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Originally Posted by HarryT
I hadn't heard that before. If it's true then it is, as you say, an onerous burden on small business.
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Ya think?
Here is one of many reports:
http://www.huffingtonpost.co.uk/sooz...b_6177222.html
Quote:
There are several issues with the logistics of this - especially for micro businesses (a business being run by a single person) using the most basic sales software.
1. It is not always possible to know where a buyer is when they buy your product - PayPal, for instance, just doesn't always provide sellers with this information.
2. In order to charge VAT on a product in the country where your buyer is you have to be registered for VAT in that country. Given there are 28 countries in the EU with 75 rates of VAT, a seller of digital products would need to be registered in every country where someone buys their products - even if it's only one customer buying one product for, say, £5.
3. There is an option to use the 'Mini One Stop Shop' (VAT MOSS) by registering for VAT in the UK (this will distribute the money to the EU making it unnecessary to register for VAT in other countries individually). The requirement threshold for registering is usually a turnover of £81k a year, but the threshold has been effectively scrapped for (and only for) businesses selling digital products.
This will make it necessary for a micro business who may only be doing, say, £800 a year to register for VAT (and all the extra administrative burden that brings) if they sell a £5 ebook to a single person in Spain. (Even if that person is a Brit who happens to be on holiday there when they buy it.)
If it sounds a bit confusing so far, take a moment to enjoy this example from a City AM article from last month:
"On board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the consumer's journey."
This means a French person travelling from London to Paris by train, having passed through the Channel Tunnel, could purchase an online subscription, connecting to the French mobile network, with a French IP address, and using a French credit card, but it would be correct for VAT purposes to show this as a UK customer. Getting this wrong risks an unlimited fine, even though the VAT rate in both countries is 20 per cent.
So, absolute opaque clarity aside, there are many more issues of course, but let's just sail straight on to why these rules are wildly unfair and discriminatory.
This only applies to digital products, so it won't affect businesses delivering physical products or live services. Which means digital businesses get penalised while other types of small businesses are completely unaffected.
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More at the source.
Bolded text mine.
Basically, the law was thoroughly crafted to target Amazon's Kindle business but since specific companies can't be singled out they simply substituted digital products for "amazon" and carpet bombed entire industries. Because it isn't just ebooks impacted.