong. You are not forced to give your whole address always to buy something, especially on digital goods. In fact e.g. giving only your payment information like your debit/visa card is actually enough for buying stuff legally online as a normal customer in EU (b2c).

[blibble]

just replying again as I remembered another point

previously when I had a new idea that I might be able to turn into a business I could form a limited liability company for about £10, try the idea out with essentially no paperwork at all

then if the idea panned out I could worry about the huge-pain-in-the-ass-that-is-VAT later

now with this regulation it's a problem once I've made my first sale to a non-domestic EU customer, and my agility goes through the floor

EU countries have gone from being fantastic places to start a digital services micro-company to being at best mediocre ones, all to try to stop Amazon avoiding VAT

utter madness: small companies started as side projects turn into the big ones, but apparently we no longer want that

[dvfjsdhgfv]

> EU countries have gone from being fantastic places to start a digital services micro-company to being at best mediocre ones, all to try to stop Amazon avoiding VAT

Well, so how do we deal with Amazon avoiding VAT and still being fair to all players on the market, big and small?

[blibble]

the paperwork is a minor bureaucratic annoyance, it's not a significant problem

the significant problem is now the fact that I have to register for VAT domestically if I want to to sell to people in other EU countries

before if my turnover was below ~£70,000 I paid no VAT at all due to the exemption (giving me a competitive edge vs. big companies with better economies of scale)

after the new regulations if I make any EU sales I have to either fill in VAT returns for EU member state I've sold to (not feasible, that would be hundreds of VAT returns/year in many languages), or register for domestic VAT which will handle that for me, but kills my business model

the EU Commission doesn't see this as a significant problem, likely as it is a beneficiary of VAT (the VAT being an EU mandated tax)

[claudius]

So you’re upset that your tax evasion scheme is now no longer possible and you have to pay taxes?

[peoplewindow]

That's not the hard part of the VAT rules. If it was just asking the user what country they're in and then submitting sales figures by country, that'd be easy.

There are two hard parts to what the EU did, for businesses.

The first is you have to charge variable VAT rates and remit the collected tax. However VAT rates do vary not only by country but in some cases within countries too, and they do change, so you have to make sure you have a really up to date list of tax rates and geographies where they apply. Including varying rates down to the city levels.

But the real kicker is that you can't trust the user's claim about where they are. Users are financially incentivised to lie about their location because these are digital downloads. So if they claim to live in a low VAT region they pay less, but download the same files. Simple as that.

As a consequence the VAT regulations have a LOT of complicated edge cases and "guidance" in them about how to figure out where the user really is, not where they say they are. This is hard of course, the user may be using VPNs and so on. There is specific guidance on how to handle users who are on ships sailing between VAT regions, or planes that are in the air when a purchase is made. So you've got a really complex pile of logic to start with, and then you're also in an adversarial situation where the users are all trying to screw you over by forging their location. And if they succeed, you can suffer big fines.

Oh and finally of course, you can't use any technical tricks to figure out where the user actually is, because then you'd violate EU privacy laws ... have fun with all of this! In practice it has to all be outsourced, it is too much work to implement in house for all but the largest of firms.

[jimnotgym]

Can you elaborate on which scheme you mean please?

[Xylakant]

A while ago VAT rules for digital goods were changed. Before, the VAT of the country where the company was located applied, after the VAT of the customers country. Amazon, Apple, ... exploited that by officially making the sale in a low-VAT country and pocketing the difference.

Many small businesses were concerned that they would have to register for VAT in all EU countries and deal with individual VAT laws, but the implementation for small businesses allows you to basically register at your home countries tax authority and provide them with a list of sales broken down by country. (MOSS in the UK, iirc) The initial hubbub has largely died down.

This is grossly simplified, but captures the gist. No tax advice, yadda, yadda.

[blibble]

https://www.theguardian.com/small-business-network/2014/nov/...

and

https://www.theguardian.com/small-business-network/2015/sep/...

my solution was to stop selling into the EU, though amusingly once the UK leaves the EU I'll be able to start again (by just ignoring the EU's VAT rules)

[jimnotgym]

I knew about that but I was thrown by this

> new VAT scheme

whereas this is from 2015. I was confused by language where you described it as a law to target Amazon. Now I see that was just an opinion.

> my solution was to stop selling into the EU

Interesting business decision. Was the cost of compliance that high, or was your revenue that trivial?

> though amusingly once the UK leaves the EU I'll be able to start again (by just ignoring the EU's VAT rules)

Well I was having a conversation with one of the UK's foremost VAT specialists on Friday, from one of the UK big 4 accountancy firms. He was very clear that the general opinion is that the UK will align with the EU for VAT. This was a response to my question about the catastrophic cashflow impact that losing the VAT rules on imports would have to UK businesses. He told me not to worry, as VAT alignment was simply a necessity.

[blibble]

> Interesting business decision. Was the cost of compliance that high, or was your revenue that trivial?

the cost of having to pay VAT on all of my UK REVENUES (digital services, remember!) would vastly dominate the PROFIT (not revenue) made from my EU sales

compliance wise, I'd rather not have to fill in VAT returns if it is optional (this is a side business, not my main employment)

> Well I was having a conversation with one of the UK's foremost VAT specialists on Friday, from one of the UK big 4 accountancy firms. He was very clear that the general opinion is that the UK will align with the EU for VAT.

well I'm glad his crystal ball is operating well... saying that I'm sure we will have a similar VAT after leaving (payable to our exchequer instead of the EU), but unless something radically changes the EU's laws won't be directly enforceable in the UK post brexit, and it's unlikely the UK will go out of its way to collect EU specific taxes for the EU's benefit

regardless, all of my "is EU VAT optional outside the EU?" discussion in this post and above is only an interesting thought experiment, it's not worth the possible consequences in practice (especially if your main worry is the lack of UK VAT free allowance like me... maybe if you're a large US based SaaS provider it's different)

[jimnotgym]

I'm not sure you have that right. I don't professionally engage with MOSS so I will not give advice, but I professionally do work with VAT and handle some millions in VAT a year, so I am pretty familiar with the dreaded VAT guide. All quotes are from the aforementioned resource

> the cost of having to pay VAT

Presumably you mean the higher price from charging VAT

> on all of my UK REVENUES

"your UK sales will not be liable, unless they’re above the UK VAT registration thresholds". So it makes no difference to your UK revenues at all, you either had to register for VAT because your total revenue was over the threshold, or you didn't.

> I'd rather not have to fill in VAT returns if I don't have to

Wouldn't we all love to avoid administering taxation.

> well I'm glad his crystal ball is operating well.

I think it is rather more than a crystal ball when you are the UK VAT lead for a big 4. This means you get consulted on it by the government, get to sit in on meetings with them, and work with the biggest companies in the UK who will also be lobbying the government. I think you rather trivialise their positions when you assume they know the same amount as me and you.

>(payable to our exchequer instead of the EU)

When did you ever pay VAT to the EU? I pay all of my VAT to HMRC despite trading extensively across Europe. It is possible as a consumer that you paid VAT that was passed on by the supplier to one of the member states tax authorities, but under what circumstances could it be paid to the EU?

> it can claim jurisdiction all it wants, enforcing it is another matter

Not at all, the UK government will enforce on its behalf, as we will expect them to enforce on our behalf.

> but unless something radically changes the EU's laws won't apply to me in the UK after the process is complete

The UK is in the process of bringing all EU law into UK law (where it isn't already) with the strangely titled Great Repeal Bill. So EU law will apply to you. Also the government have committed to an open border in Northern Ireland as mandated by the Good-Friday agreement. This will require a customs union, and a joint body of oversight (like the European court). The government has further committed that Northern Ireland will have the exact same terms as the rest of the UK under it's coalition deal with the DUP. Therefore the whole UK will be covered by that customs union. This is before we even discuss what EU oversight will be placed over a future trade deal with the EU. So whilst the government might bluster about what leaving the EU means, it is quite clear that it's options are

a) stay in the customs union and therefore under EU law

b) Leave the customs union and violate the Good-Friday Agreement, whilst also breaking the coalition agreement and therefore bringing down the government.

I wonder against that backdrop how you think you are going to be outside of EU law? You seem to have a downer on the EU, if you don't mind me saying?

[blibble]

> I think it is rather more than a crystal ball when you are the UK VAT lead for a big 4. This means you get consulted on it by the government

given the cabinet doesn't seem to know what their objective is, this seems like a fantastical claim

> When did you ever pay VAT to the EU?

not directly, but that's why it exists and where (a chunk of) the money goes -- read about the history of the VAT, it used to form the 40% of the EU's budget (down to about 14% these days)

> Not at all, the UK government will enforce on its behalf, as we will expect them to enforce on our behalf.

doesn't work like that in practice, once we're out HMRC isn't going to spend money chasing people for taxes due in Bulgaria, in the same way it doesn't chase people for taxes owed in Russia today

> The UK is in the process of bringing all EU law into UK law (where it isn't already) with the strangely titled Great Repeal Bill.

yes

> so EU law will apply to you.

no, at that point it will be UK law

> Also the government have committed to an open border in Northern Ireland as mandated by the Good-Friday agreement.

depends on what they mean by "open" -- regardless of that: there's nothing that prevents a customs border in the good-friday agreement (have a read, it's only about 10 pages long: [1])

> (various points based on the assumption that the government will commit absolutely to one policy voters don't care about and completely abandon all others)

the government has also committed to leaving the EU customs union and the single market

I agree that it's hard to see how both are possible, but politics is the art of the fudge

> I wonder against that backdrop how you think you are going to be outside of EU law?

I don't accept the premise or the conclusion -- b) doesn't violate the GFA[1] or the confidence and supply agreement[2] (not a coalition)

to be blunt: it seems like you're making things up

> You seem to have a downer on the EU, if you don't mind me saying?

why should I like it? if you're running a medium sized or big business it's fantastic (unless you're a large foreign business like Facebook, Amazon or Microsoft), but I'm trying to run a small business, and it seems like they're doing their best to kill me

hell, if in 5 years we're still subject to the ever increasing mountains of poorly thought out legislation written by morons, I suppose emigration is always an option

[1]: https://www.gov.uk/government/publications/the-belfast-agree...

[2]: https://www.gov.uk/government/publications/conservative-and-...

[therealmarv]

There is no legal way around ignoring EU VAT rules and selling to EU customers (no matter where you or your company is located). If you do business with EU end customers you have to comply to EU VAT rules. Just telling you how it works in theory.

[jdmichal]

I believe it's a reference to 2015 VAT changes. Here's a PricewaterhouseCoopers article:

http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices...

This was quite a hit to small companies, because now they have to manage collecting and remitting taxes to every country their consumer customers reside in. Previously they only had to collect and remit taxes to their own home country.