Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 



Forgot your password?
typodupeerror
Cloud EU Government The Almighty Buck The Internet

2015 Means EU Tax Increase On Cloud Storage, E-books and Smartphone Applications 164

schwit1 writes With the new year, a change in fiscal rules in the European Union is increasing the tax on many purchases of digital content like e-books and smartphone applications. Under the new rules, first approved in 2008, the tax rate on digital services like cloud storage and movie streaming will be determined by where consumers live, and not where the company selling the product has its European headquarters. Tax experts say Europe's revamped rules could add up to an extra $1 billion in annual tax revenue for European governments.
This discussion has been archived. No new comments can be posted.

2015 Means EU Tax Increase On Cloud Storage, E-books and Smartphone Applications

Comments Filter:
  • by fche ( 36607 ) on Friday January 02, 2015 @11:05AM (#48716863)

    be thankful I don't take it all

    • by AmiMoJo ( 196126 ) * <mojo@NOSPAM.world3.net> on Friday January 02, 2015 @11:58AM (#48717319) Homepage Journal

      Actually VAT is 15-20% in the EU. We like it that way, it pays for stuff like our socialised healthcare and affordable/free education.

      • Depends on the rate - standard rate must be at least 15% and reduced rate at least 5%. There are other rates.

        http://ec.europa.eu/taxation_c... [europa.eu]

      • by fche ( 36607 )

        "We like it that way,"

        Wonder if you'd like 50% or 90% or whatever better, because it would pay for more stuff like your socialized healthcare and stuff and more stuff.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        In Finland we have 24% VAT and all we get is a bloated public sector that gets nothing useful done. If I want healthcare in a reasonable time, I have to go to a private clinic. Education is obviously not free, but it's true that someone else has to pay for your personal gain. The natural outcome is that everyone gets a university degree even if they don't need one, i.e. a lot of productivity and other people's money is being wasted on what isn't even very high quality education once you get past the element

      • I know you're baiting, but for heaven's sake, which part of Europe are you in? Most of my family is scattered around Europe and I know that we all "enjoy":

        1. Very high direct and indirect taxes / social charges, which fail to fully finance,
        2. Massively oversized and inefficient public sector organisations, especially in healthcare and education, (tip: if you want "good" either of those two over here, you'd better have plenty of cash),
        3. Zero or negative growth, leading to,
        4. Massive public debts.

        Yeah, we l

        • True but take all that and then finance the world's most expensive military by 10 times. That's the USA.

          If the USA would stop defending Europe and let Europe defend itself then the USA could shrink their military by 25%

          Of course the USA would never shrink it's military budget that might make sense.

          • by johanw ( 1001493 )

            Please let us "defend" ourselves. And please also don't bother us with participating in all those wars of aggression you want to fight. If you want to support the Kiev coup regime or arm ISIS while they ware fighting Assad please leave us out and take it up directly with Putin and Assad.

            • Please let us "defend" ourselves.

              You mean like you did during the 20th Century?

              How well did that work out?

              Were it not for the United States, all of Europe would be either German or Russian, take your pick.

      • Actually VAT is 15-20% in the EU. We like it that way, it pays for stuff like our socialised healthcare and affordable/free education.

        I think you'll find the GP was quoting The Beatles' "Taxman". At the time, the group were in a 95% tax bracket, the 5% being what they were left with!!

      • I have family in Portugal, France, England and a couple of other countries. I've never heard a single one of them say they like the tax rates. I do hear plenty of complaints about how high taxes are but social programs constantly getting scaled back. In fact, a couple of my uncles in France have had to get private health insurance, oh ironic, to compensate for what the government has cut. France just hit record unemployment again, something my cousins have felt for a while. Don't even dare ask about stuff l

        • by AmiMoJo ( 196126 ) *

          I've never heard a single one of them say they like the tax rates. I do hear plenty of complaints about how high taxes are but social programs constantly getting scaled back.

          I don't think anyone likes paying tax, but they certainly like the public services. If you offered them a choice between say the US model of low taxation but you are on your own for everything, especially healthcare and a decent education, and the EU model I think most would take the latter.

          • by Mashiki ( 184564 )

            I live in Canada, and sure people like the public services here ... as long as they can get them. Then again, I've been waiting 9 months to see a ENT specialist...dem public services...

    • Is this a variation on Rule 34? If it exists, someone is trying to tax it.
    • Replying to remove accidental down-mod.
  • by MikeRT ( 947531 ) on Friday January 02, 2015 @11:07AM (#48716879)

    And how much in compliance costs? I've seen stats on the US federal income tax that put compliance costs at about $300B for businesses and individual filers. It's not necessarily the tax rate that hurts the economy so much as it is the paperwork burden. Tax rates may hurt, but they can at least be planned for in advance. It's all of the compliance work that costs incredible sums of money to keep everything in order.

    • by FooAtWFU ( 699187 ) on Friday January 02, 2015 @11:14AM (#48716941) Homepage
      It's particularly lovely in this case because you need to record not just the customer's location and the tax rate there, but also some corroborating evidence that the customer is in fact in that location, then register with the appropriate authority in that location. The reporting burden is going to mean fewer small sites capable of doing their own checkout process.
      • by N1AK ( 864906 ) on Friday January 02, 2015 @11:25AM (#48717019) Homepage
        Almost no small sites were doing there own checkout process, those that are can use VAT MOSS in the UK (I'm sure equivalents exist in other EU countries) to avoid registering with ANY new tax authorities. Did you ignore that because it doesn't gel with your hyperbolic or did you not even know about it?

        Short of setting an EU VAT rate there's not much else the EU could do. Let one country undercut others on VAT and you'll get big players like Amazon/Tesco setting up firms with 'headquarters' there to pay the lowest rate.
        • Actually, there something else the EU could do. And it's already been happening for years. When selling actual stuff (e.g. furniture) you can charge the company's country's VAT up to 100kEUR (sometimes 35k) yearly revenue in a specific EU country, at that point you'll have the register with that specific country and charge that country's tax next year. Works quite well, avoids both a LOT of paperwork and big companies moving to low VAT countries and it could have been done exactly like this with electronic
          • Re: (Score:2, Insightful)

            All of this basically presupposes that taxes are a right of government. Let that sink in.

            • taxes are a right of government, we have governments to organise stuff we couldn't do individually like national defence and such like and the tax pays for those things. How else could it work?

              Of course, government itself is a thing we have to have but don't really want, a necessary evil if you like, and we have to pay tax for that too, but there's no other way round that.

            • All of this basically presupposes that taxes are a right of government. Let that sink in.

              In the US, at least, we don't presuppose any such right. We explicitly grant it to the government in the 16th Ammendment.

              The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
              • I would just like to point out that Amendments can be repealed...Government granted ITSELF this right, im not so sure if we directly asked the people if they would actually be for the 16th amendment. TL:DR: the 16th would never pass today.
              • Actually, the 16th only applies to income taxes.

                And taxes are a permission, not a right (a subtle distinction). The 16th is permission, supposedly by the people, to collect taxes on income. And like all taxes, was supposed to be progressive, and only applied to the Uber Rich when it was promoted, only to apply currently to just about anyone making more than Min Wage. Compliance costs are extremely high for the average person who can't follow Income Tax Regulations. And the EZ form is nothing short of robber

        • Short of setting an EU VAT rate there's not much else the EU could do. Let one country undercut others on VAT and you'll get big players like Amazon/Tesco setting up firms with 'headquarters' there to pay the lowest rate.

          It would only apply to distance sales tho, so Tesco et al couldn't sell goods at the lower VAT rate in UK stores, just online.

          Remember Play.com? How originally it was cheap cheap cheap DVDs from the Channel Islands where taxes were lower and thus items were cheaper? Remember how that got "fixed" pretty quickly? Same shit.

        • I am not yet aware of equivalents to the UK VAT MOSS in other countries, though I'm sure they'll get it together. But bear in mind by registering with the MOSS you forfeit your "too small to matter" VAT registration exemption. And you still have to collect all the evidence. There are other catches too that I don't remember. But mostly it doesn't help anyone not in the UK.

          • well if you have to collect VAT then obviously you have already forfeited your "too small to matter" non-registered for VAT exemption! (ah, if only I could collect VAT but be exempted from passing it on to the taxman)

            It would have been nice to have the exemption for small businesses across the EU, but the EU bureaucrats don't consider things like that, just those lovely rules and paperwork.

            It'll be interesting to see what happens with payment processors, how they determine which country I'm in if the entire

        • MOSS is available in all EU countries as far as I can tell. But make no mistake, even registering for MOSS and proving compliance is no insignificant administrative burden for small (tiny) business compared to simply paying VAT in one's own country, and those business still have to figure out the location of their customers (and retain that data!).

          This is typical of European tax regulations (both EU and national): administrative burden and impact are gauged by looking at how things will work out for lar
          • Most of the US authors and artists I know who self-publish have recently been ranting about VAT MOSS compliance costs, and how it's basically too difficult and expensive to make it worth selling to Europeans since the new law kicked in, so their web sites now won't sell to you if you ask to ship to Europe.

            The ones who aren't ranting about it either don't know about the issue, or are just planning to ignore the taxes.

            • It's even more fun if you're in the EU, because apparently there are also laws that mean discriminating against customers elsewhere in the EU based on which EU nation they're from is itself illegal. According to the people citing those rules, you can sell to all or you can sell to none, but you can't sell to your home state and not to other EU states.

              That said, I'm not sure how long that would stand up in court, when the defence inevitably argued that they weren't discriminating on the basis of the customer

        • I'm blowing several moderations in this thread to make this point, but it's important enough that it needs to be made.

          Almost no small sites were doing there own checkout process, those that are can use VAT MOSS in the UK (I'm sure equivalents exist in other EU countries) to avoid registering with ANY new tax authorities.

          That is some combination of unrealistic and simply wrong.

          For one thing, there are thousands of small/micro businesses -- actually, it could be millions, but no-one has accurate figures across all of Europe yet -- that are theoretically affected by the new EU VAT rules this year. The governments of the states individually and at European level completely dropped the ball on this one. They did

      • by AmiMoJo ( 196126 ) *

        It isn't nearly that complicated. When you take a card payment (online services remember) you simply bill according to the billing address. In fact for small retailers who use a payment processor it will be automatic.

        • Ok so thats your first bit of evidence. Where's your second? The law requires two bits of non-contradictory bits of evidence to be retained. Billing address in Spain but IP seems to be in Germany? You need to go find a third bit of evidence to support one or the other. In terms of ensuring you are always in compliance, its actually a lot more complicated/involved than you seem to think.
          • by AmiMoJo ( 196126 ) *

            Shipping address, or simply ask the user to select their country.

            This is nothing new, sites are already required to do this stuff by payment processors who are required to operate with local laws (e.g. Mastercard UK are governed by UK law, even if I use the card to buy from a website in France).

            People just seem to assume that all EU laws must be idiotic, but when you get past the headlines and Daily Mail articles and actually look at them they tend to be quite sensible and well thought out. This is just one

            • We're talking about online supply of digital goods (at least for this year; it changes again in 2016). There is no shipping address.

              Customers can self-certify their location, but in that case you need to correlate it with the registered bank/card location, which not all payment services will give you. This will probably change now, but certainly many services don't do it yet, while the new rules have already come into effect.

              Even if you can get that information eventually, you still have the consumer protec

    • All taxes are regressive.

      This also goes towards tax compliance.

      Just remember, it is your money that is being taxed.

      • And where do governments get money? By selling cookies? Gimme a break.

        • by fche ( 36607 )

          They could get some of it by selling valuable services that the market couldn't satisfy. Aw heck, even if you force-sell to the population at large, at least keep up the appearance that this is in exchange for specific goods or services of value provided to the population, as opposed to some sort of general entitlement by the state to your money. That mindset would come along with burdens upon the state to show minimality, necessity, etc., rather than mere majority whim.

          • How is a forced sale different from a tax? Spare the philosophical nonsense, it only serves to waste money. Call it a tax and pay trivially less.

        • Voluntary taxes which can be avoided by anyone. Compulsory taxes are a threat to liberty simply because it requires force of government for compliance.

          Once you realize that Eric Garner was killed over taxes, you'll realize we live in a police state that is chasing after every last dollar it can extort out of the people. At the point you realize that Taxes discourage the activity / goods they are applied to, then you can simply tax "sin", which would fund everything we want in government while at the same t

          • Once you realize that Eric Garner was killed over taxes [...] Don't ban cigarettes, tax them.[...]

            Non sequitur. The former is an argument against the latter.

            You're clearly living in a fantasy world. You sound a bit like Dennis:
            https://www.youtube.com/watch?... [youtube.com]

            • Eric Garner didn't pay the taxes, nor should he have. They should be taxed at the manufacturing/Distribution level, not at the store. I realize that it appears to be a Non Sequitur but it isn't. You apply/collected taxes to the smallest vector possible (higher up the chain). The Cigarettes Eric Garner was selling, were singles, not packs, not cartons. There is no need to pay taxes on singles. And police shouldn't be enforcing tax laws with choke-holds for people selling single cigarettes.

              But you now must re

              • There are several issues here:

                Where should taxation occur? This can be debated, but is not the object of the discussion.

                Police brutality: it's shameful and unacceptable, but it's tangentially related, at best. Claiming that taxation caused it is absurd.

                Tax evasion: he should've been prosecuted for this, no doubt there. Police reaction was shameful, as I've said, but it doesn't make him innocent.

                You are arguing beside the point. Nobody said the cop reacted appropriately and it is frankly irrelevant to the di

    • by Tom ( 822 )

      And how much in compliance costs?

      Because actually adhering to the laws of the countries you are doing business in is now an unbearable burden?

      It's all of the compliance work that costs incredible sums of money to keep everything in order.

      That's mostly because you let your compliance be designed by consulting companies whose primary business model is to sell you more consulting hours.

      • Because actually adhering to the laws of the countries you are doing business in is now an unbearable burden?

        When the law says you effectively have to record and file taxes on the same scale as, say, Amazon, because you sell e-books for 5 Euros on your site and someone from another EU country happened to buy one copy... Yes, adhering to those laws is now an unbearable burden. It is literally not commercially viable for microbusinesses and even quite a few larger but still small businesses to operate across Europe today.

        Plenty of vendors have, at least temporarily, closed their doors to international sales as a dir

        • by Tom ( 822 )

          Yes, adhering to those laws is now an unbearable burden.

          Then stop doing business there, problem solved.

          It is literally not commercially viable for microbusinesses and even quite a few larger but still small businesses to operate across Europe today.

          Yet strangely, thousands of businesses do just that. Apparently, they're all idiots for not listening to /. user #457657.

          Plenty of vendors have, at least temporarily, closed their doors to international sales as a direct result.

          Most of the crying comes from the UK, however, because of a special rule there which exempts most small business from registering for VAT at all.

          • Then stop doing business there, problem solved.

            That is exactly what a lot of those very small businesses are doing.

            It is mind-boggling that you seem to think killing off trade because of overweight administrative burdens is a good thing. The entire purpose of the EU, or rather the original organisations that have now become the EU, was to facilitate international trade.

            Yet strangely, thousands of businesses do just that.

            And as of 1 January 2015, most of them are either ignorant of the law or breaking it one way or another.

            Most of the crying comes from the UK, however, because of a special rule there which exempts most small business from registering for VAT at all.

            There is no longer any such rule, at least for practical purposes, if you sell acro

            • by Tom ( 822 )

              It is mind-boggling that you seem to think killing off trade because of overweight administrative burdens is a good thing.

              I don't.

              What I do think is that "whaaaa, we have to comply with laws!!! how could you!!!" is a valid business argument.

              And I also do think that paying taxes in the country of the buyer was a good and necesssary step to stop all the tax-dodger multinational corporations from incorporating in the low-tax country and using their internal accounting to shift all income there.

              An exception or lighter rules for small businesses would have been great, though.

              • What I do think is that "whaaaa, we have to comply with laws!!! how could you!!!" is a valid business argument.

                In general, neither do I. But if you decided to impose a new start-up fee of a billion pounds to operate as a small business and required five different company officers to sign the paperwork, the number of new start-ups you had would not be large the next year. It's about proportionality and reasonableness, and the new system is wildly disproportionate for a whole sector of the economy.

                An exception or lighter rules for small businesses would have been great, though.

                Indeed, though it's worth remembering that some of the new rules will be all but impossible for almost any business to com

  • by xxxJonBoyxxx ( 565205 ) on Friday January 02, 2015 @11:14AM (#48716945)

    >> tax rate...will be determined by where consumers live

    Wasn't there some nutjob article here last week about borders disappearing? Not as long as we have taxing bodies...

  • by Anonymous Coward

    I paid my country VAT rate buying from UK stores many years ago. Actually big online retailers in USA started to add VAT with the rate of the customer origin many years ago too.

    • by kzanol ( 23904 )

      Up to now, this only happened when the retailer had a branch where the customer was located; US Retailer w/ branch in Germany selling to a German customer.

      Now, all retailers in Europe have to deal with the hassle of having to individualy deal with the seperate tax offices in all the (european) countries its customers are located in.

      Abslolute nightmare.

      One exception: for b2b deals where the customer has an european tax ID, it's possible to bill without tax and the customer has to pay the tax to its local ta

      • I dropped O'reilly's Safari Online book service when they started charging me UK VAT rates on my monthly subscription :/ Made it just slightly too expensive so I cut it out completely.

        • Oh, I might add, that was 10 or so years ago.

        • Thus offering evidence of my Thesis, All Taxes are regressive. People engage in tax avoidance, which only hurts the little guy. The wealthier you are, the easier (relatively) it is to avoid. So in taxing the online books, they have diminished the authors livelihood.

      • by AmiMoJo ( 196126 ) *

        It's actually really easy for companies to comply with the new rules. When the payment processor takes the payment it simply looks at the billing address given and adds the appropriate amount of tax. Google already does it automatically for Play store purchases, and I imagine Amazon and Apple do too. The retailer will be able to choose if they absorb the different tax levels, or if they charge the consumer.

        • It's not quite that easy. You need multiple sources of evidence, you need up to date feeds of VAT changes from every EU authority, and then you need to (unless your local government does it for you) fill out tax returns for every EU country, assuming you have customers all over the place.

        • by grahammm ( 9083 )

          One slight problem with that. When it has been passed to the payment processor it is too late. In many (if not all) EU countries, the law requires that the tax inclusive price is shown to the buyer when the buyer is a consumer (ie not a business to business transaction). So the appropriate VAT rate has to be known before the buyer is shown the selection of goods/services on offer.

          • by AmiMoJo ( 196126 ) *

            The tax inclusive price can be shown, the web site just needs to show which country's rate it is using and have a drop-down for the user to select from. Many sites already geo-locate to offer their services in the local language and according to local laws (e.g. some items cannot be shipped to certain countries), and the ones that don't simply need to add a disclaimer saying "tax shown at 20%, adjust for your local rate".

        • As others have noted, it isn't nearly as easy as that. For example, perhaps you didn't realise, but there are huge numbers of small vendors selling on-line who don't use marketplace sites. There are multiple payment services with multi-billion dollar valuations that support that kind of set up, and many more smaller ones in a fast-growing field. This is not some minor edge case. This is hundreds of thousands of businesses.

          Also, the workaround you proposed for the conflict between displaying tax-inclusive pr

      • by Threni ( 635302 )

        This is aimed at companies like Amazon or Google who are "based" in whatever country lets them avoid tax. Now they'll have to pay tax. This is good, right? Yes, there's some paperwork involved. So, do the paperwork and there are no problems. It's the cost of doing business. They can always give up and do something else; someone else will step in and somehow struggle through all those bits of paper so that they can import boxes from china, pay the staff minimum wage etc. Frankly I'm surprised there's no

        • by corychristison ( 951993 ) on Friday January 02, 2015 @12:27PM (#48717613)

          This is so much more than that.

          I own a web hosting business. My company id based in Canada (where I reside), and my servers are located in Canada.

          If a European resident decided they wanted to do business with my company, all of a sudden I have to submit to their tax rules. I must collect and submit taxes to their countries government. Obviously I have the choice to decline, and tell the potential customer to go do business elsewhere... but that is bad for business.

          I can register with MOSS in the UK, and it will allow me to accomplish this hassle much more easily, but it is still a complete pain in the ass.

          • If a European resident decided they wanted to do business with my company, all of a sudden I have to submit to their tax rules.

            Why? Are you somehow subject to EU laws?

            I'm not, no more than I'm subject to China's laws.

            The EU can pass any rules they want, I have no presense in Europe and don't much care what they have to say.

        • by Nemosoft Unv. ( 16776 ) on Friday January 02, 2015 @12:41PM (#48717727)

          Yes, there's some paperwork involved.

          Some? We have 35 different VAT regimes here... And VAT changes regularely. Try to integrate that into your webshop.

          The problem with this system is that it's backfiring. Yes, it is intended at the big companies who can pick a convenient country to pay taxes in. But it only hurts thousands and thousands of little mom-and-pop webshops who suddenly need to file extra paperwork, keep "2 reasonable proofs of location of the buyer" (Duh? Over the internet?) and must keep that information for 7 years (Hello! Security breach knocking at your front door!). So, to downloading a font, a game, or anything else purely digital, I now have to enter my address details into each and every shop. Why? It's a freaking download. Creditcard number should be enough.

          Then there are 2 additional problems:

          • Having to explain to your customers again and again that the price changes depending on which country they live in (which was not the case before) and yes, because you live in country X you pay more than a customer in country Y.
          • "Country hunters", people who will simply fill in bogus information to get the lowest price.
          • My state alone has 39 countries. Each can add it's own margin to the state ysales tax, and when they're done each city can add it's own margin as well. To make things even more complicated these tax borders don't align with zip codes or the city in the address. And, we have a few cities that even straddle county lines as well.

            And yet, we still have small website operators here. They just don't manage their own checkout process. It does sound like you have more strenuous record keeping regulations though,

          • by Tom ( 822 )

            Some? We have 35 different VAT regimes here... And VAT changes regularely. Try to integrate that into your webshop.

            If your business is creating webshop software, then that's part of what your customers pay you for.

            If your business is selling socks and your webshop software doesn't do proper tax handling, then wtf are you paying for?

            Why?

            Because you should be happy that your taxes go to your country and not to some 3rd world tax haven where the local druglord will spend them on whores and guns, you moron.

            Send your thank yous to the multinational corporations who dodge taxes by putting their "headquarters" into low-tax countri

            • If your business is selling socks and your webshop software doesn't do proper tax handling, then wtf are you paying for?

              What is this "webshop software" you keep talking about?

              Not everyone uses marketplace sites. The people most damaged by these new rules are mom-and-pop stores selling some small digital product with little more than a home page and a PayPal button.

        • Yes, there's some paperwork involved. So, do the paperwork and there are no problems. It's the cost of doing business.

          Congratulations, you just killed an entire sector of the European economy, which can no longer afford to operate.

          You don't run a successful economy by making the price of doing business, particularly for small businesses, more than they generate in total revenues. That is literally now the case for thousands of businesses, though no doubt many of them will continue to operate illegally anyway because they don't even know they're doing anything wrong.

  • So, if on my Ipod i will set the living place by choosing the first country on the list, Afghanistan, and will pay with Paypal or Bitcoin, will the tax be collected? How will the living place will be determined? Complexities are staggering.

    On the other hand, there are approx 500 million people living in EU, which gives an average $2 revenue per person per year, or less than approx 1.5 EUR per year. Let's make a non-scientific assumption that 10% of the population are actually using the services, which gives

    • Its quite simple - if the vendor cannot reliably detect a VAT rate for you, they will use the fallback VAT rate of 15% for standard rate, or 5% for the reduced rate, which are the EU minimums for those rates.

      Nuff said really :)

      You can check out all the EUs member VAT rates here:

      http://ec.europa.eu/taxation_c... [europa.eu]

      • So, if on my Ipod i will set the living place [to a country outside the European Union], and will pay with Paypal or Bitcoin, will the tax be collected? How will the living place will be determined?

        if the vendor cannot reliably detect a VAT rate for you, they will use the fallback VAT rate of 15% for standard rate, or 5% for the reduced rate, which are the EU minimums for those rates.

        The customer is in Afghanistan for all the vendor can tell. If VAT is based on the EU country of residence, what gives the EU authority to charge VAT on goods sold to customers outside the EU?

        • "For all the vendor can tell" - patently not true, as the vendor won't rely solely on customer supplied information. Don't expect to be able to purchase anything with a payment method which doesn't corroborate location information supplied by the customer - this is not done on the honour system - so bitcoin et al are out.

          Regarding sales to entities outside the EU, this is already covered by EU rules and VAT isn't charged for those sales - if, that is, the purchasers payment method details corroborate the e

    • Taxes will be collected, for sure, and the rest of your thesis is missing a major piece. Taxes are regressive, as people search out tax avoidance remedies. The only people hurt are the ones that cannot avoid the taxes, and these tend to be poorer people. Socialist paradise!

  • by j1976 ( 618621 ) on Friday January 02, 2015 @01:04PM (#48717965)

    While the OP in principle is correct, the increased tax revenue is not the most important consequence of the change. The drastic part is the legal burden added on companies offering e-services. Any company (regardless of whether they are located in the EU or the US, regardless of their size, and regardless of their annual turnabout) that want to makes sales in the EU will now have to read and understand 28 different national tax laws regarding VAT. Not only do all these countries have different VAT rates, but they also have different exceptions depending on what it is that is sold. In one country the VAT rate might be 20%, unless the sale can be categorized for example as advertisement, in which case the VAT rate is 10%. In another country the item that is sold might be categorized in a different manner.

    The burden of figuring out what tax to charge lands entirely on the salesman, even if he's just a hobbyist selling a single item. Needless to say, learning and keeping track of 28 different legislations is impossible unless you are a large corporation. But despite this, a german shop owner charging the wrong VAT rate for a bulgarian customer might end up being sued in a bulgarian court of law. And in the long run get extradited to bulgaria. Since this law change in practice is going to wipe out small business owners, there have been quite vocal protests raised. For example a twitter storm ended up making the #EUVAT hashtag trending at number 3 worldwide. (see http://euvataction.org/2014/12... [euvataction.org]) More information about what the salient consequences of the law change are can be found at http://euvataction.org/key-fac... [euvataction.org].

    • by Tom ( 822 )

      read and understand 28 different national tax laws regarding VAT

      Which isn't half as much trouble as you make it out. Firstly, most people who are half-way serious about selling something online use some kind of merchant service that will manage that for them. Secondly, you don't need to read the whole law. You only need to understand what the tax rate for your product is. If you're a small company or hobbyist, you're unlikely to have more than one class of products.

      And in the long run get extradited to bulgaria.

      Total nonsense. To be a crime, and not just a misdemeanor, you have to commit tax fraud intentionally. You

      • Firstly, most people who are half-way serious about selling something online use some kind of merchant service that will manage that for them.

        Wrong. On some estimates so far, that group is actually a minority of the small and microbusinesses affected by these measures. It certainly isn't "most".

        Secondly, you don't need to read the whole law. You only need to understand what the tax rate for your product is.

        Wrong. You also have to understand, for example, the rules for issuing VAT invoices, which again differ widely among the 28 EU states.

        Of course, even if you were right, "understanding what the tax rate for your product is" is no small thing now. Each state has its own quirks about different rates for different types of product. You can't even rely on the o

        • by Tom ( 822 )

          Wrong. On some estimates so far, that group is actually a minority of the small and microbusinesses affected by these measures. It certainly isn't "most".

          Really. Maybe I learnt something new today, or maybe we're talking about different things. You see, I'm not talking about Grandma's Handmade Socks or the local pizza delivery service - they're not worried about cross-border commerce. These businesses are the vast majority of microbusinesses. But they are not affected by this measure.

          the rules for issuing VAT invoices, which again differ widely among the 28 EU states.

          Really. Apparently I was dreaming when a 30-second Google search turned up this informative overview that includes, among other things, a bullet list of what an invoice has to c [europa.eu]

          • You see, I'm not talking about Grandma's Handmade Socks or the local pizza delivery service - they're not worried about cross-border commerce. These businesses are the vast majority of microbusinesses.

            Grandma's Homemade Socks aren't affected this year because they don't supply digital products on-line. If the current plans haven't changed by the time the VAT rules change again in 2016 to include physical products as well, you should probably start planning for another significant dent in the European economy.

            Pizza delivery companies aren't microbusinesses. Microbusiness in this context usually refers to individuals who sell something on the side to make a little extra money on top of their day job.

            There

            • by Tom ( 822 )

              that in the UK alone

              The UK is a special case here in that you don't have to register for VAT at all unless your revenue is quite considerable (much bigger than any microbusiness). So yes, for the UK, a lot suddenly changed.

              Look at the length of the document you just linked to. Seriously.

              It has a TOC. It took me literally 10 seconds to find what I was looking for in it.

              We simply don't know yet.

              We can agree on that. Maybe I've just been in too many positions where people came to me all day long complaining that this or that change or proposed change will make the sky fall. Maybe I've become desensitized to these alar

              • Well, let me give you one data point. I have a business that is big enough to be worth continuing under these conditions, but only does a tiny amount of trade across EU borders (we're UK based and the US is by some way our biggest international market so far). It's larger than a microbusiness but still in its early days being run on the side by the founders rather than with any full-time staff.

                We knew some time ago that the change to charge VAT in customers' local currencies was coming (no thanks to HMRC, I

                • by Tom ( 822 )

                  Good points with solid first-hand experience, thank you.

                  Yes, it's an additional burden and I don't think the two-data-points requirement is great, though I can't immediately think of a better solution that isn't trivial to game.

                  The problem is that there's no good way to make the rules better. Keeping business-country-VAT is an open invite to more Amazons to incorporate in low-tax countries. Putting a only-applies-to-more-than-one-million-revenue-companies exception on it would mean the same thing has differ

                  • It seems to me that the most practical solution is to say if you're going to charge tax that is going to the tax authorities in another EU country, those authorities must use a standardised EU-wide tax rate for cross-border sales.

                    This does mean each nation would have to surrender some control over its tax levels, which is a threat to national governments and not likely to go down well. But then this whole policy is designed to undermine precisely that independence anyway, so I'm not sure that's really any w

                    • by Tom ( 822 )

                      True, a unified "EU VAT" would be ideal. But given the realities of politics, it's not something that will happen within this decade.

                    • Perhaps not, though I suspect neither is collecting the level of extra tax revenues they think they're going to get from the recent EU VAT rules...

          • by mcvos ( 645701 )

            Wrong. On some estimates so far, that group is actually a minority of the small and microbusinesses affected by these measures. It certainly isn't "most".

            Really. Maybe I learnt something new today, or maybe we're talking about different things. You see, I'm not talking about Grandma's Handmade Socks or the local pizza delivery service - they're not worried about cross-border commerce. These businesses are the vast majority of microbusinesses. But they are not affected by this measure.

            Every small-time RPG publisher selling a few PDFs per week is affected by this. And many believe they're even affected if they don't live in the EU. Some have announced they won't be selling to EU countries anymore (which still means they need to figure out where their customers are from, of course).

            Big part of the problem is that information is sparse and very late. The law may be from 2008, but most shops only heard about this a few weeks ago. So now people are panicking. Justified or not? Nobody really k

  • by scamper_22 ( 1073470 ) on Friday January 02, 2015 @08:15PM (#48721687)

    Most of the complaints here are in regard to complexity.

    Wouldn't it be reasonable for the EU to then provide a webservice for such a calculation.

    They take in an address/other info and tell you how much to add to the bill. How much info would be up to the EU. It's their citizenry. They can then vote on how much is too much. Heck, if they can force their own citizens to provide a government issued national ID and retina scan for every purchase for all I care.

    They can provide healthcare and education. They should be able to build a webservice :P

  • by mcvos ( 645701 ) on Monday January 05, 2015 @11:11AM (#48736365)

    The summary calls it a tax increase, but the tax rates aren't changing (or if they are, it's up to the individual member states, not the EU). What the EU is doing is closing a tax loophole that allows big companies (Amazon and the like) to put their European office in a tax haven so they don't have to pay any sales tax in the EU. But now they have to pay the VAT rate in the country where the customer is, rather than where their own office is.

    In principle that's totally reasonable. What upsets a lot of people about this new rule is that small time PDF publishers may have to register for sales tax in 28 countries as well as collect data on where their customers are (and the rules for that are really confusing) and keep that data for 10 years, when previously they didn't have to know anything about their customers (because they just downloaded the thing, and payment was handled by a payment provider), and they didn't even have to pay any VAT at all because they were below their countries VAT limit, due to their low volume of sales. The new rule doesn't seem to specify any minimum.

There is very little future in being right when your boss is wrong.

Working...