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  1. #1
    Join Date
    Mar 2001
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    164

    * How to charge for VAT?

    How do you guys in the UK/EU actually charge for VAT on sales? Since you only charge VAT on UK sales (if resident in the UK) and EU sales that are non-vat registered this is a bit of a mess at the cart/order form stage.

    In the case of forms do you simply write code to redirect to a VAT and a non-VAT order page? In the case of a cart how do you differentiate between a registered and non-registered EU business?

    Or are there better ways?

    Don't you just love tax authorities?!

    --
    Dr S

  2. #2
    Join Date
    Aug 2004
    Posts
    1,461
    I'm from Germany and we have the same VAT law here... To be honest I just charge them the same fee as anyone else and say 16% VAT included for EU customers. Then I pay 16% VAT on all EU payments (90% of my customers are outside the EU so it`s not a big deal...). Note that you have to charge UK VAT for all EU customers while I have to charge the 16% German sales tax for all EU customers (unless they give you a valid VAT ID, of course). Maybe we should all move to the country with the lowest VAT in the EU
    Last edited by thomas.smith; 06-27-2005 at 09:08 AM.

  3. #3
    Join Date
    Mar 2001
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    164
    To be honest I just charge them the same fee
    Yeah, well you may have a point there, I anticipate business will be mainly english-speaking and that actually is mainly non UK Its a 17.5% hit here in the UK

    Maybe we should all move to the country with the lowest VAT in the EU
    Not wanting to start a flame war..........

    You could be right. One of the (other, there are so many) beefs the French have with us is the level of Corporate taxation. Although now the "problem" is from the new entrants to the East

    Thanks Thomas, much appreciated. Best wishes to Germany (I worked in Frankfurt for a while)

    --
    Dr Strangelove
    (No I'm not Donald Rumsfeld!)

  4. #4
    Join Date
    Apr 2002
    Posts
    447
    One of the things we are discussing quite heavily concerning VAT is 2checkout payments.

    When 2checkout recently started their policy where 2CO is the authorized retailer and their "Buy from 2CO", we then decided (with our accountant's advice) that if this is the case then we only have one client (2co) and technically 2co are selling our service on to others that are not *really** our clients and seeing as they are in the US, no VAT

    We have informed our local tax office of this, and sent them all the relevant information from 2co and are awaiting their reply

  5. #5
    Join Date
    Mar 2001
    Posts
    164
    ....discussing quite heavily concerning VAT is 2checkout payments.
    Hey, Deefer I do loke your style. Although not an accountant my experience suggests that a) thats a great argument he has raised there, b) it looks technically correct, c) VAT will argue against it and disallow, d) you would then have to challenge them in Court, e) they would probably lose.

    ....but are you preared to do so? VAT has had a hard time in various Court battles recently, as you may well know if you watch the financial bits in the papers, or even read the VAT Notices if you get them with your returns)

    Best of luck and keep us posted

    --
    Dr S

  6. #6
    Join Date
    Aug 2004
    Posts
    1,461
    I talked to a lawyer about 2CheckOut. He says that it depends on the customer's view. That means if the average customer would think he has a contract with me he has the contract with me. The lawyer was looking at my page and 2CheckOut and he said the customer was having the contract with me and not with 2CheckOut and therefore 2CheckOut was just the payment processor and I should pay VAT for EU customers.
    The lawyer also said it depends on how I advertise the service and how I talk in emails etc. If I don`t make it clear to the customer that he has the contract with 2CheckOut from the beginning the customer has the contract with me, not with 2CheckOut.

    Afterall: If you have 90% US customers then is it worth getting into trouble for a few bucks ? Nope ! I'd rather pay the VAT for customers who pay through 2CheckOut. The EU does not consider 2CheckOut a reseller.

  7. #7
    Join Date
    Apr 2002
    Posts
    447
    2co are not a payment processor, which aids the argument we will have with the VAT office

    "Vendors should represent 2CO as an authorized retailer or out-sourced vendor solution, not as a "credit card processor" or "payment gateway.""

    We have chosen to represent 2co as an authorised retailer. When a client buys our server they "buy from 2checkout"

    We now generate one invoice to 2co for every payment they make to us.

    One invoice generated to 2co, one payment from 2co.

  8. #8
    Join Date
    Mar 2001
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    164
    The EU does not consider 2CheckOut a reseller.
    Just off at a bit of a tangent......while the EU is trying to harmonise VAT issues, is the law the same accross all EU countries. Or does that argument work in UK as well as D?

    I dunno

    "Vendors should represent 2CO as an authorized retailer or out-sourced vendor solution, not as a "credit card processor" or "payment gateway.""
    Why do 2CO insist on this representation? What is THEIR legal need?

    --
    Dr S

  9. #9
    Join Date
    Aug 2004
    Posts
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    >Just off at a bit of a tangent......while the EU is trying to
    >harmonise VAT issues, is the law the same accross all EU
    >countries. Or does that argument work in UK as well as D?

    Most of the national laws are based on EU laws. I would say most of the VAT laws are pretty much the same in all EU countries. There are a few differences. They might accept 2CheckOut as a reseller in some EU countries. At least in Germany it depends on contractual law...it depends on whom you have the contract with - and that depends on what an objective average customer would think. I guess its pretty much the same in all EU countries.

    >Why do 2CO insist on this representation? What is THEIR legal
    >need?

    Visa and Mastercard do not accept them as a payment processor. I guess you need to have a custom contract with Visa/Mastercard in order to be a payment processor. That is why 2CO needs to be considered as a reseller...because Visa/Mastercard does not accept them as a payment processor.

    One thing that I find kind of wired: If 2CO say they are a reseller: What gives them the right to refuse payments if their customer doesn`t pay ? I mean for example if the customer's CC fails 2CO would still be obligated to pay you as they are your customer and it is not your problem if their customer doesn`t pay. That is like when I am holding back the payment for a dedicated server because my customer's don't pay me... That is just one thing about 2CO that is wired. Why do they refuse payments if the customer's CC fails. If they are a reseller as they claim they have no right to do that.

  10. #10
    Join Date
    Mar 2001
    Posts
    164
    One thing that I find kind of wired:
    I guess you meant weird [just joking: mein Deutsch ist sehr, sehr slecht!]

    Seriously, you have good points there. I wonder if 2CO have ever been tested on this?

    And where might juristiction be in all this? UK? Germany? Delaware (Ithink that where 2CO are)? .......and then ther's federal/state law

    Anyway I'm in danger of making this complicated
    --
    Dr S

  11. We use modernbill.

    you can set different rates of vat for the country of residence. reports that are supplied in modernbill are adequate enough, but as back up we duplicate them into excel format.

    Chris
    Affordable UK Hosting - 99.9% Uptime and 24/7 Support

  12. #12
    Join Date
    Aug 2004
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    Originally posted by Dr Strangelove

    And where might juristiction be in all this? UK? Germany? Delaware (Ithink that where 2CO are)? .......and then ther's federal/state law

    Well, if I don`t pay VAT for 2CheckOut payments the German government would kick in my door so I would say the US gov may accept them as a reseller - however, I still have to pay VAT here in Germany as the German government may not accept them as a reseller.

  13. In the UK you only need to pay tax if your companies turnover is £37k or more. If it goes beyond £37k then you must pay tax on that also. To pay tax in the UK you must apply for a business card with a bank, then get a VAT Number. Then obviously tot up all your tax, then pay it.

    In the UK you only pay tax on services in the UK. So 17.5% of whatever your selling. However if you sell anybody else (Even the Republic of Ireland) then you do not need to pay tax, and with web-hosting obviously there is no import/export tax.

    Simple eh? lol

  14. #14
    Join Date
    Aug 2004
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    >In the UK you only need to pay tax if your companies turnover is
    >£37k or more.

    In Germany there is a similar law. However, only VAT taxable income counts. That means you can even make like 100 k of sales to US customers and it won`t count because they are not taxable... Guess that may be the same in the UK.

  15. #15
    Join Date
    Oct 2004
    Location
    Germany
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    Let's all move to Liechtenstein (in Germany). You don't have to pay any taxes there.
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  16. #16
    Join Date
    Mar 2001
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    Let's all move to Liechtenstein (in Germany)
    Yup. Good idea. Though Liechtenstein is a separate state and surrounded by Switzerland and Austria

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