Online tax: Is Europe on crack?

[m0rph3us]

I think the EC has been spending a little too much time in Amsterdam. I know this has been posted before but it really seems that it's for real

http://www.tax-news.com/asp/story/st...toryname=12027

All companies based outside the EU which sell digital products into the EU will need to become compliant with the EU's Directive on the Taxation of Digital Sales; for companies with a significant volume of sales to individuals and unregistered traders, it will be necessary to register for VAT in one or more EU member states.

This is severly flawed. It will drastically separate the markets. Some if not most US and worldwide merchants will opt to simply stop taking EU orders digitally forcing the market to move to EU merchants. This will fuck the EU customers in the ass.


July 2003 lol. That's 1 month to implement, register and get ready to collect and pay up VAT.

Good luck with this EU. Really.

[Theo]

yes,this is fucked up

[SexySarah]

Originally posted by m0rph3us
This will fuck the EU customers in the ass.

why?

wouldn't it mean less competition for EU companies which means more sales and higher profits for them which means more money kept in europe which means less revenue going into the US?

[Theo]

no, EU co. will have to pay the tax as well

[SexySarah]

Originally posted by Soul_Rebel
no, EU co. will have to pay the fee the tax as well

most companies in the EU already pay VAT

what's the big deal?

it just means companies from outside the EU contributing to EU tax coffers too

I guess if you want access to a market of half a billion people, that's the price you have to pay

[m0rph3us]

Originally posted by SexySarah


why?

wouldn't it mean less competition for EU companies which means more sales and higher profits for them which means more money kept in europe which means less revenue going into the US?

yeah what soulrebel said + not all EU merchants will provide the same services as US merchants denying e-services to EU customers so this is how they get fucked.

Imagine you're in EU and want to subscribe to some online music site and they only take US customers and you can only get the content from that site. You're fucked.

[BRISK]

Thats a serious pain in the ass to implement.

How do they enforce it? Like if a paysite owner doesn't bother charging the tax to EU customers, what are they going to do about it?

[SexySarah]

Originally posted by m0rph3us


yeah what soulrebel said + not all EU merchants will provide the same services as US merchants denying e-services to EU customers so this is how they get fucked.

Imagine you're in EU and want to subscribe to some online music site and they only take US customers and you can only get the content from that site. You're fucked.

only temporarily

what I said was correct - it will decrease competition for EU merchants creating space in the market allowing for more revenue, profits, and money to be kept in the EU since EU companies will fill the gaps

[NickB.]

start a company in Holland!!!! just a few days work

[Theo]

nick,what's the tax rate in Netherlands?

[scooby doo as scooby does]

The proposed changes. It is currently proposed that when a business sells services (not goods) to EU consumers, and the value of such sales is more than 100,000 euros (£62,000 / $93,000) in a 12-month period, that business should be made to register for EU VAT liability.

Since I am a UK business with both adult and non-adult interests registered for VAT. Hence I already pay the tax, to me this is just levelling the playing field.

The US, being a net exporter of online services, is against this tax. The EU, being a net importer of digital sevices is by and large for the tax. It will be interesting to see whether any retaliation is forthcoming.

[El Pres]

Originally posted by nickbaauw
start a company in Holland!!!! just a few days work

And pay twice the tax, than if you start one in Spain, hehe.
Isn't the base rate of tax around 40% there, its about 20% here.

And the sales tax rate is lower here *16% against 19 in holland*, so a Spanish firm becomes cheaper than a Dutch firm even if they charge the same net amount for the product.

[Theo]

check this out
http://www.pwcebiztoolkit.com/

[Theo]

Because the VAT rate in EU member states varies considerably, the VAT payable by an established business can be greater than that payable by a non-established business but :?

It is also possible to choose a country where the VAT rate is lower than all or most of the other EU countries

[Theo]

and we are talking from 13-25% VAT

[SexySarah]

Originally posted by Soul_Rebel
and we are talking from 13-25% VAT

a flat VAT across the EU does make the most sense I feel

[Theo]

even a flat rate is problematic

let's say you sell the SAME product online and offline

assume that the flat VAT is 20%

if you live in UK where the VAT is 17.5% (i think) then you have to deal with an extra 2.5%

[El Pres]

Here ya go
Austria 20%
Belgium 21%
Sweden 25%
Finland 22%
Denmark 25%
France 19.60%
LuxLuxembourg 15%
Spain 16%
Portugal 19%
Greece 18%
UK 17.50%
Ireland 21%
Netherlands19%
Germany 16%
Italy 20%

[Theo]

El pres thanks

now let's get the scenario of NO flat VAT,

Luxembourg will get everyones business heh

[El Pres]

The trouble with setting up in Luxembourg is straight away the taxman is wondering, what have you got to hide!
and the admin costs would be extremely high.

Germany's got some bad laws regarding porn, if you had an affiliate registered there, could they demand that your sites followed their laws.

I'll go and talk to my accountant in the morning and see what he says about it, I've read some articles and it says that a company from outside the EU can have a subsidiary or other affiliate act on its behalf.

Maybe I can set up a registered office for US companies here.

[magicmike]

Yup, this is insane. How do they plan to enforce it is a good question.

Another one is, for example, the good ole, Canadian gov't wants CDN businesses to charge GST on worldwide sale of paysite access - seen here on other threads. Then the EU wants their share of the tax from an eu customer.

15% in Canada - 15% in Europe ??? WTF is going on here?

USA or some offshore island seems like the best place to be.

[SGS]

There have been moves in Brussels for quite a long time now for a uniform VAT rate accross the EU and this is only a very short way away. If you are a EU company this is no big deal as most of us are already liable for VAT now in one way or another.

[Theo]

magicmike, the VAT will apply for EU consumers even if you do not operate a EU co.

[Theo]

Originally posted by magicmike

15% in Canada - 15% in Europe ??? WTF is going on here?

yeah, they try to pass it at 15%

not too much, not too less

[SGS]

Thinking about it... Didn't I read a while back that some US states are speaking of on-line taxation of some kind too? This is a multi billion $$$ business so its really only a matter of time.

[SexySarah]

<b><a href="http://www.havenco.com" target="_blank">the only solution that makes sense</a></b>

[Giorgio_Xo]

Originally posted by El Pres
Here ya go
Austria 20%
Belgium 21%
Sweden 25%
Finland 22%
Denmark 25%
France 19.60%
LuxLuxembourg 15%
Spain 16%
Portugal 19%
Greece 18%
UK 17.50%
Ireland 21%
Netherlands19%
Germany 16%
Italy 20%

Don't forget to add the regular income tax! jesus... you people are fucked in the ass.

Assume a customer makes $100. Income tax rates hover between 30-60% in Europe. You have $50 left... then you pay a VAT of 20% of the $50 you have left which in reality is an additional 10% of total income. That leaves you people $40.

No wonder your economies suck. $5 a gallon gas to boot! I read that almost a third of the Swedish economy is black market unreported underground in a World Bank report.

Is mortgaging your child's future for your current well-being and quality of life worth it? Don't you think it strange that each generation of college graduates in Europe only aspire to ace the government service exams to get a cushy job?

[SGS]

You also need to understand that the EU and the US have a cross border tax exemption scheme where tax only has to be paid at either one side of the Atlantic or the other... Not both sides.

[SexySarah]

Originally posted by Giorgio_Xo


Don't forget to add the regular income tax! jesus... you people are fucked in the ass.

Assume a customer makes $100. Income tax rates hover between 30-60% in Europe. You have $50 left... then you pay a VAT of 20% of the $50 you have left which in reality is an additional 10% of total income. That leaves you people $40.

No wonder your economies suck. $5 a gallon gas to boot! I read that almost a third of the Swedish economy is black market unreported underground in a World Bank report.

Is mortgaging your child's future for your current well-being and quality of life worth it? Don't you think it strange that each generation of college graduates in Europe only aspire to ace the government service exams to get a cushy job?

educate yourself before digging a hole for yourself

VAT is only paid on certain products/services

and if you're a business it's redeemable anyway

[SexySarah]

Originally posted by Giorgio_Xo

Is mortgaging your child's future for your current well-being and quality of life worth it? Don't you think it strange that each generation of college graduates in Europe only aspire to ace the government service exams to get a cushy job?

and this has to be one of the dumbest paragraphs I've read here

and that's saying something

[SGS]

People have been coming here for legal advice for ages? I suppose it will be accounting advice as well now?

[El Pres]

Originally posted by SexySarah



and this has to be one of the dumbest paragraphs I've read here

and that's saying something

Damn, I find myself agreeing with SexySarah, that's scary.

[Theo]

online TAX would apply to software as well according to PWC.

if you live outside Europe and the same product is offered both in Europe and States, you won't order the product from Europe because most probably the VAT will make it more expensive.

am i missing something?

[SGS]

Originally posted by Soul_Rebel
online TAX would apply to software as well according to PWC.

if you live outside Europe and the same product is offered both in Europe and States, you won't order the product from Europe because most probably the VAT will make it more expensive.

am i missing something?

You need to get the advice of your accountant as this is not how it will work.

[Theo]

yes, these are just hypothesis


WARNING: if you start getting accounting and tax decisions based on what I post you are fucked. :WARNING

[Giorgio_Xo]

Originally posted by SexySarah



educate yourself before digging a hole for yourself

VAT is only paid on certain products/services

and if you're a business it's redeemable anyway

I hold an EU passport. The VAT is structured so that the last user pays. The VAT is paid on most consumables.

My comments still hold true. There is little reason to want to improve oneself living in Europe. People are happy with what Daddy Government offers. People expect the government to supply everything. Wealth is taxed to the point of trying to redistribute it.

These are societies that place more emphasis on labor input above capital input while forgetting that labor input is easily transferred to another area. Socialisim is still in full swing. Labor thinks that if you reduce the work week from 38 to 35 hours that this will spur new hirings to replace the three hours. Then they go on strike when they find out that those hours were farmed out to Eastern Europe or China.

[SGS]

VAT has absolutely nothing to do with your passport.

[FreeOnes]

Originally posted by SexySarah



educate yourself before digging a hole for yourself

VAT is only paid on certain products/services

and if you're a business it's redeemable anyway

Lots of products in Holland do have 19% VAT and some 6%. Only a few don't have any taxes, not many at all! Overall Giorgio_Xo
has a very good point I vote for him as President!

[Trolleater]

first time I heard this...whoa.

pass the pipe

[Giorgio_Xo]

Originally posted by SexySarah



and this has to be one of the dumbest paragraphs I've read here

and that's saying something

Feel free to ask all my nieces and nephews and their friends. Every summer they come to live with me so they can intern at Silicon Valley companies or I meet with them regularly in my trips to France, Italy, and Spain.

I stand by my comments. Europe can not afford spending on social programs at this current level without bankrupting itself. You are falling behind and will become irrelevant economically if you don't change your thinking as a society.

Spain has changed since the fall of Franco.

[vegasdude]

google is enforcing it...

[SexySarah]

I still must disagree that the tax system in the EU causes lazyness (which is basically what you're implying).

It's like everywhere - people who want to succeed, work harder at it.

There's lazy people everywhere - it's just in the EU they're not quite so fucked as in other places if they don't have health insurance...etc.

And I disagree on your 'EU is fucked unless it changes' comment - does the EU have a debt level of 70% of it's GDP? The US does (and that doesn't include local government which takes the debt level to around 14 trillion which is 140% of GDP approx.)

[SGS]

Originally posted by Giorgio_Xo


Feel free to ask all my nieces and nephews and their friends. Every summer they come to live with me so they can intern at Silicon Valley companies or I meet with them regularly in my trips to France, Italy, and Spain.

I stand by my comments. Europe can not afford spending on social programs at this current level without bankrupting itself. You are falling behind and will become irrelevant economically if you don't change your thinking as a society.

Spain has changed since the fall of Franco.

What? On top of having just had a house built in Sussex, just had a lovely old 1960?s villa in restored in Spain, a new Jaguar and a my partner has a new Merc on order? Now we have to fund fucking social programs too! lol

[scooby doo as scooby does]

What? On top of having just had a house built in Sussex, just had a lovely old 1960?s villa in restored in Spain, a new Jaguar and a my partner has a new Merc on order? Now we have to fund fucking social programs too! lol

Yeah, when I fractured my wrist a few days ago, I am so glad nobody asked me 'how do you want pay' as I blacked out. I was safe in the comfortable knowledge that you personally paid for my hospital bed. Thank You !

[SGS]

No problem at all BUPA has great plans for everyone...

[magicmike]

Originally posted by Soul_Rebel
magicmike, the VAT will apply for EU consumers even if you do not operate a EU co.

Yeah thats what I was getting at...

if your a canadian co, you'll be paying both the canadian gst and eu vat on all EU citizens...

time to move?

[magicmike]

One more thing I was thinking about.

In the USA don't you have to have a physical pressence in a state if you wish to charge people in that state sales tax?

There's no way the EU would be able to charge american co's tax. The US would want that money way before they let some crackers in the EU get it.

[Groove]

Originally posted by magicmike


Yeah thats what I was getting at...

if your a canadian co, you'll be paying both the canadian gst and eu vat on all EU citizens...

time to move?

I suspect you'll find that you do not charge GST on exports (at least that is the case in Australia). So you'd charge VAT for EU customers or GST for Canadian customer, but not both.

[Giorgio_Xo]

Originally posted by SexySarah
I still must disagree that the tax system in the EU causes lazyness (which is basically what you're implying).

It's like everywhere - people who want to succeed, work harder at it.

There's lazy people everywhere - it's just in the EU they're not quite so fucked as in other places if they don't have health insurance...etc.

And I disagree on your 'EU is fucked unless it changes' comment - does the EU have a debt level of 70% of it's GDP? The US does (and that doesn't include local government which takes the debt level to around 14 trillion which is 140% of GDP approx.)

I am saying that the tax structure is a result of the social contract not the cause. Western European countries as a whole try to destroy capitalism and individual initiative by controlling the prime factor inputs of the economy, i.e. banks, heavy industries. Why start a bank when it will be nationalized? Why start a computer company when your only customer will be the government? As government takes on more responsibilities in society, it requires easier sources of taxation to pay for it. Taxing consumption is a favorite because collecting it is easier. The government enforces hyper-regulations to enforce this.

[Giorgio_Xo]

Originally posted by SexySarah
I still must disagree that the tax system in the EU causes lazyness (which is basically what you're implying).

It's like everywhere - people who want to succeed, work harder at it.

There's lazy people everywhere - it's just in the EU they're not quite so fucked as in other places if they don't have health insurance...etc.

And I disagree on your 'EU is fucked unless it changes' comment - does the EU have a debt level of 70% of it's GDP? The US does (and that doesn't include local government which takes the debt level to around 14 trillion which is 140% of GDP approx.)

You forget that the USA pays for Europe's defense thereby saving each country in Europe an additional 5% of GDP.

THe USA can effectively take on much greater debt because we grow at a mucher faster rate with little inflation. We also don't tax capital and income at the same rate which is reinvested immediately into the economy producing more return and a higher tax receipts.

You may want to check your debt stats for the USA. You are including government backed mortgage securities gauranteed but not owed by the government.