The EU may have just banned the anonymous sale of online goods and services

[DVTimes]

The EU has introduced new VAT (Value Added Tax) legislation that is supposedly meant to prevent companies like Amazon from 'reducing their tax burden'.

Roughly summarized, the change of legislation means that VAT is now calculated based on the country of residence of the buyer, rather than that of the seller. Which sounds like a great idea, until you look at the way it's implemented.

I've just finished reading the official proposal for these changes, and as far as I can tell - the proposal does not actually define 'electronic service' anywhere like it claimed it would - these changes basically mean that it is no longer legally possible to, as a company, sell (online) goods or services to an anonymous customer.

Again, due to the lack of definition for 'electronic service' it is unclear whether this also entails physical goods that are bought over the internet.

The proposal lists nine options for establishing the country of residence, of which a minimum of two are required. I have quoted the list below, highlighting the options that are relevant to online sales.

(a) customer details such as the billing address of the customer;
(b) the Internet Protocol (IP) address of the device used by the customer or any method of geolocation;
(c) bank details such as the place where the bank account used for payment is and the billing address of the customer held by that bank;
(d) the Mobile Country Code (MCC) of the International Mobile Subscriber Identity (IMSI) stored on the Subscriber Identity Module (SIM) card used by the customer;
(e) the location of the residential fixed land line through which the service is supplied to the customer;
(f) in relation to a customer who is selling goods via the Internet or similar electronic network, the place where the transport or dispatch of the goods sold by that customer initially begins;
(g) in relation to a customer who is buying goods via the Internet or similar electronic network, the place where the transport or dispatch of the goods bought by that customer finally ends;
(h) registration details of the means of transport hired by the customer, if registration of that means of transport is required at the place where it is used, and other similar information;
(i) other commercially relevant information obtained by the supplier.
As you can see, practically every relevant item in the list would expose the identity of the customer, and businesses are required to collect this information "for VAT purposes".

The only thing that could potentially be spoofed is the IP address, and even there it is not unreasonable to assume that the tax office will complain about business who do not block known proxies or Tor relays.

While other forms of proof may also be admissible, it is very likely that they will be held to a similar standard of identity verification.

According to a well-known Dutch (IT) lawyer, Arnoud Engelfriet, this information is supposed to be kept for 10 years and accessible to any foreign tax office. While the proposal does list individual privacy as a consideration, this is not expanded upon in the rest of the proposal.

The consequences will be especially dire for businesses (and their customers) that use micropayments or cryptocurrencies like Bitcoin. Effectively, the only way to still serve your anonymous customers, is through tax evasion.

While I'm not a lawyer, I have read through the proposal a few times now, and I really see no other interpretation of it than the above. Whether this side-effect of banning anonymous sales was an oversight or intentional... I'll leave that as an exercise to the reader.

The EU may have just banned the anonymous sale of online goods and services - joepie91's Ramblings

[DVTimes]

[pornmasta]

Originally Posted by DVTimes

part 2 to 6 are very similar of what happens usually in france, but unlike the UK, here the unemployment rate is much higher.

[aka123]

Originally Posted by DVTimes

VAT returns 4 times a year? Is that supposed to be much or little? I get VAT returns every month, if I am eligible to those.

[aka123]

I don't get this "anonymously" stuff. How do you sell anything in online anymously? From practical point of view and in legal business.

[DVTimes]

Originally Posted by aka123

I don't get this "anonymously" stuff. How do you sell anything in online anymously? From practical point of view and in legal business.

bitcoin sales

[aka123]

Originally Posted by DVTimes

bitcoin sales

Doesn't sound like that big loss.

[seeandsee]

EU really want to fuck around online sales

[pornmasta]

Originally Posted by seeandsee

EU really want to fuck around online sales

if they continue they won't have a lot of thing to play with...

[aka123]

Originally Posted by pornmasta

if they continue they won't have a lot of thing to play with...

No, there will be, but many of the current smaller companies won't. For companies like Amazon, this kind of stuff has been reality for long time.

[Barry-xlovecam]

Verify payment with a SMS send back code. (Get the buyer's mobile number, i.e.; the country code.)
Match the buyer's IP address. (Usually in the same country.)

Due diligence.

If you cannot match the 2 above -- or other listed criterion -- then your buyer is in an unknown location.

Would the defense of substantial compliance and due diligence be sustained in tax court? Ask a tax lawyer ... A buyer of unknown location is non-taxable? No fuckin' idea ... But the tax man cannot prove where he is resident either

[DraX]

Can someone fill in the blanks, what's the whole purpose of this...

Getting back more tax money from companies selling products?

[Barry-xlovecam]

Originally Posted by DraX

Can someone fill in the blanks, what's the whole purpose of this...

Getting back otherwise lost tax money from companies selling products?

Basically that. It's the same as charging the buyer's State Sales Tax and having to remit the right amount (%) to a payment site in a selected one state -- that idea. But, the EU is claiming extraterritorial jurisdiction on digital sales for any world country to its EU citizens.

Comparable: That EU businesses would have to charge USA State Sales Tax on its sales to USA residents and remit the same to some super aggregation agency. (Reversal of principle.)

I am not sure if it is protectionist or simply a tax grab ...

[hadden]

Tax is war

[greg80]

What do you do when the buyer is from Canary islands (Spain, but outside VAT zone)? You have no right to charge me VAT. Will you charge IGIC or no tax at all?

[Barry-xlovecam]

When accepting a credit card sale, the credit card's code has the issuing bank's location (country and address) ... There is no issue determining place of residency (of his money anyway) 99.95 % of the time they are the same place.

What is at question is digital anonymous currency like Bitcoin.

SMS message callback and IP would resolve location of "residency" sort of -- for these purposes. Someone could live in the EU and their Bitcoin payment account is in Asia somewhere. Since payment for legal digital service in Bitcoin are small this probably will not matter. However, if e-wallet type payment services get popular it may become necessary to identify the e-wallet owner's country (state) location for tax purposes ...

[Barry-xlovecam]

Originally Posted by greg80

What do you do when the buyer is from Canary islands (Spain, but outside VAT zone)? You have no right to charge me VAT. Will you charge IGIC or no tax at all?

Canary islands (Spain, but outside VAT zone)? You answered your own question I think -- you would be resident outside of the EU VAT Zone. "Non-taxable" person.

***

The harmonised rules on VAT do not apply to the Canary Islands and the application of turnover taxes is a matter for the national or local authorities subject to respect for the general principles of the treaty and, notably, the absence of discrimination in the taxation of products.

Turnover taxes in the Canary Islands - European commission

[aka123]

Originally Posted by Barry-xlovecam

Basically that. It's the same as charging the buyer's State Sales Tax and having to remit the right amount (%) to a payment site in a selected one state -- that idea. But, the EU is claiming extraterritorial jurisdiction on digital sales for any world country to its EU citizens.

Comparable: That EU businesses would have to charge USA State Sales Tax on its sales to USA residents and remit the same to some super aggregation agency. (Reversal of principle.)

I am not sure if it is protectionist or simply a tax grab ...

There are two main elements in this: within EU and outside EU.

One idea behind this is to close the gap that US business doesn't charge VAT and EU businesses do. Now everyone charges VAT for EU customers. And still, no one charges VAT for US sales (web sales outside states). So basically, it is now more even playground, that is one purpose of the law.

Within EU; countries don't want to leach the VAT to other countries from the sales their own citizens make.

[aka123]

Originally Posted by greg80

What do you do when the buyer is from Canary islands (Spain, but outside VAT zone)? You have no right to charge me VAT. Will you charge IGIC or no tax at all?

This doesn't work that way; your rights in some "Mombojambo" doesn't really concern me, unless there is some treaty between our countries (as there is in this case). In this case, I would say that no VAT is charged.

[Barry-xlovecam]

Originally Posted by aka123

There are two main elements in this: within EU and outside EU.

One idea behind this is to close the gap that US business doesn't charge VAT and EU businesses do. Now everyone charges VAT for EU customers. And still, no one charges VAT for US sales (web sales outside states). So basically, it is now more even playground, that is one purpose of the law.

Within EU; countries don't want to leach the VAT to other countries from the sales their own citizens make.

I see it as trade protectionism -- why can't the EU rely on their loyal willing to pay tax payers' attitude for the buyers to declare and pay the VAT on their foreign purchases?

How many people would pay the regressive tax voluntarily -- 18% to 27% VAT?

The truth is, that they (the EU), wants businesses worldwide to collect their taxes for them uncompensated for being the EU's tax collector -- the rest of the world should charge the EU tax man 28% of the tax collected as a fee

If EU sellers are not globally competitive because of their taxation laws then they should change their tax laws in the EU -- exempt online purchases for VAT.

There may be a bigger picture here; the taxman is forcing (perhaps unintentionally?) EU companies to find foreign markets and sell to non-taxable customers maybe? The Euro declines in value and the forgotten (online) sales in the EU are taxed.

This incentivizes export and foreign sales for the Euro Zone business community.

[aka123]

Originally Posted by Barry-xlovecam

I see it as trade protectionism -- why can't the EU rely on their loyal willing to pay tax payers' attitude for the buyers to declare and pay the VAT on their foreign purchases?

How many people would pay the regressive tax voluntarily -- 18% to 27% VAT?

The truth is, that they (the EU), wants businesses worldwide to collect their taxes for them uncompensated for being the EU's tax collector -- the rest of the world should charge the EU tax man 28% of the tax collected as a fee

If EU sellers are not globally competitive because of their taxation laws then they should change their tax laws in the EU -- exempt online purchases for VAT.

There may be a bigger picture here; the taxman is forcing (perhaps unintentionally?) EU companies to find foreign markets and sell to non-taxable customers maybe? The Euro declines in value and the forgotten (online) sales in the EU are taxed.

This incentivizes export and foreign sales for the Euro Zone business community.

Pay VAT voluntarily? That is so silly, why you even bring it up?

About the VAT laws; as internet sales are growing business, it is quite hard to see that those sales could be VAT free. Well, unless you take the US debt over debt approach. Maybe the rest of the world should add "debt tax" to US companies to compensate US being compensating their own businesses?

About outside EU sales; basically those have to be counted too; as there is reporting oblications if the sums exceed certain sum (although that sum is quite big). So, it really doesn't help that much in this bureoucracy issue.

Basically the issue in here is to make things less bureoucracy intensive, not the VAT per se.

[Barry-xlovecam]

Originally Posted by aka123

Pay VAT voluntarily? That is so silly, why you even bring it up?

I declare and pay a 6% State Use (Sales) Tax on goods only (services are not taxable) on my out of state and foreign purchases. That is the law here. So, why is that silly?

I would be a tax evader if my taxes were not collected at the source and remitted to my State's government by a out-of-state or a foreign seller?

By your logic everywhere should have a regressive tax law equivalent to yours to level your playing field.

Any duties or taxes in international trade are the responsibility of the buyer.

If you want to change the way taxes are paid within the EU boundary that is an EU prerogative.



You can't have your cake and eat it too ...

[aka123]

Originally Posted by Barry-xlovecam

I declare and pay a 6% State Use (Sales) Tax on goods only (services are not taxable) on my out of state and foreign purchases. That is the law here. So, why is that silly?

I would be a tax evader if my taxes were not collected at the source and remitted to my State's government by a out-of-state or a foreign seller?

By your logic everywhere should have a regressive tax law equivalent to yours to level your playing field.

Any duties or taxes in international trade are the responsibility of the buyer.

If you want to change the way taxes are paid within the EU boundary that is an EU prerogative.



You can't have your cake and eat it too ...

You talked something about relying to loyal willing, etc. I thought you meant volantarily tax. And by the way, how do you pay taxes for your out of state and foreign purchases? I mean, what is the process?

Regressive tax law? I don't get from where you got that. At least VAT in here is solid percentage, not regressive. About taxes in international trade, etc., it is all about what kind of treaty there is. US government has made treaty with EU regarding this VAT issue and regarding multiple other issues. If you have some issues with this in general, maybe you should turn to your own government.

[Barry-xlovecam]

As an EU based business, I would not want extraterritorial legislation (foreign laws) requiring me to collect sales or VAT taxes for every nation in the world, then be responsible for accounting for the taxes collected, and remitting the taxes collected to every nation's (or confederation -- EU) bureaucrats.

[aka123]

Originally Posted by Barry-xlovecam

As an EU based business, I would not want extraterritorial legislation (foreign laws) requiring me to collect sales or VAT taxes for every nation in the world, then be responsible for accounting for the taxes collected, and remitting the taxes collected to every nation's (or confederation -- EU) bureaucrats.

I don't think that EU has deal with every country in the world, neither USA.

As a seller, who solds to USA too, I wouldn't want to deal with all the bullshit that USA puts in front of me, but still, the bullshit is there. And that is mostly really just bullshit, no fucking sense in it. And the legal system in US? It is more fucked up than in Somalia.

[Barry-xlovecam]

You make a declaration on your annual state income tax return.

There is no treaty -- There is only an OECD dictate and an EU interpretation. The EU law in unenforceable in any US Court jurisdiction. The EU is relying on foreign businesses voluntary taxation compliance -- voluntary taxation compliance which you have previously said is silly

All sales and VAT taxes are regressive. The lower your income is the greater percentage of your income is used to pay these consumption taxes.

This is for the USA:


VAT tax is similar -- it costs lower income people the most. VAT tax like sales tax -- the same rate for everyone rich or poor.

This will end up hurting international trade.
I don't want reciprocal taxation for 100 countries (and 50 USA states) that we do business with. We would need to add 15 accountants and bookkeepers -- what does that cost and why should our business support every tax law in the world? We comply with the tax laws of the jurisdictions we are domicile in. Every business does.

[aka123]

Originally Posted by Barry-xlovecam

You make a declaration on your annual state income tax return.

There is no treaty -- There is only an OECD dictate and an EU interpretation. The EU law in unenforceable in any US Court jurisdiction. The EU is relying on foreign businesses voluntary taxation compliance -- voluntary taxation compliance which you have previously said is silly

All sales and VAT taxes are regressive. The lower your income is the greater percentage of your income is used to pay these consumption taxes.

"These measures mean that the EU became the first significant tax jurisdiction in the world to develop and implement a simplified framework for consumption taxes on e-services in accordance with the principles agreed within the framework of the Organisation for Economic Co-operation and Development (OECD)."

VAT on electronic services - European commission

And there is a shit load of treaties between EU and USA. EU law is enforceable in US if agreements and treatys say so.

"How will this digital VAT compliance be policed for overseas merchants selling into Europe?

Andrew Webb (AW): The rules have actually been longstanding, since 2003. If you are, for example, an American digital service supplier to the EU, then you should be already registered for the non-Union MOSS scheme. In the UK, currently, this is called the VAT on eServices (VOES) scheme. This scheme becomes the non-Union scheme on January 1, 2015.

There is already an obligation to level the playing field. The fact that you are in America or China, the obligation and requirement is the same.

What we [HMRC] and other EU tax authorities are doing is if we found that one of these businesses is non-compliant then through treaties arrangements that we have with the jurisdictions, through information exchange or debt recovery, we would then approach the authorities in those other states to take action to help us to get the debt paid.

Those arrangements are going to be reinforced, and strengthened, effectively in the coming months and years to make sure that there aren’t jurisdictions out there where someone could effectively hide and make those supplies without properly declaring."

Digital VAT compliance: how EU will deal with U.S. companies


About the regressive tax, we were talking about business and the impacts to it. In that concept regressive tax is a tax that is kinda sale discount where you get cheaper per unit, the more you buy. If you mean VAT, then say it, not some regressive shit.

[The Porn Nerd]

So US authorities will arrest you if you do not pay the VAT in France?

Shah pfffft!!

[aka123]

Originally Posted by The Porn Nerd

So US authorities will arrest you if you do not pay the VAT in France?

Shah pfffft!!

Well, what ever penalties you have in there. Around here you usually don't get arrested for simply not paying taxes, unless it is more serious tax fraud. Although the arresting is not penalty per se, but as there is no reason that you will run out of country and settle to Argentina or something like that, there is not usually arresting for lesser crimes/ or not paying taxes (not crime per se).

If necessary, probably your company will just get auctioned and sold, not biggie.

[Barry-xlovecam]

And the Euro has fallen to $1.15 and still sliding ... You cannot tax your way out of a recession.

What some bullshit "taxamo.com" website claims without citing any signed treaty is all bluff.

If the USA or any other substantial market retaliates with a 20% duty on all digital sales from the EU that will create a mess.

What the EU does on tax payments within the EU is their business.

[aka123]

Originally Posted by Barry-xlovecam

And the Euro has fallen to $1.15 and still sliding ... You cannot tax your way out of a recession.

What some bullshit "taxamo.com" website claims without citing any signed treaty is all bluff.

If the USA or any other substantial market retaliates with a 20% duty on all digital sales from the EU that will create a mess.

What the EU does on tax payments within the EU is their business.

Without citing any treaty? Those were precisely named.

About the euro; euro's decreasing value is planned. Plans were announced not so long time ago, and that started the euro's declining value. Idea is to increase inflation in generally and to lower euro's value to give boost to export industry and tourism.

"Mr. Draghi appeared to endorse the euro's recent slide, noting "significant and increasing differences in the monetary policy cycles of major economies."

ECB Cuts Rates, Announces Stimulus to Combat Low Inflation - WSJ


European Central Bank rate cuts triggered drop in euro value: Americans should vacation there.

[Barry-xlovecam]

Originally Posted by aka123

Without citing any treaty? Those were precisely named.

Only EU statutes and treaties between EU nation states.

EU vat tax - Economics and Statistics Administration Search Results

Sorry, no results found for 'EU vat tax'. Try entering fewer or broader query terms.

I am not going to waste anymore time.

The EU's legal jurisdiction on taxes stops at the border of the EU for non EU citizens or legal entities. Same as any other countries' jurisdiction on taxes does.

Legal entities like Amazon, IBM, Microsoft, et al. that are also legal entities within the EU are in the EU Zone tax jurisdiction.
<the end>

[aka123]

Originally Posted by Barry-xlovecam

The EU's legal jurisdiction on taxes stops at the border of the EU for non EU citizens or legal entities. Same as any other countries' jurisdiction on taxes does.

Maybe you should read about a treaty or two. Most common example from past years is the case where you move to another country and have for example pension from your old country (whether you are still citizen or not). And how is that pension taxed.

It is a fucking treaty, the other country will enforce it within it's own territory for the behalf of the other country and vice versa.

You really think that EU will just put up these kind of VAT rules even without discussing with other countries outside EU? There are treaties about it and there surely has been multiple meetings about the implementing.

[faxxaff]

Companies with EU and offshore locations are those who are affected by this the most. But this treaty is not new and VAT has to be paid for years already. I do have to pay VAT for all customers since 2005 as long as they are end customers. It was an easy process. The only thing that changes is that it gets more complicated with different VAT tax rates, now. Before you could just shave the VAT rate to the EU country where your EU VAT ID number was registered. In return you can offset VAT paid. It increases paperwork, but I am sure there will be digital solutions.

If a payment is anonymous, I would think it would be taxed the same as a walk-in customer in a shop: at the tax rate where you registered your VAT number. If that's the UK, that would be the UK rate.