EU Being Stupid?

beorhthelm · Dec 29, 2014

Camicus said:
Its better to close the tax loops than to keep them open!

it would be better to close tax loop holes completely, rather than offer a bureaucratic fudge that closes a small proportion of that loophole, while impacting hobbiest and small business disproportionatly.

Herr Tubthumper · Dec 29, 2014

Westdene Seagull said:
But you've made the assumption that no agreements like Norway or Switzerland have will be agreed. Therefore you nor I have any data.

Whilst they're in the EFTA I didn't realise the UK has VAT agreements with Switzerland and Norway. Is this the case?

Herr Tubthumper · Dec 29, 2014

Westdene Seagull said:
IP addresses are only roughly geographical - use a proxy server and it will cause Paypal no end of difficulties. As usual the EU have issued a dictate without actually thinking it through.

Oh, so the issue is with ropey 2-bit payment systems not asking where their customers reside as opposed to the EU screwing things up. Thanks for clarifying.

Westdene Seagull · Dec 30, 2014

Camicus said:
Blah blah blah the EU sucks as a patriotic Englishman.... FFS even when the EU get it right you moan. Its better to close the tax loops than to keep them open!

But the EU haven't got it right. As [MENTION=599]beorhthelm[/MENTION] points out this hits small businesses disproportionately - those most affected will be hobbiests.

Even if for a moment we assume the regulation is the correct thing to implement, it can only be a good one if it can be adhered to and policed.

The requirement for two bits of proof of the customers origin is impossible, in many cases, for the trader to comply with. Paypal for example ask you where you reside when you set up an account - they can't check it or tell if you are telling the truth. Even if they could they can't pass this information to the trader as the DPA, and the various flavours of the same law across Europe, prevents them doing so. So as a trader how to you go about getting these two bits of proof ? Go on clever clogs, how ?

The EU doesn't get everything wrong, the regulations that are gradually cutting out excessive roaming charges on mobiles they have got right albeit the end result of no roaming charges is being very slowly headed towards.

In this case it's a basket case of a regulation that achieves no practical aim and has been implemented by an organisation that clearly doesn't understand the borderless nature nature of the internet. Which is somewhat bizarre given they want a borderless EU.

Westdene Seagull · Dec 30, 2014

Herr Tubthumper said:
Oh, so the issue is with ropey 2-bit payment systems not asking where their customers reside as opposed to the EU screwing things up. Thanks for clarifying.

If you're suggesting Paypal is ropey and 2-bit then you're suggesting the clearing house model they use which mirrors exactly that of the bank card system is also. The clearing houses don't know where you reside either yet every country in the world uses the system ..... including your beloved Germany.

Herr Tubthumper · Dec 30, 2014

Westdene Seagull said:
But the EU haven't got it right. As [MENTION=599]beorhthelm[/MENTION] points out this hits small businesses disproportionately - those most affected will be hobbiests.

Even if for a moment we assume the regulation is the correct thing to implement, it can only be a good one if it can be adhered to and policed.

The requirement for two bits of proof of the customers origin is impossible, in many cases, for the trader to comply with. Paypal for example ask you where you reside when you set up an account - they can't check it or tell if you are telling the truth. Even if they could they can't pass this information to the trader as the DPA, and the various flavours of the same law across Europe, prevents them doing so. So as a trader how to you go about getting these two bits of proof ? Go on clever clogs, how ?

The EU doesn't get everything wrong, the regulations that are gradually cutting out excessive roaming charges on mobiles they have got right albeit the end result of no roaming charges is being very slowly headed towards.

In this case it's a basket case of a regulation that achieves no practical aim and has been implemented by an organisation that clearly doesn't understand the borderless nature nature of the internet. Which is somewhat bizarre given they want a borderless EU.

You seem to think there is some seismic change to cross-border sales being implemented. There isn't. Businesses already have to declare where they're sending their stuff for VAT purposes. All that is being asked is that you follow exactly the same process as before but apply the VAT at the other end.....using information already at your disposal. Again, I might be missing something but I'm struggling to see the issue.

And where does this "two bits of proof" come from?

Deleted member 22389 · Dec 30, 2014

More EU bollocks I see, which will cost small business more time and money. People don't make enough as it is, so adding another layer of EU bullshite is going to just piss people off.
Get us out this bullshite club.

beorhthelm · Dec 30, 2014

Herr Tubthumper said:
...All that is being asked is that you follow exactly the same process as before but apply the VAT at the other end.....using information already at your disposal. Again, I might be missing something but I'm struggling to see the issue.

And where does this "two bits of proof" come from?

HMRC advice, search for "Circumstances where the presumptions don’t apply" (and the presumptions are genious too, opening the option for VAT tourism if/where its worth it).

what you are missing is firstly that unless you have a certain turnover, you dont need to be VAT registered. now anyone potentially selling in EU must register. secondly, if that the information is not automatically at your disposal for digital services. there's no need to know a customers address if you simply accept an paypal payment and they download a file. instead of a simple payment processing and auto-release data, one now needs to extract address, IP, phone number, bank details from the customer, to prove where they are. this will impact on VAT registered businesss too who'll have to capture infomation previously unnecesary.

and then keep those details, another side not covered much, a previously anonymous transaction becomes linked to indentifiable person so the seller has to comply with data protection act to keep that data. often this is the good reason to not ask for all that info in the first place.

its not the end of the world, its not going to change much for companies of substance or that already do lots of EU trade. its a bugger for small traders and hobbiest who now have to effectivly become small businesses in terms of their admin overhead. many just wont bother. many will go on to platforms that deal with the location informaion, so losing independence. all so some country can collect a few pennies VAT. meanwhile the core loophole with VAT on goods as exploited by the large companies goes on regardless.

Deleted member 22389 · Dec 30, 2014

beorhthelm said:
HMRC advice, search for "Circumstances where the presumptions don’t apply" (and the presumptions are genious too, opening the option for VAT tourism if/where its worth it).

what you are missing is firstly that unless you have a certain turnover, you dont need to be VAT registered. now anyone potentially selling in EU must register. secondly, if that the information is not automatically at your disposal for digital services. there's no need to know a customers address if you simply accept an paypal payment and they download a file. instead of a simple payment processing and auto-release data, one now needs to extract address, IP, phone number, bank details from the customer, to prove where they are.

and then keep those details, another side not covered much, a previously anonymous transaction becomes linked to indentifiable person so the seller has to comply with data protection act to keep that data. often this is the good reason to not ask for all that info in the first place.

its not the end of the world, its not going to change much for companies of substance or that already do lots of EU trade. its a bugger for small traders and hobbiest who now have to effectivly become small businesses in terms of their admin overhead. many just wont bother. many will go on to platforms that deal with the location informaion, so losing independence. all so some country can collect a few pennies VAT. meanwhile the core loophole with VAT on goods as exploited by the large companies goes on regardless.

Think you summed this up perfectly.

Westdene Seagull · Dec 30, 2014

beorhthelm said:
and then keep those details, another side not covered much, a previously anonymous transaction becomes linked to indentifiable person so the seller has to comply with data protection act to keep that data. often this is the good reason to not ask for all that info in the first place.

And it could also invoke the necessity of complying with PCI-DSS rules - a hugely technical and expensive overhead for small businesses.

Herr Tubthumper · Dec 30, 2014

Getting back on topic, it seems Bandcamp have added functionality to their software and provide the tax info with the other data their service provides.

https://bandcamp.com/help/selling#eu-vat-digital. Check the "What about taxes" section.

As mentioned before I'm struggling to understand how this will hugely impact musicians and by extension small business as 1) if you are above-board then you are already accounting for your turnover and filing a self-assessment (and declaring personal and business taxes anyway) so this VAT form is no hardship especially given the Bandcamp functionality or 2) if through choice you're flying under the radar then it's not going to affect anything.

Also. Whilst everyone knows I'm pro-EU and have a pro-EU agenda I'm much much more pro-music. If something was to impact significantly on music and especially smaller artists I'd support it regardless.

Captain Sensible · Dec 30, 2014

Sounds ok to me. A minor change to close large company tax loopholes.

Herr Tubthumper · Dec 30, 2014

Captain Sensible said:
Sounds ok to me. A minor change to close large company tax loopholes.

Good point made succinctly.

Herr Tubthumper · Dec 30, 2014

spring hall convert said:
Possibly - http://www.factmag.com/2014/12/29/bandcamp-sellers-vat-tax-digital-downloads-from-january-2015/

But I'm noticing quite a few small level musicians/ labels withdrawing from bandcamp on Twitter. It seems a bit OTT when these types are nowhere near making a living from what they are doing.

Have any of these given clear reasons? I'm genuinely interested to know how this affects them above and beyond their current accounting and tax obligations.

Herr Tubthumper · Dec 30, 2014

Westdene Seagull said:
Because micro digital businesses avoid tax on such a large scale that it dwarfs the likes of Google and Amazon ??

How was your time in France?

Buzzer · Dec 30, 2014

Herr Tubthumper said:
Have any of these given clear reasons? I'm genuinely interested to know how this affects them above and beyond their current accounting and tax obligations.

Local musician Chris T-T wrote this on his Facebook page:

https://www.facebook.com/christtuk

I've come across quite a few musicians who, on social media, are saying exactly the same thing. So yes, it is real, musicians are worried about it and they do think it is draconian and will affect their ability to make money from their music.

You and others say that it's just a small administrative issue but people like Chris T-T feel overwhelmed by it and are intimidated by it to the point that they might not sell their music. Maybe they're not as savvy as some people on here when it comes to tax forms but should they really HAVE to be, just to sell a few records? It's extremely sad that any musician feels that they might quit because of petty bureaucracy and my gut feel is that small businesses and hobbyists shouldn't pay the price for the failures of the big corporations.

Herr Tubthumper · Dec 30, 2014

Buzzer said:
Local musician Chris T-T wrote this on his Facebook page:

https://www.facebook.com/christtuk

I've come across quite a few musicians who, on social media, are saying exactly the same thing. So yes, it is real, musicians are worried about it and they do think it is draconian and will affect their ability to make money from their music.

You and others say that it's just a small administrative issue but people like Chris T-T feel overwhelmed by it and are intimidated by it to the point that they might not sell their music. Maybe they're not as savvy as some people on here when it comes to tax forms but should they really HAVE to be, just to sell a few records? It's extremely sad that any musician feels that they might quit because of petty bureaucracy and my gut feel is that small businesses and hobbyists shouldn't pay the price for the failures of the big corporations.

Whilst I agree with most of what he and you have written I'm struggling to get my head around the additional burden. Chris must already be dealing with and filing accounts and self-assessment for overseas sales so I don't understand why this is causing folk to be overwhelmed? It is extra admin, I agree, but if you can complete a self-assessment then VAT, and cross-border VAT, is an absolute doddle especially as Bandcamp provide the data. I wonder if it's more to do with previously VAT unregistered folk simply thinking VAT (which is currently an unknown to them) is a huge burden?

That said Maybe a level should be applied to remove cottage industries from this law? (Edit: just realised this might not work as it will impact on a country's domestic VAT)

As an aside I like Chris TT and have been to a couple of talks on music and politics which he has been on the panel of.

Buzzer · Dec 30, 2014

If you have to register for VAT by virtue of even €1 of sales to EU then all your outputs then need to have VAT applied to them. Musicians will have to charge 20% more to UK buyers overnight. It's not just administrative. It's forcing prices up with no gain at all to the musician.

Westdene Seagull · Dec 30, 2014

Herr Tubthumper said:
How was your time in France?

Lovely thank you. I went through immigration checks at Newhaven on the way out, at Dieppe on arrival and exactly the same again on the way back. No big deal and little delay so the argument of us leaving the EU making life difficult because of border checks is utter rubbish as they are already there run by both the UK and France.

Buzzer · Dec 30, 2014

And just to add that on bandcamp there's a tradition of pay what you feel is the right price. If I as the buyer forget to add VAT onto the sale then the musician will instantly lose 17% of the money I paid straight to the taxman. It's patently unfair.

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