We're a small US company selling digital course material to a world wide audience. We have gotten conflicting advice about whether or not we need to register and collect VAT for EU buyers, even though our amounts for each country amount to just a few sales per month per EU state.
The overhead of setting up the infrastructure to collect, calculate and report EU VAT seems heavy compared to the number of sales we have. I have a hard time seeing it as even worth selling to EU buyers.
An annual EUR 10 000 turnover threshold up to which the place of supply of relevant supplies of cross – border TBE services remains in the Member State where the supplier is established. This threshold is only applicable if a supplier is established within the EU. As your company is established in the US you cannot benefit from the threshold
This is a corporate tax issue, which I dealt with when the company I worked for sold in Europe. I met with international accounting firms and VAT experts. First, it sounds that there is a de minimis situation where the income is so minor as to not warrant local country registration, and second, European countries are notably concerned about digital sales and lack of revenues from companies ranging from Microsoft to Google, which are undergoing tax challenges for the same type of revenues. So if your company has notable income, it will be targeted. For smaller revenues that reach a substantial threshold, I suggest consolidating all EU sales, choose one country as the base of operations to handle all VAT matters.
I could be very well mistaken but after registering for MOSS, I believe the threshold is contingent upon whichever country you use to register. We utilized two different pieces of software to automate and detect the most cost-effective approach. I'd be happy to dm these to you if you're interested.
Regardless, be sure to go ahead and collect VAT accordingly to EU legislation to be on the safe side. I know our EU customers benefit from receiving the VAT invoice as well.
Let's all pray there is some unified global tax overhaul for online businesses in the next decade or so.
Steve Karmeinsky is wrong.
Any company world wide, selling to EU customers needs to incorporate for VAT in EU and collect VAT from those customers when selling online.
Hi, currentry there is no threshold for the MOSS registration in the EU , so if you are selling digital services to non taxable person B2C in EU you are obligated to register and pay the VAT. The European Commission is considered about the implementation of the treshoaled from 2018.
Indeed its a mess. How can any reasonable person expect a small business to collect tax payable in 28 countries with different laws and different tax departments is a mystery. Dealing with one tax department is bad enough. (yes, I know about MOSS, but even figuring out which one to go with is hard)
What is even worse is the trend is catching on and I believe Australia and South Africa might have similar laws. Probably other countries you are unaware of have similar laws which you are breaking if you sell to them without collecting tax.
Big companies like google employ a few extra people to figure it out and charge their customers more, job done. Politicians pat themselves on the back for sticking it to the multinationals even though their own citizens pay the tax, not the multinationals who just collect.
If its just you or a small team it can do your head in trying to come to terms with this anti internet red tape.
However, there are a few things you could try. IANAL, so please verify this yourself.
I believe if you sell to a European business with a VAT ID, you can label the invoice 'reverse charge' and not collect the VAT.
You could also get a European reseller - it then becomes their problem to deal with the VAT, something they will know about.
If you're outside the EU you do not need to charge VAT for services to the EU, I don't believe the US has a tax/VAT arrangement with the EU. If you set-up shop in an EU member country and sell from there, then you would have to collect VAT.