CCBill EU Contract and VAT

It's kind of a "how long is a piece of rope" question. Theory is this:

As a EU based biz you net a VAT ID # and charge your customers VAT. The percentage and exact procedure depends on the country you are based, so are the submittal procedures.

On the other hand you can claim VAT for business expenses you have. Let's say if you charge your customers 1.000 Euro, 190 Euro of which is VAT, and you buy a computer for 1.000 Euro (with 190 Euro VAT) as a business expense, the amount you owe to the tax authority is 0.

If you biz-expense VAT exceeds your charged VAT in a billing period, you can claim that VAT back in your VAT return. If you are a new business and claim lots of VAT in the first year you most likely will get audited. If your collected VAT exceeds the amount spent you need to submit that amount to the tax authorities.

Reality is this:

Billing companies simply charge and withhold the VAT, and if you don't have a tax ID # and can't file a claim you are fucked out of 16-22% of your revenue.

Ah I see, very good info, thank you very much Jenny.

But what about the case of CCBill, they have an office in EU, and the EU Directive 112 says electronic services pay 0% VAT. In theory I am signed with CCBill EU, although I haven't received a contract stating that. I could probably get in the end something to show that.

Would that be enough to say I shouldn't pay VAT? Or their business is still considered to be located in US, which in this case I should actually pay the VAT.

Thanks!

Bump! No one has faced this situation in Europe, or just prefer not to reply?

bump too

very interesting question to me too

does anyone else know?

Are you saying billing companies withhold % of tax from your account? So if you make 4000euro, they take their processing fee(let's say 12%) AND they withhold the tax (19% for NL, XX% for UK etc)

So out of 4000 euro, they take 12% billing fee AND 19% VAT?

Thanks for the info men!

Bump for you

This old chestnut again:

If you are operating from the EU then you can only sign up to ccBill EU.

If your revenue is above a certain threshold then you must register and charge VAT on EU sales (not on sales to the rest of the world). You can elect to register voluntarily if your revenue is below the threshold level.

If you are registered then you can reclaim the VAT you have paid on EU purchases.

ccBill do not retain the VAT element of your sales. They pay you the gross amount less processing fees.

EU directive 112 does not apply. I dont know where you have plucked that one from. If you are in the EU and registered for VAT then you pay it on all EU sales - Period!

Dont believe a lot of the bullshit spouted on here.... if in doubt get an accountant to check it out.

However:

- members that signup send their money to CCBill US, not CCBill EU. So they are not paying any VAT.

- Wires and Cheques are sent from CCBill US(BOA account).


So here's how I see it: members signs up, pays to an american company(so no VAT), american company pays you money, not the member.

It's all a bit grey.

You try telling this to some of the EU webmasters, who have been turned over by the VAT authorities........

Its not grey at all - If you are registered for VAT in the EU then you must charge VAT on all EU sales - PERIOD!

Very few people know this, and very few people do this but VAT must be charged for any consumer within the EU regardless where you business is based and where the money flow.
You are allowed to have a certain amount of sales within the european union before you are forced to register for a VAT number, if you do not register and claim VAT yourself, the country where you need to pay the VAT as collected can be forced through based on where you had your first european union sale.
If you charge ?39.95 per month the VAT (let's just say 25% as it is in Denmark)can be set in the following way:
Price including VAT is ?39.95, the cost is then 31.96 and the VAT is ?7.99
Price without VAT is ?39.95, the VAT is then ?9,9875
If you get caught by authorities for not paying VAT, even as a US company, they will if you say "I did not collect VAT" be able to claim ?9.9875 per membership sold for the previous 5 years, if you say you did claim VAT and it was included in the price you need to pay "only" ?7.99 per membership. (it's possible to go 5 years back I believe)
One problem there may be for the governments is getting sufficient proof of transactions in the past to claim the money. To my knowledge this have not yet been tried in court for companies not based outside EU but have seen several cases in for domestic companies on foreign income.
My advise is seek legal guidance and see where it will be best for you to place your VAT residence.
On a spam note, with our Phone & SMS billing platform VAT and local taxes is always claimed and paid according to the tax regulations in the country where customer is based and you would have no VAT issues as it is B2B and we are not based in the European Union
Disclaimer: I have not followed up on changes in VAT reguations in the past 2 years and changes may have been done that make my reply useless and incorrect, seek legal guidance, a claim for 5 years worth of VAT can take a lot of people out of business!!!
Since it is a consumer tax and not a business tax they can require you to claim it for EU customers even if you are not a EU company (fair competition clause)

Talked to someone as well, and he said, you should charge and pay the VAT amount of the country the surfer is in(within the EU)

So for a Dutch surfer, you should pay 19% for a Danish surfer 25% etc etc. It's a pain in the ass...

I know there are some legal ways to make it easier. Don't have that here right now

Thanks for the info guys! Regarding VAT for EU transactions, I heard it before, so it must be that way, although it's impossible to stay after each transaction and monitor it.
I think the best thing to do is to establish a meeting with VAT person and agree on a given percent or something.

The easiest and most cost effective way to deal with this is a Gibraltar corporation.

Gib is classed as Visa EU for processing and because of the various treaties it sign when joining the EU has a 0% VAT rate.

It works just fine for me

Look at this link for lawyers and company formations
www.gibyellow.gi

The person you spoke to is an idiot.

You charge the VAT rate that the country your in sets, same as every other business in the EU.


As for the original poster. You have to pay VAT on ALL EU sales if your vAT registered. You have to be VAT registered when you make the sales level set in your country.
CCBill doesnt keep the vat back or charge vat they give you the gross and you have to work out the vat yourself.

This isn't my opinion, this is fact. ALOT of UK webmasters have fought the UK vat people over this, and used all the arguments about ccbill being in the US blah blah. We fought it and lost.

First of all it depends on what country your business is based in and how you setup contracts and billing. VAT legislation varies from country to country and there are ways to optimize your costs. You can be smart and operate a company in the US for retail of memberships and a production company in the EU for wholesale of your content. If you make enough dough this may lower your operating cost for a significant number.

Interested topic, to the top!

This offers no protection. As has been mentioned before EU VAT laws say that if you are doing business (B2C) in the EU (i.e. billing members) that you must register and charge them EU VAT, no matter where in the world you are based.

As most countries treat TAX/VAT avoidance more seriously than rape, this is one area where you shouldn't be listening to what a friend of a friend is saying.

In this case you would not bill the members from your EU based company, but from the US. That means, you would need to have the US company have a contract with CCBill US of course. US companies are not paying any VAT on memberships.

The US company would receive invoices for usage of the content that was produced by the EU company ... this could be fixed price or percentage based ...

Wrong, US companies is required to register to pay VAT in europe once they reach a total revenue of something in the range between ?6-?10K in total, not per year.
VAT is a consumer tax not a business tax, if you sell something to a EU consumer you are required by law to collect the VAT to pay to the government.
To my knowledge it is at the moment not really enforced for foreign companies, at least not in adult, it is just a matter of time though.

That's a dream of the EU. They have absolutely no jurisdiction over companies outside of their territory who don't do business in their territory.

That is true, but the moment you make a sale in the EU then YOU DO BUSINESS in the EU
I am just offering my advice and sharing my knowledge, take it or leave it is really none of my concern, just remember in the EU you will end up doing more time than a rapist for economic fraud

Yeah, I understand your kind effort .... but I am not convinced that a US internet service provider with US billing and hosting is conducting business in the EU. He is not sending anything to the EU, but the customer from the EU is virtually going to the US to look at his stuff ... just my logic.
I know a few foreign companies who ship hard goods to the Eu. They have VAT registered because it is in their benefit as they can claim back VAT, but I have not heard of any US internet company charging VAT for European customers. I am pretty sure that large US hosts like The Planet make more than 10k Euro a month from EU customers, but they never ask for VAT info and they never charge VAT for EU customers.

That's flawed logic I'm afraid.

The problem is that the hosting company theplanet.com is delivering the service in USA, that is where the server is placed.
If you sell a membership it is an electronic service, with electronic services the place of delivery is where the customer receive the product / service, that is on the computer the place your customer is based.
I'm not an expert in the subject though, so you may be right, I know only what I have been reading and the advises I have received when I had tax audits in Denmark for the accounting years 2000,2001,2002,2003,2004,2005,2006 and I expect to be called in for 2007 as well even though I am no longer a resident in denmark
Either way, if you are right you should hit up playboy as they are an american company that seems to charge VAT, taken from their join page "If applicable, VAT will be added for customers from some European countries."

Jez yr a thick cunt...............

Read what a few of us in the Eu have written.......... you can try anything you like but the EU vat authorities will nail you if you try to fuck with them.....

Now, here are my stupid and naive questions! First of all, how could the EU possibly know a company ABC LLC in Nevada is selling memberships worth a certain amount of Euros to European customers? And if they knew, how could they force a foreign entity to register for VAT in the EU? Can they put up any sanctions like telling CCbill not to process EU customers for you any more???? Will the IRS collect EU VAT? Just curious :-P