Author Topic: Are you responsible for charging/collecting VAT in the EU?  (Read 3306 times)

guest819

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Are you responsible for charging/collecting VAT in the EU?
« on: October 17, 2018, 09:14:53 PM »
The simple answer is Yes! you are.

I'm just an individual, i'm not a business
If you're selling digital goods (eBooks are digital goods) then it is your responsibility to charge, collect and repay the EU VAT at whatever rate (between 17 & 27%) is required by the country your customer is buying in. If you're selling via Amazon or other major platforms they have this covered for you. You can see this reflected in the charges on their setup page.

If you are using Shopify or other sales products on a website, (yours, or a group selling site), then you are required to settle all the VAT on outstanding sales. Warning! If you don't collect it from the reader/listener you will be subsequently charged by the country from which you have a VAT liability anyway. It's your responsibility.

I'm not in the EU I'm not subject to their regulations.
Unfortunately yes, you are. What's more, if you want to sell within the EU you are required to obtain an EU VAT registration. It's covered by an organisation called MOSS (mini One Stop Shop) where you can register yourself.
e.g.
For the non-Union scheme, the taxable person (who has neither a business establishment, nor
a fixed establishment, nor is registered or otherwise obliged to register, in the EU1
) can
choose any Member State to be the Member State of identification. That Member State will
allocate an individual VAT identification number to the taxable person (using the format
EUxxxyyyyyz).


If you don't choose MOSS you may be required to register in all EU countries individually (28 countries).

I'll add to this information once everyone has a chance to ask questions/discuss their position. It won't affect 98% of you, but if you give/sell or other in the EU then you might need to re-think your strategy.
 
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David VanDyke

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Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #1 on: October 17, 2018, 11:13:48 PM »
The key takeaway for most people is, as long as you sell through a vendor like Amazon or Kobo, it's all integrated and you need do nothing more.

Only if you sell directly is this an issue.
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Vidya

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #2 on: October 17, 2018, 11:49:38 PM »
are we required to obtain an EU VAT registration even if we sell through Payhip, which takes care of VAT?

I posted this in my thread and will ask again here:

this was discussed on kb and I remember some people saying the authorities in Europe canít actually do anything if you dont add the correct VAT for their nation and remit it to the tax office in that country.

I live in India. Iím asking seriously: what are the authorities in Europe going to do if I donít pay them the VAT?

How will they even know about it unless I become a big name?

And ok, letís say I do become a big seller. Again, what legal action can they take to make me pay the tax? Because from what I remember of the KB discussion, some said they can do nothing and we should just ignore all requirements for VAT and continue on our merry way.
 

guest819

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Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #3 on: October 18, 2018, 12:07:04 AM »
are we required to obtain an EU VAT registration even if we sell through Payhip, which takes care of VAT?

No, if you're using any payment platform that says they take care of VAT then they will shoulder the burden of collecting and paying the relevant authorities. Some don't so if in doubt check them and get it in writing.

this was discussed on kb and I remember some people saying the authorities in Europe canít actually do anything if you dont add the correct VAT for their nation and remit it to the tax office in that country.
Yes, they can track you down. Whether they will bother to do so, or not is dependent on a few things. Your level of income from their particular country, their threshold for pursuing the debt and their interest in doing so. some countries are more switched-on than others.

I live in India. Iím asking seriously: what are the authorities in Europe going to do if I donít pay them the VAT?

This is simple to answer. Probably nothing if you're small-fry, but don;t count on it. Some legal firms like to collect debts on behalf of a country and add their own extortionate fees to the fine for non-payment. You could start with a small debt, but incur a massive fine - ask yourself is it worth it. Probably not. Use a payment platform that does it for you then you won;t have any concerns.

How will they even know about it unless I become a big name?

Every transaction has a record from end-to-end. Even Swiss bankers cannot hide people's money any more.

And ok, letís say I do become a big seller. Again, what legal action can they take to make me pay the tax? Because from what I remember of the KB discussion, some said they can do nothing and we should just ignore all requirements for VAT and continue on our merry way.

Tax is a serious issue in every country so there are usually rules about them and now we are truly a global society, they have worked out agreements between them. You may find you are pressed by your own tax authorities, or by a legal firm in your own country empowered to collect the foreign debt. Remember, there is money to be made in debt collection. If you are a big seller you will become an easy target.
 
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HSh

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #4 on: October 18, 2018, 03:21:51 AM »
Payhip handles VAT.  You don't need to worry about it on that platform.  They add whatever the buyer owes for their location and send it to the EU. 
 

CoraBuhlert

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #5 on: October 19, 2018, 07:57:03 AM »
The EU VAT law is a classic example of a law that was aimed at large companies such as Amazon, Apple, Google, etc... that used the old rules to (legally) evade taxes, but ended up hurting a lot of small online sellers instead, because no one thought to include a minimum threshold in the law. British writer Juliet E McKenna campaigned a lot for excluding small sellers from the VAT laws. She also spoke to a lot of members of the EU parliament and realised that most of them weren't even aware that small one person online stores were a thing. The reason why many of the EU laws regarding internet commerce, copyright, data protection, etc... are so awful is that the majority of the members of the EU parliament are not very tech savvy and for some reason the ones in charge of drafting internet related bills are the least tech savvy of all to the point that they don't even have an online presence.

However, at the moment you're safest using a provider like Payhip, etc... which supports VAT collection.

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Vidya

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #6 on: October 22, 2018, 09:02:51 PM »
Thanks, sFABi. That settles it then. Iíll sell only through Payhip, which takes care of VAT. Unless anyone knows of any other site that takes care of VAT?
 

ErikT

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Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #7 on: November 09, 2018, 12:04:29 PM »
I'm not in the EU I'm not subject to their regulations.
Unfortunately yes, you are.

No, this simply isn't correct. If you're outside the EU, you are not under EU jurisdiction, and not subject to their regulations. PERIOD, end of story.

That said, it most certainly is true that EU tax officials have a long history of bullying people worldwide with threats that lack any legal basis, but are often effective intimidation tactics. Ignoring them is an effective countermeasure.


Quote
What's more, if you want to sell within the EU you are required to obtain an EU VAT registration.

A grey area comes into play in the following regard. It IS true that if you are holding out a product or service INSIDE the EU then you are very much subject to their regulation and must collect VAT. European regulators are fond of "interpreting" this to mean than anyone selling anything to a European BUYER is "offering a service in the EU", and must collect tax. Their interpretation is complete BS, and can be ignored in many cases.

If we're talking about Amazon or Barnes & Noble or another company that clearly has OPERATIONS inside the EU, they definitely have to collect the tax, and they have little choice but to accept the interpretation that any online sale to any buyer inside the EU is taxable.

But if you are operating your own website in a non-European TLD such as .com, you are perfectly within your rights to simply ignore them. They have no jurisdictional authority over you. To be sure they will cite "official" EU regulations which say that all sellers all over the world are required to collect their tax. The correct answer is F.U. They have no recourse, and their laws and regulations have no binding legal effect outside their territorial jurisdiction.

The assertions made elsewhere that they could send debt collectors after you are nonsense. To accomplish that they would need a court judgment in the jurisdiction you actually reside in, meaning a court in your country has to agree to uphold their law, even though you are not subject to their law. That would never happen.

You have no obligation to obey any law imposed by the EU unless you are in the EU or doing business in the EU. As much as they would like to pretend that selling something on a website outside the EU to a buyer who happens to be in the EU violates their rules or constitutes doing business in the EU, if you're outside their territorial jurisdiction, they have no authority over you. Period, end of story. They don't like it, and they try hard to pretend they have more authority than they do because these intimidation tactics work on most people. Smart people just laugh off their threats and ignore them. Doing so is NOT illegal.
 

Lee

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #8 on: November 09, 2018, 01:06:02 PM »

No, this simply isn't correct. If you're outside the EU, you are not under EU jurisdiction, and not subject to their regulations. PERIOD, end of story.


Sorry but sFABi is correct. It's an International agreement. Whether or not they would bother to chase a small business is another matter; probably not, but as technology "improves" and it becomes easier to trace things on automation ... who knows?

This is about digital goods only. The same rules do not apply to physical goods, I think this is where people get muddled.

A few other points to mention:

There is zero VAT threshold so it applies to all sellers.

You are required to provide proof of where the customer was at the time of purchase as well as where they are resident. The best part is trying to obtain this proof is not only close to impossible, it's pretty much guaranteed to contravene GDPR. Clever lot the EU aren't they? :)

VATMOSS is not for those outside the EU, but I believe this will change in 2019. Until then, if your business is outside the EU you will need to register in all member states.

In short, it is just not worth it for the small seller. If you sell digital goods you're better off letting others deal with the problem, i.e., Amazon, Payhip etc.


 
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antares

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #9 on: November 20, 2018, 08:22:19 PM »

No, this simply isn't correct. If you're outside the EU, you are not under EU jurisdiction, and not subject to their regulations. PERIOD, end of story.

Sorry but sFABi is correct. It's an International agreement. Whether or not they would bother to chase a small business is another matter; probably not, but as technology "improves" and it becomes easier to trace things on automation ... who knows?

This is about digital goods only. The same rules do not apply to physical goods, I think this is where people get muddled.


Sorry, Lee, but ErikT is correct. The fact that there is an international agreement means nothing. Is India a signatory? Has India agreed to enforce EU taxes against Indian citizens in India? That is the situation under discussion.

The EU is attempting to tax everybody everywhere. Can the EU collect the tax they levy? Can they enforce their laws? Not outside the territorial limits of the EU.

Vidya, I think that if an EU law enforcement agent comes to your home in India and tries to force a sale of your assets to pay EU taxes, the Indian authorities will clap him in jail. It is, in fact and in law, an act of war to apply force within the sovereign territory of another country.

I suppose the EU may try to domesticate an EU judgment in an Indian court and rely on Indian authorities to enforce the domesticated judgment. I say good luck with that. Remember the Bhopal disaster in 1984? Plaintiffs filed suits soon afterward. Those cases are still in the Indian courts, and Dow has not paid a single rupee to anyone. Indian court procedures are glacially slow.
« Last Edit: March 07, 2022, 04:27:09 PM by TimothyEllis »
 

Lee

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #10 on: November 21, 2018, 11:21:53 AM »
Try to keep things in perspective.
We're not talking about what you'll probably get away with. That's an entirely different topic and your choice.
The topic is about the responsibilities or legal requirements of charging VAT and paying it in the EU.
Forum topics go around in circles so I'll just post a few links so that others can make their own decisions.

https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers

http://www.oecd.org/tax/consumption/mechanisms-for-the-effective-collection-of-vat-gst.htm
(download the report. It's a long, over-complicated read and answers a lot of questions but lacks clarity ... as usual)

https://www.forbes.com/sites/janetnovack/2014/05/15/european-vat-10-things-online-sellers-need-to-know-about-taxes-on-digital-goods-and-services/#3c836ab5fa47

https://blog.taxamo.com/insights/us-digital-companies-eu-vat



 

antares

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #11 on: November 21, 2018, 12:23:46 PM »
The topic is about the responsibilities or legal requirements of charging VAT and paying it in the EU.

Precisely. A citizen of India in India has no duty to comply with EU law. Vidya may comply voluntarily, but he is not compelled to do so. Absent a business address within the jurisdiction of the EU, no one is compelled to pay EU taxes.
« Last Edit: March 07, 2022, 04:27:38 PM by TimothyEllis »
 

okey dokey

Re: Are you responsible for charging/collecting VAT in the EU?
« Reply #12 on: December 21, 2018, 05:09:48 AM »
Until I get voting rights in the EU, I say fuk em
I'm sure their traffic laws don't apply to me here in the U.S.