As of the 1st July all companies are required to charge VAT at the rate relevant to the purchasers home country....

Buy now and save 17.5%.....:(

yep saw that the other day :(

ebay wont be such a good bargain any more!

so are you saying that if you buy something from say the US they have to charge VAT?
and what then they have to pay it over to the UK government?

robski

Yeap

Robski, I don't think so as VAT is charged as normal by customs, not at point of sale. Just like it would be if you bought some DVD's in the states and had to declare them at customs.

So it's not physical stuff, but digital stuff(such as music downloads) that has VAT on it.

http://www.ecommercetimes.com/perl/story/21693.html


[Edited by Neil Smalley - 19/06/2003 21:10:00]

Our audtors got in a right strop with us this year over this.

Didn't like the fact that we hadn't paid the VAT on around 10 grands worth of (purely digital) purchases from the States :)

Well :confused: now. Somebody help me out here..

As an example:

I buy an small software app over the web, say WinZip for 20 USD.

I'm dealing with a US company. How can C&E force Winzip to make me pay VAT?

Chris,
I suspect they'll have to do a check on where you're buying from.
I.e
If IP address=from UK then
price=cost*17.5%
End if

It's going to make E-commerce really tricky.

Right, but how do HMC&E go about collecting the VAT off the US company? The US company isn't VAT registered :confused:

Not a clue.
Maybe US companies will ban downloads to EU countries from a US site.

My point exactly. What powers do C&E have to go after a US company if they don't charge me VAT?

Do they come after me?

Running off IPs is flawed too. I was in London yesterday and anyone looking at the IP logs for ScoobyNet would have seen my traffic originating from an Australian IP.

[Edited by ChrisB - 20/06/2003 09:34:34]

Hmm interesting.

I cant see how they are going to make this work really.

The UK government have no authority to force a non UK registered company to pay VAT to them, unless they have a Tax agreement with the other countries government (which I have never heard of for VAT, but I may be wrong)

Hitting ebay etc is a wierd one, as the sale of second hand goods has always been VAT free, I could see this one being taken to court myself.

Im struggling to see how they are going to put this into practice.

If I setup a web server in the US and the UK government told me to charge tax for them I would tell them where to go.

robski

OOO just thought of another "interesting" one

what about insurance which has historically been VAT free (as second hand goods)........

are they going to force Insurance companies who sell via e-commerce to charge VAT?

robski

Just started to read from here:

http://www.hmce.gov.uk/business/elec...e-services.htm

Ah, it's starting to become clearer. There's a new VAT scheme to combat "missing trader" fraud where the VAT is never paid on goods imported from the EU. In these cases, it's the responsibility of the purchaser (usually a VAT-registered UK company) to ensure the VAT has been paid or they will be liable for it themselves. Maybe they're cunningly extending this to US imports to private individuals.

Got a note from HMC&E the other day: "New VAT Rules on 'joint and several liability

This leaflet has been sent to all those in the trade sectors affected by a fraud called 'missing trader intra-community fraud' (MTIC fraud). It tells you about the new rules and a two-month period of consultation that is taking place.

If you buy or sell mobile phones, computer chips, or related equipment in the course of your business you may now need to be more careful about who your suppliers and customers are.

From 10th April 2003 new VAT rules mean that if your supplier or someone else in that supply chain fails to pay the VAT to Customs and Excise you may be liable to pay it yourself. This is called 'joint and several liability'. This will only happen if Customs believe you knew (or you had reasonable grounds to suspect) that the VAT had not or would not be paid.

The new rules are part of changes in the law, announced in the 2003 budget, to crack down on MTIC fraud involving mobile phones and computer chips.

MTIC fraud is where someone registers for VAT specifically to purchase goods VAT free from another member state of the European Union, sells them at a VAT-inclusive price in the UK, and then goes missing without paying the VAT to Customs.

The new rules aim to put serial abusers of the VAT system out of business by discouraging people from dealing with them, and so honest businessess to compete fairly"

There's also a suggestion on HMC&E's web site that US companies will have to register for VAT in an EU member state. Needless to say, they'll probably all register in the state that has the lowest VAT. I believe this is why AOL have set up AOL Services Europe SARL registed in Luxembourg, to bill their AOL UK customers.

http://www.hmce.gov.uk/news/nat-nr-3303.htm

Of course for B2B transactions it makes no difference what the rate of VAT is, but for B2C it's critical. If you're a business, I have no idea what you do about recovering the VAT if it's been charged at another member state's VAT rate.

To claim back vat paid at another country's vat rate, I believe you fill in the details on the vat return and claim it back as normal. There are boxes for this on the return. They refer to it as 'Acquisitions from other Member States' or something like that. Never done it myself though.

It still is. They're charging VAT on the service (i.e., the eBay charges) not on the actual sale of goods themselves.

As far as eBay goes, if you are VAT registered and provide details to eBay you will not be charged the VAT on their fees. If you don't supply your registration details you will be charged the VAT but will not be able to reclaim it. This assumes you are selling on one of the EU eBay sites, although they have only implemented the VAT on their 2 largest EU sites on the others they are absorbing the VAT.

The applicable VAT rate is where the service is used not where it is supplied from.

It appears the US are refusing to implement the EU regulations until 2004 at the earliest.