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EU digital VAT effective 01Jan15

Discussion in 'Picture Framing Business Issues' started by Rick Bergeron - CPF, Dec 24, 2014.

  1. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    This might belong in "Warped"

    Not quite as bad as Arizona's WorldWide Sales tax that goes into effect 01Jan15.

    I'm still wondering how the EU thinks that it has more than the remotest chance of enforcing this upon US online companies that do not have any physical EU presence. The EU says they do and will.

    It is almost worse than an online merchant in the US having to know and collect sales tax for every tax jurisdiction within the US. That part is technically feasible.

    The part about confirming a person's whereabouts by using 2 different acceptable sources that have identical location matches. If not, additional databases must be utilized until 2 are confirmed. All this before an online digital product can be delivered. AND those specific, auditable records kept for 10 years. AND no minimum threshhold for an online file.

    Below is a link to a lighthearted but accurate analogy of the ruling.

    http://hannahkate.net/hannahs-bananas-a-vatmoss-analogy/
     
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  2. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Customs will return goods sent to Europe without the correct VAT compliance. .with a change attached to it due from the sender.

    For all intent an purpose the new VAT regulations for US shipping have been in effect for quite a while. ...I have already had to drop some US sourced products because the US supplies are not willing to comply with the VAT requirements for Europe. ..

    The European custom authorities are very skilled, they have some of the best monitoring systems for handling shipments in the world...

    All shipping companies like the postal service, FedEx, UPS, etc in Europe have government customs personal located at there international shipping sites...

    To defraud VAT in Europe is a criminal offence ....if a US sender does defraud on VAT and are found guilty the ultimate penalty could be that the owners of a business could end up in jail if they were to visit Europe. ..

    Also remember the USA and all European countries have reciprocal tax agreement. ..
     
  3. tedh

    tedh PFG, Picture Framing God

  4. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    I stopped shipping outside the US a decade ago. Just too many hassles.

    And they just keep getting worse.

    Not worth the aggravation.
     
  5. tedh

    tedh PFG, Picture Framing God

    That's why we Canadians have US addresses just south of the border.

    Did I mention that I have a girlfriend south of the border? Last night she came across.


    lol. That one's getting stale.
     
  6. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    I have actually sold a number of frames to Canadians with US addresses. They ask if I will ship to Canada and after I say no, they order to a US address. FedEx and UPS have these weird and explainable brokerage fees that have back to bite me after the recipient didn't pay.
     
  7. tedh

    tedh PFG, Picture Framing God

    UPS is notorious, just notorious, for adding broker fees that will shock and anger most recipients that don't see them coming. It works both ways - I've have customers call me from the USA to complain about them, and try to have me pay them because I didn't warn them. No shipper knows what the **** UPS will do next. I've had nothing but trouble with UPS on international transactions, and that's why I try to carry my stuff across to ship from USPS or Fedex Ogdensburg NY.

    So can you imagine trying to deal with those notoriously evil EU bureaucrats? Ten times the trouble of UPS. Not worth being in business, especially the banana business!
     
  8. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Ted

    A bit unfair calling Europe evil on this subject. ..

    The regulations for shipping to European countries are very transparent if you bother to try to understand them....

    However when I ship to the US and Canada (yes I have customers in both areas, for the USA my business is a verified and approved government supply business) the regulations are unbelievable. ..every shipments I make to Canada and the USA takes hours to work the paperwork.
     
  9. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    The OP concerns digitally delivered products & has nothing to do with physical products.

    It is pretty easy to comply with physical goods since the receiver is ultimately responsible for paying the VAT on received packages... regardless of carrier.

    The fine print on digitally delivered goods is to email the files instead of delivering by automated process. Price increases due to manual intervention... not due to VAT. Either that or cease doing business with EU customers which also would violate EU law.

    Our experience w/international shipments has been pretty good. Only 1 lost package in 5 years.
     
  10. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Now Arizona implying their state sales tax on all ecommerce sales shipped outside
    Arizona will cause us to reconsider any AZ vendor. That is why most states have a use tax clause.
     
  11. tedh

    tedh PFG, Picture Framing God

    Hey Dermot:

    read this and tell me who's evil: http://www.express.co.uk/news/uk/527196/EU-Brussels-David-Cameron

    I googled "eu bureaucracy horror stories" and there they were. Brings back the old days when there were daily headlines about incomprehensible EU rules, and hoops so high even Cheech and Chong couldn't reach.
     
  12. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest


    Ted would you stop....

    David Cameron is nobody to quote about the EU....These days all that comes out of his mouth is anti EU rhetoric to try and counter the Ukip ...

    Reality is that and let's keep this thread to the VAT subject. ..reality is that the VAT rules in Europe are very simple..if you bother to understand them.

    Whether you agree with paying VAT or not is another debate....however trying not to pay VAT is a crime of theft....which steals from the various countries in Europe. ..

    Anyway business trying to avoid paying VAT is in my book a business focused on theft.
     
  13. Mike Labbe

    Mike Labbe Member, Former moderator team volunteer

    Amazon exists and ships from many places, though, including the biggest individual EU countries. It wouldn't be cost effective to ship to UK customers from USA, or Canadian customers from USA, etc. Customs are a bear and delay everything. I once ordered from the UK division, and it took over a month to receive the package. If in the UK or Ireland, it would probably take a day or two.

    http://www.amazon.co.uk/

    http://www.amazon.ca/

    (The localized sites/locations: USA, France, Canada, Japan, Austria, Germany, Spain, China, Italy, UK)
     
  14. David N Waldmann

    David N Waldmann SGF, Supreme Grumble Framer

    Are you saying that if someone from the EU places an order with me, I am legally required to fill and ship it?
     
  15. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    According to the EU non discrimation statute, that is a true assessment of EU verbiage. A business is not allowed to pick & choose which countries to do business.
     
  16. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    That is not necessarily applicable to delivery of automatically delivered digital goods to EU countries. The humorous link in my OP is a physical analogy to the digital VAT rules that go into effect.

    Cell service is also considered digitally delivered product.
     
  17. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    The rules may be simple but the knuckleheads that made this rule did not consider the technological challenges required for EU mom/pop business to comply.
     
  18. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    That's it. Come and slap the cuffs on me. I am a business trying to avoid paying VAT by refusing to do business within the EU.

    Criminal me be.
     
  19. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Another example of the nonsense that bureaucrats perpetrate in an effort to destroy liberty.
     
  20. David N Waldmann

    David N Waldmann SGF, Supreme Grumble Framer

    I could (sort of) understand if that applied to businesses within the EU. But I don't see how they think they have any rights over entities outside their jurisdiction.

    Of course, for me this is (hopefully) academic. First someone would have to want to buy something from me. Then, when/if I refused they'd have to want to start whatever complaint process would end up in a judgement against me as an individual. Then I'd have to enter an EU country. All the more reason to stick to Switzerland when I go to Europe...
     
  21. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Until the EU stops their "Chest Pounding" about how their laws are even remotely enforceable outside the EU, our accountant told us to take whatever reasonable actions were available to us to restrict the automated, digital download process. Manually emailing digital files is not considered to be within the scope of the digital VAT rules. It seems to me that IF there were any enforceability, the specific statutes would be specified instead of some nebulous rhetoric.

    I feel for the "Mom & Pop"s in the EU which are selling $1 pdf downloads who must take the required actions to comply with the rules.... the rules which are as clear as those described by Hannah's Bananas :confused:

    At least Arizona's new sales tax rules are easier to implement. Arizona retailers must charge sales tax to everyone in the world, effective 01Jan15
     
  22. stcstc

    stcstc SGF, Supreme Grumble Framer

    are these both not the same chest pounding thing

    i kinda understand how the logic works, thats products (albeit digital) products are being delivered within the eu

    although at present, if i buy from UK from within Ireland, i don't pay the vat, as its an export
     
  23. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Not at all. Arizona tax change makes it easier because every sale becomes taxable at the same rate instead of 'inside Arizona' or 'outside Arizona'. The buyer's location becomes irrelevant.
     
  24. stcstc

    stcstc SGF, Supreme Grumble Framer

    in the same way that what the eu are trying to do no?
     
  25. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Switzerland for vat is regarded as part of Europe with all legal reciprocal agreement in place.
     
  26. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    I presume you business is registered for VAT in ireland. ..this is why you don't pay vat on orders from your uk suppliers. ...if you are not registered for vat both you and your uk supplies are breaking the law.
     
  27. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    BTW. ..

    It is the USA who are driving the new VAT regulations.....as the USA is trying to create a integrated trading zone with Europe...

    To create this trading zone all transboundary law's must be in place....one of those requirements is that both the usa and europe have the same type of tax regulations for both zones...

    The usa have had similar tax requirements as europe are putting in place for businesses who sell to the us for about the last 35 years or more.
     
  28. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Not at all. Read the hannah's bananas analogy.

    EU is requiring all sellers in the world (so they think but cannot quote any verifiable document, statute number or legal treaty clause) to verify each sale to an EU buyer the exact location within the EU the buyer resides using 2 independent databases for verification and if the first 2 location verifications do not match, use additional database until 2 verify the legitimate location of the buyer. Then, have the appropriate website logic in place to present the buyer the VAT inclusive price for the digital download based upon the VAT of their verified residence location. These records must be kept as an audit trail for 10 years. Collect the VAT for each buyer's location and remit the VAT to the appropriate EU country on a regular basis. There are some VAT consolidators available but that is also addressed in Hannah's Bananas.

    Payment processors do not provide the required data to the seller in the case of most digital sales. IP address does not necessarily apply to real, verifiable residence locations. This leads to required email exchanges between buyer and seller until the location data matches. How many buyers are going to mess with that so that they can download a document of token value.

    From the lack of online chatter, my assumption is that most sellers are hoping that this goes the way of the EU website cookie requirement a few years ago that was abandoned only hours before it went into effect. The cookie requirement was a joke of similar proportion and required nearly the same level of software development to comply.
     
  29. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Where do you get those ideas. I have not had any online purchase of a digital download made outside the US apply my local sales tax rate to the purchase. Come to think of it, I haven't had the first physical product purchased online, delivered to me by International delivery method, charged my local sales tax rate.

    If you mean import duty and VAT collection at the time of delivery. That is not a concern of the seller. That has always been a responsibility of the buyer, even if the seller made an error in declared valuation. It is technically difficult or impractical for anyone to know the exact sales tax/VAT requirements of any particular location in the world.
     
  30. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Rick....

    The new digital vat requirements are not about a few dollars worth of business. ....there is billions involved...

    My wife has been involved with transboundary shipping in one way or other for the last 17 years....the amount of money that is involved particular in the digital download area that no tax is collected on is mind boggling, it is doing huge damage to that sector and the businesses who are tax compliant.
     
  31. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    This is where it is coming from...

    http://www.ustr.gov/ttip
     
  32. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    I didn't see anything that would relate to B2C transactions where VAT or Sales Taxes would be concerned.
     
  33. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Let the Googles, Amazons, Apples, Dells, etc worry about that.

    Use a little common sense that the small mom/pop business who sell token value digital downloads cannot commission custom software required to comply with the technicalities. It would have been very easy to make a common sense addition that contained a threshold instead of placing the minimum threshold at $0, 0 euro, 0 pound, etc.
     
  34. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    You cannot have a trading zone unless the tax laws are aligned. ..

    You are looking at the subject via a micro point ie: vat/sale tax the whole trading requirements for the agreement cover thousands of aspects....

    And yes it does cover vat and sales tax...

    The trade agreement between the us and europe is the biggest transboundary agreement ever negotiated in the world.
     
  35. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    0 (zero) is what the US want....

    Before this agreement the EU had a trading threshold of about Euro €75,000 (this varied a little bit from eu country to country) before there was a need to register for vat.
     
  36. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    All above are vat compliant. ...it is the as you described them Mom's and Pop's who are costing the billions which at this stage are doing untold damage to the digital sector. ...it is like the wild west the trading conditions in the digital sector globally. ..
     
  37. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    Never in a million zillion years will that happen. What is your source for this?

    eBay alone will squash this like the zit it is.
     
  38. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    That is the problem. While they are vat compliant, from what I've read, they are paying vat to Luxemburg because of the lowest EU vat rate. All other EU countries are VAT losers to those big name entities and Luxemburg is a winner.

    I've dug deeper into the link you posted and have yet to find any mention of treaty at the B2C or vat/sales tax level of business. Maybe you can show the specific section that you allege exists to save debate time. I did find a couple of mentions regarding similarities to NAFTA which has minimal applicability to microbusiness regarding Import duty and nothing regarding Sales Tax/VAT.

    It won't take long for microbusiness to find the exception which is written into the rules. It is just a bit more cumbersome and requires a bit of coding to offer EU customers the option to purchase the alternatively delivered product.

    I say microbusiness because mom/pop don't really fall into the definition of small/medium business.
     
  39. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Larry it has already happened. ..


    Ebay paypal etc etc etc etc all support and are implicating 0 (zero)....

    As I said my wife has been involved in these transboundary requirements in one way or other for the last 17 years. ...
     
  40. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Luxembourg is not about vat....it is about corporate tax...

    In international trade agreement like what the us wants with europe....specific taxes will not be mentioned it will be couched in some other technical language. .
     
  41. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Sorry Rick ...

    You are correct Luxembourg has one of the lowest vat rates in the EU. ...

    However from January 1 2015 the vat that will be charged is the vat rate for the receiving country. ..and will be repatriated to the receiving country. ..

    The big tax issue in Europe is the corporate tax issue....as I said earlier vat tax is very simple once you understand it.
     
  42. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    I've have seen nothing about a zero threshold for US sellers paying VAT to the EU. All I have seen are the existing thresholds such as these : http://www.vatlive.com/eu-vat-rules/distance-selling-eu-vat-thresholds/

    Show me a link that shows this zero threshold for physical goods shipped to an EU country.
     
  43. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Dermot,

    You have now changed the story from "It's a mom/pop microbusiness that is causing the loss of billions" to "It's a corporate tax issue".

    VAT is simple. I understand that. Determining the country of residence by 2 means, Implementing the collection and extreme record keeping clauses with zero bottom end to accomodate the occasional seller IS the issue that was not considered and refuses to be considered.

    I don't think the USA would be behind the EU digital VAT any more than they are behind doing the same here. It would be difficult at best for a microbusiness to calculate, collect and remit sales tax based upon the tax jurisdictions of a person's physical residence.
     
  44. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

  45. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    OK Larry. ..

    The threshold into Ireland from a non eu country is Euro €22... effectively zero that is the irish threshold. ... the usa are pushing to get that to zero. ..

    http://www.citizensinformation.ie/en/money_and_tax/tax/duties_and_vat/value_added_tax.html

    If you buy online or by mail order etc.

    From outside the EU

    You can buy goods from outside the EU up to a value of €22 without incurring any VAT charges. Goods up to a value of €150 may be imported without payment of Customs Duty. To avoid these packages being stopped by Customs, the value should be clearly marked on the label. However, VAT and import duty is charged on importations of tobacco, tobacco products, alcoholic product and perfumes even if they cost less than €22. The Revenue Commissioners#

    The €22 euro is the irish threshold...

    Each eu country can set there own threshold. ..starting at zero...
     
  46. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    OK Larry. ..

    The threshold into Ireland from a non eu country is Euro €22... effectively zero that is the irish threshold. ... the usa are pushing to get that to zero. ..

    http://www.citizensinformation.ie/en/money_and_tax/tax/duties_and_vat/value_added_tax.html

    If you buy online or by mail order etc.

    From outside the EU

    You can buy goods from outside the EU up to a value of €22 without incurring any VAT charges. Goods up to a value of €150 may be imported without payment of Customs Duty. To avoid these packages being stopped by Customs, the value should be clearly marked on the label. However, VAT and import duty is charged on importations of tobacco, tobacco products, alcoholic product and perfumes even if they cost less than €22. The Revenue Commissioners#

    The €22 euro is the irish threshold... with some products set at zero...

    Each eu country can set there own threshold. ..starting at zero...
     
  47. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    I am not trying to change it to corporate tax I made a mistake in my response to the Luxembourg questions. .. I mentioned corporate tax by way of clarification. ..

    The usa are the ones behind the digital vat issue....as I said my wife has for the last 17 years being involved with transboundary movement of product. ...which covers digital media etc.
     
  48. Larry Peterson

    Larry Peterson PFG, Picture Framing God

    That may be the threshold on which a buyer is required to pay VAT and customs on something imported into Ireland from a non EU country.

    But as I understand it, if I am selling to someone in Ireland, the threshold for me to register for VAT in Ireland is €75000 in a twelve month period. So if my total physical sales to Ireland for the year are 5000, I neither have to register nor pay VAT. The consumer may still be responsible but not me.

    http://www.revenue.ie/en/tax/vat/guide/registration.html#section2

    As with all the legal gobbledygook that makes it difficult to understand, I may be wrong or right or both or neither. :beer:

    If it really is zero, then I am certainly glad I stopped selling outside the US. Even within the US if they institute paying sales tax to every state, there will be thresholds so that microbusineses don't get crushed,
     
  49. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    Oh believe me Rick. ..there will be no problem implementing the VAT requirements. ...

    Think about it...it is a criminal offence to avoid paying vat....if a card company eBay PayPal bank you name it transmit money as a payment for a business who are not vat compliant it could lead to criminal charges.....Do you really think that the businesses who move money around the world are going to support a business who is acting in a criminal manner ....
     
  50. Dermot Cox-Kearns

    Dermot Cox-Kearns Guest

    The 75k is for an irish based company.

    And if I understand it all correctly it will move to zero as soon as the law is changed in ireland. ..

    VAT falls under criminal law....so the law will need to be changed. ..something I understand will happen in ireland sometime next year....other EU countries will fall within the same time frame if they haven't done it already. ..
     
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