Hi!

Our company is based in Finland, EU and we sell shareware. I've tried to read about VAT rules for EU companies, with no success. Today I called my local tax office. This is what they said (which i don't belive):

If our company sells to a consumer or company from a non EU country I have to look up how their VAT system works, and pay the VAT to that country. This means that I have to call ALL non EU countries' tax offices and ask what and where I should pay the VAT. Yeah right.

If our company sells to a consumer from an EU country I'll have to register our company as a VAT payer in that country. This means that I'll have to register us as a VAT payer in all the EU countries.

If our company sells to a company from an EU country and they provide us with a VAT ID, we don't need to pay any VAT, else we do.

This I was told:eek:

This is how I think it is:

If our company sells to a consumer or company from a non EU country we don't need to pay any VAT.

If our company sells to a consumer from an EU country we need to pay VAT according to this country's VAT percent. And we need to pay the VAT to our country's tax office.

If our company sells to a company from an EU country we need to pay the VAT according to this country if they don't provide us with a VAT ID. And we need to pay the VAT to our country's tax office.



Can somebody tell me how this works???


Thanks!
Simon Björklund

Well apparently, (according to UK Customs & Excise) you only have to charge/collect and pay the VAT if you exceed the VAT thresshold for that country.

As you are in Finland, this means that you can quite happily sell up to about £56,000/year (Sterling) worth of games to the UK without having to register and charge VAT on your game. Once over that threshhold, you are required to register and deal with the VAT issue.

Out of curiosity, how much are you allowed to make/year without having to become VAT registered in Finland?

-Z-

Originally posted by Zoggles
Well apparently, (according to UK Customs & Excise) you only have to charge/collect and pay the VAT if you exceed the VAT thresshold for that country.

As you are in Finland, this means that you can quite happily sell up to about £56,000/year (Sterling) worth of games to the UK without having to register and charge VAT on your game. Once over that threshhold, you are required to register and deal with the VAT issue.

Out of curiosity, how much are you allowed to make/year without having to become VAT registered in Finland?

-Z-

We can only sell up to 8500 euro/year. So that won't solve my problem:)

Depends how many you are likely to sell to Finland. I have no idea what all the other threshholds are, but say for instance that France, Germany, and Italy are all around the 20,000€ mark, that would mean that you could sell up to £56,000 to the UK, up to 20,000€ to France, up to 20,000€ to Germany up to 20,000€ to Italy and up to 8,500€ to Finland without having to deal with VAT.

-Z-

Originally posted by Zoggles
As you are in Finland, this means that you can quite happily sell up to about £56,000/year (Sterling) worth of games to the UK without having to register and charge VAT on your game.
I think he still has to pay Finnish VAT on those sales, though!

@karbjork,
If you use a registration service, they will take care of the VAT stuff for you.
You would then sell to "RegService" (and pay no VAT since you sell to a company, even if you are VAT registered), who sells to the customers (adding VAT where needed).

Originally posted by Norbyte
I think he still has to pay Finnish VAT on those sales, though!

@karbjork,
If you use a registration service, they will take care of the VAT stuff for you.
You would then sell to "RegService" (and pay no VAT since you sell to a company, even if you are VAT registered), who sells to the customers (adding VAT where needed).

Yes this is what we do. 2checkout.com and eSellerate resells our software. And they are both located in USA. So do EU companies need to pay VAT when a customer (the resellers) are from USA?

Originally posted by karbjork
So do EU companies need to pay VAT when a customer (the resellers) are from USA?
No.

Since you are based in the EU, you might want to make sure your resellers comply with the new tax laws and add VAT to EU sales.
It's of course their problem to do so, but if they don't (and you know of that) you could get in trouble with your tax office...

VAT is a complex and serious issue and you really, really need to consult an accountant. Failure to conduct VAT affairs properly is considered to be a pretty serious offence so it isn't something you want to get wrong.

An accountant will be able to easily handle VAT registration in the various countries you trade in and will also help you to offset any business expenses against tax (thus saving you some tax).

Most accountants will be happy to give an introductory 1 hour chat to help you understand what they can do for you and what the likely cost is. That will allow you to work out if you can afford their services.

Originally posted by obscure
VAT is a complex and serious issue and you really, really need to consult an accountant. Failure to conduct VAT affairs properly is considered to be a pretty serious offence so it isn't something you want to get wrong.

Yes this is true.

There must be other EU companies that sell software through the internet=) I suspect that 90% of these companies don't bother to pay any VAT at all, because of the bureaucracy.

Originally posted by karbjork
Yes this is what we do. 2checkout.com and eSellerate resells our software. And they are both located in USA. So do EU companies need to pay VAT when a customer (the resellers) are from USA?

Well, eSellerate is a reseller and 2checkout.com is a merchant account provider. In the first case they are liable for the VAT and in the second case you are.

Originally posted by karbjork
Can somebody tell me how this works???

Using my Splinter Cell commando skills to the fullest, I have managed to sneak into the offices of the EU and "obtain" a copy of the source code that powers the chips in the heads of tax officers. After careful study, I have extracted the rules for EU-based companies, presented here for your viewing pleasure:

if (customer == entrepreneur based in the EU)
{
The VAT is owed in the customer's Member State.
The customer owes VAT at the rate applicable in
the Member State where he is based. However, the
supplier should be in possession of the customer's
VAT identification number.
}
else if (customer == non-entrepreneur based in the EU)
{
The VAT is owed in the supplier's Member State.
The supplier owes the VAT.
}
else if (customer == entrepreneur or non-entrepreneur
based outside the EU)
{
No VAT is owed
}

[edit: I forgot to mention, these rules only apply to EU-based companies that are VAT-registered. Usually if you are a small company, you are not allowed to charge VAT. In that case, you don't have a VAT ID number. Consult with your local tax office for details.]

*LOL*

Thanks for the laugh Matthijs, and welcome to the forums for a second time (you were lost in the crash weren't you?)