New EU VAT regulation for 2015 and eJunkie

[elmer77]

I just wanted to come back to concrete things that could be done into Ejunkie cart, in order to help all of the be in situation to simply be able to calcule clearly our tax revenue to possibly declare to MOSS.



What we need is:

-a similar system as for the one already there for US states in the account's VAT settings page: a list with all the 28 EU countries with for each one a field were the specific % rate can be entered/modified

-a check box in product page to indicates that the EU VAT is applied (actually we could just simply use the VAT checkbox already existing)

-a check box in product page to indicates that VAT is calculated as a deduction (thus, not an addition) from the price indicated in the product page: THIS IS IMPORTANT because for my case, we sell 99% to public (not to company that have a VAT registratoin number), and public requires to see the price inc VAT! When a product is in the cart, impose the user to enter his country: depending the country, the cart can now calculate the specific VAT amount, and the price excl VAT: these amounts can then be listed into the Ejunkie transactions database of the seller, plus maybe sent to Paypal too for compteing the transaction :in this case, I suppose that if the user ask for a receipt/invoice through Paypal, the VAT part could then be proprely displayed.



Adding this feature does not seeems long and so complicated (...my opinion, I'm software engineer), but this could then allow us sellers to export each month a CSV report with totals of VAT collected per each country: with this under excel we get easily totals to declare with MOSS system.

[sgt_bilko]

I can't help feeling that all of this could be solved if PayPal simply changed their setup so that they became a store and handled the VAT themselves. Yes you would still go to an individual website for the purchase but the cart would interface directly with a PayPal store. Sales would suffer a bit compared to now because of the added details required by buyers but it would be some way forward.



Perhaps I'm being too simplistic here but I don't see how else PayPal expects to serve sellers and buyers of digital downloads. Maybe they have already decided to write off this market.

[sgt_bilko]

HMRC ran a brief Q&A today on Twitter about this whole VAT question. From a technical standpoint it seems to revolve around the process of automated delivery following the sale. Basically it all depends on whether the seller is manually involved or not at some level.



One HMRC tweet said: "An e-service is one that is fully automated and involves no or minimal human intervention.". Then in another tweet they said "minimal human intervention is where a person takes some physical action for the service to take place".



Manually attaching an eBook to an email is acceptable but sending them automatically isn't, which is a point they made repeatedly. It's also still illegal to die in the Houses of Parliament or eat mince pies on Christmas day, proving they haven't lost their talent for creating strange laws.



In theory if an option was enabled whereby downloads to countries in the EU had to be manually authorised by the seller I suspect this might no longer be counted as an e-service for VAT purposes. Worth investigating?



Curiously HMRC are arguing that live content such as video behind a subscription service is not included in these new VAT regulations that only apply to automated downloads, yet they seem oblivious to the fact that streaming videos involves downloading content to the computer via the internet and that no human involvement is required...

[stevec]

I've been reading this thread with interest as these changes make it not worthwhile selling within the EU for me.



I followed the link to HMRC on the post by JP and if I understand it correctly if you only sell to businesses you are not affected by the changes. Does anyone know what the definition of a business customer is and how would I tell from the information I get on a sale from e Junkie or Pay Pal if my custmer is business or non-business.



I sell sales training courses as eBooks. In one respect I would presume all my customers are business customers as what use would a sales training course be to a non business customer, but I doubt HMRC would look at it that way.

[sgt_bilko]

I think the requirements for proving you are selling to a business will be pretty onerous and for these purposes it would mean a foreign VAT number that was verified as legitimate prior to purchase.



Judging by the information I receive after making a sale it's just not sufficient to establish that a buyer is a bonafide company. We have an email and an IP number that is also pretty meaningless if you know anything about the internet.

[projectsbyjane]

@jp



This twitter q & a is worth checking out. There should be a summary out soon.

https://twitter.com/HMRCcustomers



Apparently, there's a clarification on manual attachment of a download. The key is to manually attach or send. Not the best solution but a workaround.



If you manually attach the download to an email it is exempt providing the email is also manually sent.

https://twitter.com/HMRCcustomers/status/538011365135626240



Provided that the file is manually attached to the email, this is acceptable.

https://twitter.com/HMRCcustomers/status/538012875760353281



To clarify manual download, files attached to manually-produced emails are not e-services.

https://twitter.com/HMRCcustomers/status/538009984546922497

[jean]

Sgt_Bilko

On a side note today I read that there are 28 countries across the EU and 77 different VAT rates that need to applied on a case by case basis. For a small one man business with minimal turnover the situation is completely ludicrous. I have spoken to three other online sellers today who have all said they will simply remove their products from sale.

Sadly/ happily this is my main source of income so trying to work with this is my only option but if it wasn't I think I'd stop selling too!

After the HMRC twitter q&a yesterday I'm partly hopeful that manually emailing will be enough to get around all the requirements but as they have previously (and in official writing apparently) said it's not I'm not relying on a twitter answer.

Supposedly today they will release an updated FAQ based on what they were asked yesterday so we'll see if that's in there.

If that is the case then I'll either have to set up all my products as tangible goods and then, after I get the email telling me about the sale, send out the file.

However if the option to only have to do this to certain counties is possibl that'd be a great help and mean 50% of my customers would still be able to get instant downloads

[jean]

SteveC



I followed the link to HMRC on the post by JP and if I understand it correctly if you only sell to businesses you are not affected by the changes. Does anyone know what the definition of a business customer is and how would I tell from the information I get on a sale from e Junkie or Pay Pal if my custmer is business or non-business.



I sell sales training courses as eBooks. In one respect I would presume all my customers are business customers as what use would a sales training course be to a non business customer, but I doubt HMRC would look at it that way.

From what I've read the supply of verifiable VAT number from a customer is what you need to know they're a business!

[sgt_bilko]

This blog post is essential reading, explaining why none of this will work with PayPal and probably no other billing company http://www.clarejosa.com/articles/from-passion-to-purpose/what-you-need-to-know-if-youre-relying-on-your-payment-processor-to-dig-you-out-of-the-vat-moss-mess/



The key phrase is: "Here’s Why PayPal’s Solution Is A VAT-MOSS Waste Of Time

As I explained above, the information that I (and hundreds of thousands of other businesses – huge and teensy) am required to supply under the new EU VAT regulations is where the customer is at the time they purchase – NOT at the time when they created their PayPal account."



Worse still it goes on to point out that you the seller, rather than PayPal will be entirely responsible. I can understand that e-junkie are as frustrated and confused about this as the rest of us, perhaps more so, but time is short and we really need some kind guidance for what they they are planning here. For me personally the one option that isn't an option is registering for VAT amid this level of complication.

[arpeggio]

According to the following:



http://www.ft.com/cms/s/0/2d77e358-74c4-11e4-a418-00144feabdc0.html#axzz3KMCaS9JQ



The Treasury said: “The vast majority of microbusinesses are unlikely to be affected by the changes – because they trade through a third party platform or marketplace and where this happens it will be the responsibility of the marketplace operator to account for the VAT.”

[sgt_bilko]

Another wonderful figure they will have plucked from the air. Lets face it government predictions on future numbers are not exactly reliable, especially when they are trying to downplay the effects of EU membership.

[arpeggio]

According to this:



http://europa.eu/youreurope/business/vat-customs/cross-border/indexen.htm



Quote: If you sell goods and send them to consumers in another EU country, you need to register there and charge VAT at the rate applicable in that country - unless the total value of your sales to that country in the year falls below the limit set by the country (EUR 35 000 or EUR 100 000).



That's per country! so if you make EUR 100,000 between different countries and you don't exceed more than 35,000 in any single country you don't pay VAT.



From the below link it says: "To help reduce the administrative burden on companies, and to encourage them to start trading across Europe, there are national VAT registration thresholds set by each country."



http://www.vatlive.com/eu-vat-rules/distance-selling-eu-vat-thresholds/



Whereas the new EU digital good VAT law has no threshold at all, for any country.



I can barely believe this is happening.

[stevec]

Well now I'm totally confused. Reading the pages linked to in Arpeggio's post am I right to presume that we in the UK are having these new rules placed upon us with no exemption levels when selling to other EU countries.



While the rest of Europe enjoys what appears to be sensible exemption levels when selling in the same circumstances.



I thought the EU was meant to encourage cross border trade.

[sgt_bilko]

Just to give some of you an update I have contacted my MP who has written to Vince Cable the business minister and I am expecting a reply in the near future. I also contacted my MEP who is investigating.



Furthermore I have involved the Federation of Small Businesses who have put out a press release and will now contact Vince Cable directly because he is the only person who can really stop this and it requires pressure from all of us to bring these matters to the forefront.



There are a few other things I have set in motion that should bring this to greater attention, such as radio coverage starting next week. Remember there is an election coming up in a few months so this os one of the few times they are likely to listen...

[stevec]

Fantastic ideas Sgt Bilko.



I'll do the same with my MP and MEP.

[arpeggio]

SteveCWell now I'm totally confused. Reading the pages linked to in Arpeggio's post am I right to presume that we in the UK are having these new rules placed upon us with no exemption levels when selling to other EU countries.



While the rest of Europe enjoys what appears to be sensible exemption levels when selling in the same circumstances.



I thought the EU was meant to encourage cross border trade.

I think it is worldwide and for digital products only, European business will be affected equally for their digital products.



It would have been a good idea to deal with companies like Amazon based in Luxembourg with its 3% VAT, except for how this new law has 0 threshold. This link I posted earlier is for physical goods, and I think that this is what it should look like for digital also...



http://www.vatlive.com/eu-vat-rules/distance-selling-eu-vat-thresholds/

[sgt_bilko]

SteveCFantastic ideas Sgt Bilko.



I'll do the same with my MP and MEP.

To find your representatives try https://www.writetothem.com



Finding my local MP was easy because I knew his name, so I just Googled him and then called his office where I spoke to his secretary. For the MEP I used that site and found there were six covering my area including two from UKIP, so I figured they would be more likely to oppose this than the others. In fact I got an email reply from the MEP within half an hour.

[sgt_bilko]

I am happy to say we now have the full weight of the Federation of Small Businesses trying to push our case with the help of their lobbying arm in both Westminster and Brussels who also have extensive access to legal and tax experts. They represent 200,000 businesses in the UK, which has to carry some influence. I am expecting more action on Monday.

[sgt_bilko]

It gets worse and worse. My research has revealed that if we continue along this route not only would we be expected to comply with the privacy protection laws or 28 states and only use EU based servers, we would also have to ensure that every invoice is in compliance with the standards of of the country where the product was purchased. We have to stop this.

[jean]

It is such a farce

But I'm slightly encouraged by HMRC's clarification that files emailed manually would not be classed as e-services which helps many of us get around it all somewhat by emailing each file/ using e-junkies 'send free link' facility to purchasers

I'm still waiting on clarification as to whether what seems to be an EU wide zero threshold for vat registration for e-services cancels out the current uk vat threshold of £81,000 so decision as to my exact options is still open.



But, as non-uk EU customers seem to only make up less than 15% of my customers I'd prefer not to make all customers wait so either way as said before what I need is:



- a facility to filter customers at some point during their transaction and then

-they are not EU based (or hopefully uk based or non-EU)they are immediately sent their digital file

- if EU based (or hopefully non-uk EU based) then I am sent a copy of the transaction so I can separate email them the file

Is this something E-junkie could accommodate to help us deal with the change?