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Originally Posted by MaDalton
this should not be treated lightly - ask AFF
we just finished a VAT audit in our favor but without a good tax accountant, this could have ended very ugly
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Quote:
Originally Posted by MaDalton
they have sued AFF based on the previous law already for like 30 or 50 million USD (EUR?)
but yeah, no idea how they are going to enforce it on Joe Smith that runs a Clips4Sale store (actually Clips4Sale would need to handle this) or someone that has a small CCBill site.
And so far CCBill has never been a big help (sorry guys) while for example Paysite Cash (which i use for my shop) gives me a weekly statement of my sales that indicates where VAT applies and where not
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About Euro Union asking million dollars of unpaid VAT to extra-EU online companies that's a fact and includes AFF, also AFF got FREEZED money in euro bank accounts:
http://www.sec.gov/Archives/edgar/da...281/i11097.htm
"As of December 31, 2010, the total amount of historical uncollected VAT payments was approximately $39.4 million, including approximately $19.5 million in potential penalties and interest. For more information regarding the potential effect that our VAT liability could have on our operations see the section entitled ..."
"For example, in an effort to recover VAT payments it claims it is owed, the German tax authority has attempted unsuccessfully to freeze assets in bank accounts maintained by subsidiaries of Various in Germany, and
did freeze ? 610,343 of assets in a bank account in The Netherlands with the cooperation of the Dutch authorities"
Of course it is unlikely that such an effort will be setup by EU tax police for small sites, but they sure will find it worth if the company is big, ex: mindgeek - manwin, anyone remembers why Fabian/Nathaqn it was jailed? Cyprus VAT which is lower, paid for Germany business..., now I am unsure what they think of the Canada's hq VAT accounting...
Regarding VAT audits, we got some from Dutch tax guys (we're NL entity) and passed it with no issue. We paid the correct damn VAT since day 1 so many years ago, simply. I got several informal icq/skype talks across the years with non-EU (i.e. USA) site owners and often they asked me about this "VAT", that they never paid and do not intend to pay ever,... some decided to throw out (remove) any EU biller with EU banking accounts as soon as EU banks/biller or eu accountant managing biller said if they did not paid VAT they could get funds frozen and such scary warnings.
So while for EU businesses and esp. owned by EU citizens, not to pay VAT it is sort of countdown to suicide day (I remember an UK paysite stopped to pay affiliates after got VAT police ask him pay 10 years of unpaid VAT as a fine, suddendly... forgot site name but he wrote in GFY at the time to explain affiliates)... for USA (or especially, Japanese?) small sites, that may be safe enough not to use any EU biller or bank or accountant, and commit the "crime" of not paying VAT in hope not to be noticed, or if noticed, not to be considered worth the targeting. If the business is big, and wishes to do IPO (like AFF), that's not an option to wait for tax people to publicly target you with a mega fine.
Other issue for small sites it is the cost of simply software customisation and accountants... we spend few hundreds a month for just the VAT accounting, in hours of accountant work. Especially now that there's a different VAT per country anyway... for small sites, the cost fo accountant it can be higher than the VAT they account itself
It does not matter if you add the % to final invoice, or, let them pay all the same and then "subtract" the % of VAT later. We find easier to add same vat let's say 20% to all bills of guys geotargeted in EU, rather than right vat to right country, then we fix this with accountant later. Or you can keep price "as is" and same eu or usa customer, but simply you know you earn x% less later - to vat police it only matters if you made $X, you paid x% of vat over it. About code that adds vat on geotarget, we have it in some sites.. and... we also found that in some sites the guys who travel found that they got VAT added when in Germany but not when in Turkey, so learned to use a proxy to save VAT from bills!...
As someone noticed, while EU billers (vxsbill, paysite-cash etc.) do have VAT statistics in reporting, simplifying the job of accountants... the USA billers (ccbill, epoch, segpay etc.) miss this info, so that the accountant should spend quite lots of hours to divide sales by country, sum them, calculate the %. Then you have to send this money in Eu, I don't even know how this is done, we're in EU and pay to local EU country who then deals with other EU countries, what if you're in USA and want to pay VAT to EU, I assume is not super quick and easy.
On the other hand, most non-eu guys do not want to pay any vat, so it sorts of make sense that USA billers and reporting software do not vare of VAT... esp. the adult soft, because if you're mainstream see microsoft, godaddy and apple, they sure all add VAT and supports it - adult well, that's shady isn't it.