Who here follows EU VAT Law? (Applies to US companies!)

[Nathan]

I was wondering, who here follows EU VAT Laws? I understand many US companies will not even have a clue what they are, and probably do not care since they do not think they have anything to fear... but some might actually know.. so I am curious..

For those that have no idea what it is, but would like to know read on, for everyone else, answer the poll ;)

EU VAT Law states that (in simple words, so I might miss a few minor things):
1) Any EU Company has to charge VAT based on their countries Rate to anyone in their own country and any other private person (ie, non company) from any EU Member State.
2) Any EU Company does not have to charge VAT to anyone OUTSIDE of the EU Member States.
3) And this one is the kicker... Any NON-EU Company has to charge VAT to any private person from a EU Member State and pay that collected VAT to a EU Member State of their choice. The VAT Percentage to use in this case depends on the actual country the person lives in.

So, this means, a US company, in theory, has to pay the EU for example 21% of the money charged to any member that is from Belgium. Or 19% for any member that is in Germany or the Netherlands and so on...

I of course wonder, how they would prosecute this, but I'm sure bigger companies that are more international have to somehow follow those rules....

[Nathan]

From the HUGE response rate, I'm guessing its all "what do I care" huh?

Thought so...

[frank7799]

Originally Posted by Nathan

From the HUGE response rate, I'm guessing its all "what do I care" huh?

Thought so...

Well, I think it doesn´t cause problems for non EU based companies. How could the EU control it? But if your billing company is based in the EU, I´m pretty sure they will collect the money at the billing company if they get to know that there are taxes which could be collected.

[Nathan]

Originally Posted by m4yadult

Well, I think it doesn´t cause problems for non EU based companies. How could the EU control it? But if your billing company is based in the EU, I´m pretty sure they will collect the money at the billing company if they get to know that there are taxes which could be collected.

Hi,

good point, never thought about that loophole, they very well might. But yes, EU can not really control it, they are trying to figure out ways to do though... but definately very difficult in terms of online companies.

[frank7799]

Originally Posted by Nathan

Hi,

good point, never thought about that loophole, they very well might. But yes, EU can not really control it, they are trying to figure out ways to do though... but definately very difficult in terms of online companies.

Believe me, they do. At least if the billing company is EU based. They randomly control companies at the average period of five years.

VAT depends on the goods which are delivered. Software for example can be delivered online or on CD´s. Both go different ways. And there is a difference if your customer is a company or not. As long as the customer isn´t living in the EU, there is no VAT to pay for the goods delivered. But the payment itself could cause VAT, too.

[frank7799]

Originally Posted by Nathan

3) And this one is the kicker... Any NON-EU Company has to charge VAT to any private person from a EU Member State and pay that collected VAT to a EU Member State of their choice. The VAT Percentage to use in this case depends on the actual country the person lives in.

So, this means, a US company, in theory, has to pay the EU for example 21% of the money charged to any member that is from Belgium. Or 19% for any member that is in Germany or the Netherlands and so on...

BTW, I think you aren´t right so far. EU VAT laws - as far as I know - are related to the company base. So there is no VAT as long as a non EU based company sells goods or services to a private EU based customer.

[Nathan]

Originally Posted by m4yadult

Believe me, they do. At least if the billing company is EU based. They randomly control companies at the average period of five years.

VAT depends on the goods which are delivered. Software for example can be delivered online or on CD´s. Both go different ways. And there is a difference if your customer is a company or not. As long as the customer isn´t living in the EU, there is no VAT to pay for the goods delivered. But the payment itself could cause VAT, too.

If you deliver software online without CD shipping and your customer is in for example the US, and you are in the EU, you do not have to charge VAT. 2006 EU VAT Law...

[frank7799]

Originally Posted by m4yadult

BTW, I think you aren´t right so far. EU VAT laws - as far as I know - are related to the company base. So there is no VAT as long as a non EU based company sells goods or services to a private EU based customer.

I have to correct myself. The 6th EU VAT order has indeed placed such a rule. But I wonder how it will be controled.

http://europa.eu/scadplus/leg/en/lvb/l31044.htm