VAT Compliance / Filing

[Casey Kolb]

Hey all,

Totally unrelated to HISE, but I'm wondering if there are specific services or companies you use for filing EU VAT for small businesses. It's been especially hard to find accountants in the US who handle this. Thanks!

[d.healey]

@Casey-Kolb I registered for VAT MOSS in Ireland. But if you're US based why do you have to pay EU VAT? I don't pay US taxes.

[ustk]

@Casey-Kolb Shouldn't you only pay the taxes where your company is located?

[d.healey]

@ustk If you're in the EU (or in their jurisdiction) you pay tax based on the customer's location.

[ustk]

@d-healey Alright, I'm not really aware of this since I am building a special small company in France for which status I don't have to bother about VAT...

[d.healey]

@ustk

for which status I don't have to bother about VAT...

If you're selling digital products online to consumers (not businesses) in other EU countries then you might have to. There is a threshold of 10000 EUR, if you're annual turnover from EU sales is below that then I don't think you have to register.

[ustk]

@d-healey Thanks for the hint, but as I said the status of the company is weird (it is quite new here). For instance, I don't have the right to mention the VAT on the bills because it is non-applicable. Although I will fish some more information with a local specialist

[d.healey]

@ustk

the status of the company is weird (it is quite new here)

I wish we had that here

[Matt_SF]

@ustk said in VAT Compliance / Filing:

@d-healey Thanks for the hint, but as I said the status of the company is weird (it is quite new here). For instance, I don't have the right to mention the VAT on the bills because it is non-applicable. Although I will fish some more information with a local specialist

@ustk I have the same status for my company, and I haven't heard about other taxes which would apply to us, but if you find something different, feel free to share

[ustk]

@d-healey @Matt_SF So it appears I found something in between about the 10000 max and our non-applicable VAT on the bills... Don't worry Dave, I'm sure you don't want our administrative can of French worms

So you're French Matt? Let's talk about our case by PM then

[Lindon]

@d-healey said in VAT Compliance / Filing:

@ustk If you're in the EU (or in their jurisdiction) you pay tax based on the customer's location.

LOL - are you sure you're still in the EU Dave?

[d.healey]

@Lindon Unfortunately we still have to abide by their VAT rules Unless you know something I don't.

[Lindon]

@d-healey said in VAT Compliance / Filing:

@Lindon Unfortunately we still have to abide by their VAT rules Unless you know something I don't.

nope the UK VAT rules remain the same as the EU base ones - there's a threshold over which you must register for and charge VAT on sales.

[Casey Kolb]

@d-healey said in VAT Compliance / Filing:

@Casey-Kolb I registered for VAT MOSS in Ireland. But if you're US based why do you have to pay EU VAT? I don't pay US taxes.

Sadly even non-EU businesses are equally liable for collecting and reporting VAT. It's a royal pain in the ass frankly. The UK requires you to register regardless of the threshold as of 2021.

[dustbro]

@Casey-Kolb said in VAT Compliance / Filing:

Sadly even non-EU businesses are equally liable for collecting and reporting VAT.

This is only true if the corporation has a physical presence in that country.
These are the rules I follow:

*Are United States companies required to register for VAT if they are receiving or giving services to U.K. clients?

The answer is not a simple yes or no, but depends on many factors, such as:

• Whether the U.S. company has a physical presence in the U.K.
• Location of the recipient of services
• Does the U.S. company have an office or warehouse in the U.K.?
• Is the U.S. company supplying services to the U.K.? If so, will the services be performed in the U.K.?

One new and ever changing area of VAT regime is the taxation of internet services. Some countries have imposed it and others are considering imposing it when there is not a presence as outlined above, but there are cloud services or internet commerce.

Let’s look at an example of a U.S. company that sells software to a U.K. business. In the U.K., granting software usage rights through a licensing agreement is generally considered supplying services for purposes of VAT.

If the U.S. company does not have any presence in the U.K., then the U.K. company will most likely be held responsible for VAT. What if the U.S. company has an office in the U.K., or sells to an individual in the U.K. instead of a company? In this case, the U.S. company may be held responsible for registering for VAT.*

[Casey Kolb]

@dustbro Hmm unfortunately this is not accurate. Where did you get that information? There are countless articles explaining the new details, especially since a lot of things changed in 2021. Thresholds and country of residence for your business don't apply anymore. If you sell digital goods to any customer in the EU, you must charge VAT and report it.

https://barn2.com/eu-vat-easy-digital-downloads-guide/
https://www.quaderno.io/digital-tax-guides/eu-vat-guide

[d.healey]

@Casey-Kolb What dustbro is quoting seems to relate UK VAT which is separate from the EU Digital Services VAT.

[Casey Kolb]

@d-healey Ah I see. I'm speaking with a VAT accountant today, so I'll report back

[dustbro]

Now I have to double check with my accountant