In theory the laws are great. But they should be applied over a certain revenue threshold, say €1M. They're a mess for someone selling a few items per month to customers all around Europe (like selling an ebook on your own website).
As far as I know the VAT law applies only to service providers (like Skype, and AWS) and you can easily file taxes through the mini one-shop-stop way ( http://www2.deloitte.com/global/en/pages/tax/articles/eu-201... - chose an EU Member State, I recommend Ireland, their online thingie seems to be okay ).
Unfortunately, it appears that you have been misinformed. There is no lower threshold to who the new rules affect. Also, while the mechanics of filing via MOSS aren't too bad in themselves, there are numerous other problems caused as a direct result of the VAT changes. As a couple of examples, there are several practical problems with keeping records to the required standard, and related conflicts between the rules about VAT and other EU consumer protection rules about advertising all-inclusive prices.
As someone running small businesses that do have to deal with EU tax rules in some cases, it is hard to imagine how they could have got this one more wrong. I know several people who run other relatively small businesses (though in some cases much larger than any of mine) who after also going through the hassle of modifying all of their systems to comply as well as possible have the same conclusion as me. For all of us, the most commercially reasonable option if we had known the full cost of compliance would have been to instead simply decline to take on any EU customers outside our home nations from the date the new rules came into effect and have nothing to do with the rest of the EU or its VAT rules at all.
> There is no lower threshold to who the new rules affect.
I never claimed there is a minimum amount, I just said that not anything over the net is automatically subject to the new "customer's host state's VAT applies" rule.
> conflicts between the rules about VAT and other EU consumer protection rules about advertising all-inclusive prices
You can't advertise as "9.99EUR + VAT"? Or guess the VAT rate based on geo-IP location association?
What kind of services do you provide?
I agree that it's still a far cry from a great solution. First of all they have too many damned useless documents and no code at all. (At least I haven't found any.) Nor a proper infographics, or a diagram illustrating the flow.
I never claimed there is a minimum amount, I just said that not anything over the net is automatically subject to the new "customer's host state's VAT applies" rule.
No, you said only service providers, citing two of the biggest firms in tech.
Unfortunately, the rule is far more general than that. Anyone selling any sort of digital services or products online is covered, even if it's just someone selling crosswords from their kitchen table that are then supplied in electronic form.
You can't advertise as "9.99EUR + VAT"?
Technically, probably not. For B2C sales, prices are typically supposed to be shown VAT-inclusive according to the various consumer protection rules. Naturally that is difficult if you don't yet know what the applicable VAT rate is.
Or guess the VAT rate based on geo-IP location association?
You can guess, but that infamously is not a sufficient standard of proof of customer's location for the required record keeping, so you might have to change your mind later. For the reasons above, that can cause compliance issues of its own.
There are other problems with relying on IP-based geolocation as well. For example, some EU member states have regional variations in the applicable VAT rates for the same products or services. To the best of my knowledge, no IP-based system yet exists that has sufficient accuracy to cope with that. In fact, even within the regions they do cover, most such systems are expected to give the wrong answer perhaps 10% of the time because proxies, VPNs, errors in the underlying IP-to-location database, and so on.
There are plenty of other problems with the new VAT system as well. We haven't even talked about being accountable to and subject to audit by the tax authorities in every member state, or the number of such states that have already sent out mass demands for incorrect tax revenues under threat of immediate legal action if they aren't paid, in some cases even demanding payment faster than the receiving small business could reasonably take legal advice to make sure it wasn't their mistake.
The whole VAT mess is just a giant screw-up, a set of rules designed after long and expensive debates, perhaps conceived with noble intentions, but ultimately implemented with horrific incompetence. Unfortunately, the same could be said of various other recent EU rules affecting small businesses, consumer protections, and related areas as well.
For example online tangible product sales is not covered, as it's not a service. (If I understand the explanatory notes correctly.) But selling software is covered, because you can electronically deliver it. Bah.
Yes, the crossword or sudoku provider has to fiddle with VAT, just as an app store. But if the crosswords are made by humans, then it's not an electronic service. The necessity of the human element seems to be the deciding factor.
Furthermore, the point is that this is a step in the right direction, a unified legal requirement, because before this providers were simply ignoring the VAT, and Member States' tax authorities were not really enforcing it.
Regarding the inclusiveness. This is a problem of legal harmonization, eventually one law/statue/directive will come out on top.
So, I'd just go with the IP based approach, the important thing is good faith. Not a 100% correct solution. And you can always display a warning next to the price that you are not sure of the taxes to apply, so please dear end-user select where you are established.
And yes, national (member state) tax offices act rather dumb and macho when it comes to collecting money.
I'm sorry, I'm trying to be polite and constructive here, but please understand that this is an issue where some of us spent days or even weeks doing little more than understanding what the new rules actually require and then updating our systems and records to account for them. We talked to lawyers. We talked to our elected representatives. Urgent questions were asked at the highest levels of government. And the loopholes you think might be there are not there. Even the tax authorities themselves have now admitted that they mishandled the situation for smaller businesses, but since snails move at a faster pace than EU bureaucracy, it will probably be several more months before they even debate the issue further.
This isn't really a unified legal requirement where before we got to ignore VAT. In reality, it's quite the opposite. We now have to comply with 28 different sets of legal requirements, where before we only had to charge VAT at our local rate and account for it on our local VAT return. For very small businesses here in the UK, such as someone selling the kitchen table crossword supplies I mentioned as an example before, we weren't required to charge VAT or file returns at all below a certain threshold on a de minimis principle, and no such threshold exists under the new rules.
I (we) did the same, as we are selling tickets and goods (digital and umm, regular) online, furthermore do it as a whitelabel platform, so it's definitely a service, but our billing to our clients is different than their billing to the end users (though we handle it for them).
So, I know the problems, I'm aware of the clusterfuck, but it's simply exactly as bad from our point of view as it was before (and at least there is an option to file VAT for the whole EU, which was non existent before, even if implementing it is a pain in the ass).
I don't know why you did not have to - in a legal sense - care about the location of the customer before. Selling something to an EU citizen in a state different from the state your business is established in meant that you were doing business in that state, hence you were supposed to register at their tax office and file and pay VAT on behalf of your customers. Just nobody did, because fuck that.
I don't know why you did not have to - in a legal sense - care about the location of the customer before. Selling something to an EU citizen in a state different from the state your business is established in meant that you were doing business in that state, hence you were supposed to register at their tax office and file and pay VAT on behalf of your customers.
That was never the case, at least not for any business I've been part of. We've always had to charge VAT to EU customers, whether in our home nation or any other member state, but it was charged at our home nation's rate previously and was counted on our normal VAT return. If you think that policy was incorrect and we should have been registering with every relevant EU member state individually, all I can tell you is that two different accountancy firms, independent tax helplines we had access to, and guidance directly from our national tax authority all seemed to disagree with you at various points prior to the recent changes.
For the avoidance of doubt, I'm only talking about the B2C sales here. B2B has always worked differently, and there are separate mechanisms for reporting cross-border B2B sales within the EU and dealing with the associated VAT.
Also for the avoidance of doubt, we're in the EU (the UK, specifically). The rules for businesses based in EU member states are somewhat different to the rules for those outside.
Sorry, you are right, and I'm also probably wrong, because I remembered the preparation for the recent changes and forgot about the calm times. (And we are technically not in the EU.)
