Quote:
Originally posted by SR
As far as I know you don't have to pay VAT for a customer outside of the US so you do not have to pay VAT on ALL sales you make.
So I still wonder how they are going to check this.
And if the billing processors will have to pay the VAT it means they'll have to add the correct % per EU country with some kinda script.
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Charging the right amount of VAT based on country is trivial. Yes, they would have to add it with a script. So?
I don't know what you mean with "As far as I know you don't have to pay VAT for a customer outside of the US". If you're in the US, sales tax only apply to sales within the same state, and there are exemptions for a lot of online commerce. If you're in most other countries in the world you pay VAT (under whatever name it is given locally) to your own government for sales within the country, but not usually for exports.
The issues is of course whether they can enforce it. The answer is, if your company is small enough , and don't have any assets in the EU, then it probably wouldn't be worth their time. But any company with assets in the EU would risk having their assets seized if they don't comply.
And any company with significant business in the EU might suddently find that the appropriate tax authorities manage to seize the money by going after banks and card associations to withhold payments.
An "easy" way to enforce this, for instance, would be to make it illegal for EU card issuing banks to not settle credit charges to non-EU recipients unless the recipient is registered for VAT in the EU, or even just to withold a percentage equivalent to the VAT percentage.
I don't see how this will be a problem for the EU at all, except if they try to enforce it against the very small amount of EU citizens with credit cards issued by banks in non-EU countries.
I'd assume that the EU will start working enforcement provisions into any updates to their tax treaties with other countries as well.