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.
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)
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.
> 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)
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?
> 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
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.
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.
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.