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.
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.
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 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).
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
> 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?
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)
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.