US Digital Companies & their 2015 EU VAT Challenge
January 1, 2015 sees the introduction of new EU VAT rules on digital services. Global e-tax specialists, Taxamo, hosted an online webinar for US and other non-European merchants who sell e-services and digital goods to European customers.
Unraveling Multimodality with Large Language Models.pdf
US Companies & their 2015 EU VAT challenge
1. 0
US Digital Companies & their
2015 EU VAT Challenge
December 22, 2014
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John McCarthy, CEO – Taxamo
Esteban van Goor, Indirect Tax Lawyer – Baker McKenzie
5. Previously based on
merchant location
Jan 1st 2015
EU VAT Regulation 2015
EU VAT RULE CHANGE VAT now based on
customer location
EU tax authorities have
agreed
Merchants must verify
the location of
customer with
evidence
6. NON COMPLIANCE – NOT AN OPTION
FINES FROM TAX
AUTHORITIES
LIMITS GROWTH
/EXPANSION
PROSECUTION FROM
28 MEMBER STATES
7. WHO IS AFFECTED?
Anyone selling the following into or in the EU….
Games and e-books
Software and software upgrades
Websites, hosting, VoIP and content
Music, films, images and photographs
Basically any digital good
8. MOSS – Non-Union Scheme
Not registered for VAT in any
Member State
2
MOSS
A new portal for
for EU VAT on e-services
One settlement for all
EU countries
One payment for all EU
countries
3
4
No establishment in the EU
Register for MOSS in any EU State
(Member State of Identification – MSI)
1
Replaces VOES (2003)
18. What is the difference between sales tax in the U.S., and value-
added-tax (VAT) in the EU?
QUESTION
19. US and Swiss registered company. Do we need to pay EU VAT in
this new scheme?
QUESTION
20. Do I need to register and declare if I don’t charge i.e. free
downloads?
QUESTION
21. The information I have been able to find addresses compliance for
companies with a ‘permanent establishment’ in the EU.
What about companies with websites owned, and hosted, solely in
the US?
QUESTION
22. Can I register for MOSS in more than one Member State?
QUESTION
23. Under what legal authority is the EU requiring compliance with EU
VAT regulations from websites owned and hosted solely in the US?
How EU will chase VAT law breakers from USA?
QUESTION
24. These rules for have been in existence since 2003 for US companies
and I haven’t complied, why should I now?
QUESTION
----- Meeting Notes (20/03/2014 10:15) -----
Today's presentation will be a high level introduction to:
> The EU VAT directive
> Who Taxamo is
> How does our solution help merchants?
> Business case Infomation
----- Meeting Notes (20/03/2014 10:15) -----
Taxamo has developed a platfrom to help e-service merchants to comply with the EU VAT change
----- Meeting Notes (20/03/2014 10:30) -----
at a high level the front end of our platform will:
> Identify eu/non eu transactions
> Validite B2B transactions
> collect evidence for all transactions in accordence with the EU VAT directive
> we also offer a univerail pricing option for merchants
> the front end of the platform manages the VAT rate matrix for the 28 countries and product codes.
----- Meeting Notes (20/03/2014 10:15) -----
It is important to highlight The 1st of January 2015 as an important date.
on the 1st of January 2015 e-service merchants must start to comply with the EU VAT change
----- Meeting Notes (20/03/2014 10:15) -----
E- services goods ; such as software, music, games and images have been difficult for governments worldwide to tax because they are not visal goods and the customer just downloads the piece of music or software when purchased.
This is why the EU member states have introducted the EU VAT directive - the current rules of VAT on e-services is that that the VAT rate is charged at where the merchant located. as from 1st January 2015 is that the merchant must charge the VAT rate of the customer country residence.
So at the moment when you buy music from itunes you are charge the lux VAT rate of 15% and come 1st january 2015 you will be charged the German VAT rate of 20% when you purchase the music on itunes.
The EU tax authorites have agreed the introduction of this new VAT rule and the date is not going to change.
For a merchant to be complaint for this new VAT change they must collect evidence to proof the country location of their customer. the EU have set out stick guidelines on what evidence needs to be collected And the payment process is vital for this evidence.
----- Meeting Notes (20/03/2014 10:15) -----
Non compliance with this EU VAT change is not an option for merchants : it is the risks of non compliance is the same as it is today:
>fines from tax authorities
> Jail
> it will retriction you business expansion in the EU
----- Meeting Notes (20/03/2014 10:15) -----
taxamo has built a platform for E-service merchant to comply with the EU VAT change and it there is a opportunity for as the PSP's to partner with us to offer your merchant a solution that they need.
For you as the PSP this represents an opportunity of a new revenue stream from existing merchants.
Replaces VOES – automatic transfer for anyone already registered
Non-Union scheme applies if….2 & 3
Non-Union scheme applies if….
Non-Union scheme applies if….
Non-Union scheme applies if….
Non-Union scheme applies if….
1.IP BIN of CC, Billing address (only UK)
Do you always prompt for User declaration or wait until you cannot collect enough evidence
2. At what stage in the checkout process do you collect the proxies – and if you need more when do you ask you consumer?
Do you collect evidence at the payment page?
Do you stage the transaction at the payment page?
3. What proxy to default to?
How do you manage an audit from another tax authority?
Should you put a contingency in your accounts for non compliant transactions
Austria?
The letter of the law says one thing - is that what you need to abide by?
The Law is the regulations that were passed – not the Explanatory Notes. We have heard in various EU conferences again and again that the explanatory notes are not legally binding. Some countries may interpret the rules differently to how the explanatory notes interprets them. There are use cases in the explanatory notes which you can code to however some country may view that as being uncompliant. Is it likely? Not sure – was at a conference where Austria said they were 99% behind notes – did not specify which bits they weren’t happy with.
IP + BIN + Country
Other Payment methods – other flags.
If you do not get match – prompt user – Maybe partial page refresh using Ajax?
Do this PCI compliantly