I noticed we actually had a fraudulent order the other day (already!) on swreg.org. When I was looking at it I noticed that they'd been charged another 3 bucks on top of the $19.95 the game is advertised at. I sat bolt upright and stared at it. I can't help but noticing that even though we've now had over 5000 downloads in the last week, we haven't had a single sale with this new VAT thing on top.

Quick info: Shaven Puppy Ltd (trading as Puppy Games) is not VAT registered; we don't earn enough money. We're a UK company.

In the UK it is illegal to advertise wares to consumers exclusive of VAT. However, we aren't selling games for $23, we sell for $19.95 - VAT or no VAT. However, we can't charge VAT because we're not VAT registered. But it seems that swreg is charging VAT to our customers. Here's the exchange I had with swreg:

MeWe've noticed you charged VAT to a (probably fraudulent) customer of ours pretending to be from Denmark but actually from Poland. We're not VAT registered - what do we do with the VAT you're collecting?
swregYou do nothing with it - we pass it to UK Customs each quarter.

However the order you refer to is a Failed order so completely irelevant.
meOh ok, thanks.
Do we need to update our site to tell everyone that the price of $19.95 is now exclusive of VAT then and that the customer may be charged VAT? I'm not really happy about the situation, because we're quite able to sell the software in the UK VAT-free for £12-ish as we're not VAT registered. It seems like the punters are being charged when they shouldn't be.
swregWe have no control over the law I am afraid.

You would need to tell me what linking method you are using to answer your question properly, sorry.
meI'm pretty sure the law says that you only charge VAT if you're VAT registered - and we're not, because we don't meet the threshold for UK VAT registration (by a long way!)

I believe the technical sequence of events is that you are selling a product from us that you have purchased from us without VAT; even if you are VAT registered I don't think you're obliged to charge VAT on that product. Would you check with your accountants?

The link we use for purchase is a direct one: https://www.swreg.org/cgi-bin/s.cgi?s=30964&p=30964afwin32&v=0&d=0&q=1
swregYou are not the legal retailer, we are. It has to be that way to satisfy VISA and Mastercard rules. Please see the early paragraphs at http://swreg.org/pages/author_agreement.html with regards to our relationship. It has not changed but the law has from 1st July on Internet software sales.

If you wish to discuss this further please join the SWREG Yahoogroup by sending a blank e-mail to swreg-subscribe@onelist.com where all your VAY questions can be answered.


I just visited https://www.swreg.org/cgi-bin/s.cgi?s=30964&p=30964afwin32&v=0&d=0&q=1
and it tells EU customers how much they will be charged on that very page - you need do nothing.
meActually Steve we believe this is definitely incorrect and your information to us is inconsistent here.

If you are charging VAT on our sales then you MUST pass the VAT back to us, even if we are not VAT registered. We will have to adjust our price to $16.98+VAT (ie. $19.95 inc VAT, which we are required to state). This means you will be charging the customers $19.95, of which $2.97 is VAT. You should be passing the entire $19.95 back to us as we are at the root of the supply chain. The VAT then becomes our problem. As we are not VAT registered we do not pass the VAT on to HMC&E; but nor are we able to claim VAT back on company purchases. This is how it has always worked in the UK and the recent law change has no effect on this state of affairs.

I'm not joining a mailing list to discuss this further; I need to talk to someone on the phone if this issue isn't resolved as I expect.
swregI am sorry to get 'heavy' over this but we know exactly what we are doing and it is correct.

I suggest you bring this up with your VAT Office if you are not happy or visit their website.

We have spent rather a lot of money on legal advice to try to avoid this issue and in fact are fairly expert on VAT issues anyway as we do publish Intrastat VAT specialist software ourselves.

One point I can make to you - they are *our* sales. Your sales are to us, ours are to the customer. We are the retailer.

The scenario you give is totally invalid - please speak to an accountant or VAT Office.

So I get a phone call a few minutes later from Steve. This really is the situation: if you are not VAT registered in the UK, you will either have to overcharge your customer, or take a loss of 17.5% which you are now unable to recoup through VATable business expenses. (If your company is VAT registered, you claim back the VAT on all purchases made by the company on which there is VAT).

swreg appears to be collecting VAT but then subsequently gives it straight to HMC&E instead of back to us. Steve of swreg claims that this is exactly what they're supposed to do, and that yes, it's ****ed up, proper.

There is only one solution that doesn't leave either a) me ripped off or b) the customer ripped off and that is that we have to get VAT registered, in which case we would claim the VAT back directly from swreg and then we'd send it to HMC&E instead of them. There's one small snag: HMC&E are terribly reluctant to allow you to register for VAT if you don't meet their threshold (a staggering £56k a year - I'm not likely to turn over that much ever again). We know we can't penalise the customer - they'll just walk. Basically this new scheme is seriously penalising small businesses from attempting to conduct business over the internet. It's particularly galling, because not only have the government in the UK absolutely shafted the consultancy & contracting market for IT staff, resulting in me and 50,000 others being out of work for *years* on end, they have now started to attack our new businesses that we've just managed to claw out of the fecking earth with our bare hands to try and grub up an existence.

The reason that this has really gotten my goat is because if I clicked buy now and it said $19.95 all over the website but subsequently it tried to add VAT on the shopping cart I'd tell the authors of Alien Flux to take a flying f*ck at a rolling donut and stick their shareware game up their arse. Which might well be why we've mysteriously had no sales all week despite nearly quadrupling in download rates.



Cas :)

Would this be a good time to offer Paypal as an optional payment method - since selling through paypal it's still your sale and VAT can be bypassed?

I *know* not everyone has it, and they're not as trustworthy in some ways, but otoh I know plenty of people in lots of different countries who *do* have it and would certainly rather use that than suffer the 17.5% hike.

Or shall we organise a field trip to bang on the door of a customs office with signs and try to get some coverage and sympathy? :)

(Are BMT Micro still offering a handle-your-own-VAT option?)

Yeah the whole system sucks really, but even becoming VAT registered doesnt solve too much. You would still have to pass the VAT on to HMCE, just as SWREG are.

In effect, you are selling the game to SWREG for $19.99 (less their sales charge), they are selling it to the customer at $19.99 + VAT, and retaining the $19.99, the customer is in effect just paying $19.99 for the game and VAT to HMCE via SWREG's accountants.

If you are VAT registered, you would be selling your game to SWREG at $19.99 + VAT (less their sales charge), and giving the VAT to HMCE yourself. SWREG would be selling to the customer at $19.99 + VAT, but wouldnt be paying HMCE as they would offset the VAT paid by the customer against the VAT they paid to you, resulting in a $0 balance.

The only advantage to being VAT registered, is that you would be entitled to claim back any VAT on business purchases (computer equipment etc). You will still have to pass on the VAT from every sale to HMCE regardless of whether or not you exceed the thresshold though. For the extra accounting work involved, you may save yourself a couple of hundred pounds a year, but thats assuming you are still getting the customer to pay the extra VAT on top of your current price.

Whichever way, the customer (going through a large company as the retailer) is forced to pay the extra VAT.

PayPal seems like a very nice alternative option and would allow private sales, which would be VAT exempt (so long as you stayed below the thressholds) and is certainly something I will be offering as a solution to customers wishing to avoid the tax.

In fairness this law also hurts the companies like SWREG because they suffer the loss of all their suppliers sales combined, and they have to deal with all the VAT accounting etc. If 1000 indie's all lose 1 sale per month due to this extra VAT charge, then SWREG is losing 1000 * $2 sales charge etc per month.

Companies like SWREG may also start suffering if more and more indies start taking it upon themselves to trade privately to avoid the tax.

Perhaps add additional methods of payment options for those in the UK - eg allow them to pay by cheque or by phone, paypal etc. You could set up an account at somewhere like worldpay and use that for taking telephone credit card payments etc. Of course, all this is extra work on your side and would need to be weighed against the cost of losing a few sales.

I'm wondering if the whole VAT issue can be avoided if the Visa and Mastercard rules change in such a way so that SWREG etc don't actually purchase the game from you as a reseller, but act more as an agent.

I'm sure that at some point in the near future someone will find a way around the system allowing indies and small companies to sell their own goods and just deal with the CC processing and charge a certain transaction fee to the company involved as well as offering a few automated services like email confirmations with URLs etc.

Actually thinking about it, it still seems crazy that SWREG etc are 'reselling'. Heck, they take the money and pass the customer a URL back to your webspace (think of it like a shop) to collect their purchased product. It's almost as if they are just acting as a employee/cashier in your own store. They just make a small commission on the sale instead of receiving an annual salary.

Gonna leave it there cos this feels like I'm waffling on - heh especially since I'm not yet selling anything myself.

-Z-

papillon
(Are BMT Micro still offering a handle-your-own-VAT option?)


Yes.

you are charging VAT on our sales then you MUST pass the VAT back to us, even if we are not VAT registered.
I'm no expert on the VAT issue (who could be with all the F'd up rules in place), but my understanding is that if you are a business and your intent on buying a product is strictly to resell, you are not obligated to pay VAT on that purcahse. Since the VAT only needs to be collected once, it is collected on the final purchase, and only the final seller (SWREG) needs to deal with the VAT.

Originally posted by Zoggles
Actually thinking about it, it still seems crazy that SWREG etc are 'reselling'. Heck, they take the money and pass the customer a URL back to your webspace (think of it like a shop) to collect their purchased product. It's almost as if they are just acting as a employee/cashier in your own store. They just make a small commission on the sale instead of receiving an annual salary.

They need to do this because of the Visa/Mastercard rules. Their term for doing otherwise is "fronting". As I understand it, their reason for not allowing you to "front" is that it opens up all kinds of doors for abuse. If a problem comes up, the company that processed the charge could say "not my problem...all I did was handle the transaction...go talk to so an so". Then you get a big mess of everyone pointing fingers at each other. By disallowing fronting, they have one person who has the final burden of legal responsibility to the credit card company. If the customer can't work things out, the credit card company can just say to the processor "look...this is your problem. WE want our money, and you can figure out how you need to deal with it".

It's kind of like when you build a house. If you want to be your own (my mind's gone blank...what do they call it...the foreman...the person who coordinates everything for construction) foreman, you can save some money, but then if something goes wrong you get a bunch of finger pointing. If you hire a foreman and something goes wrong, you can say "I don't care who did what...this isn't how my house is supposed to be, and it's YOUR job to fix it!"

> They need to do this because of the Visa/Mastercard rules.

Sure I appreciate this and even made mention to it in my post. I wasn't aware of the terminology in question though (fronting).

However.. a closer example might be that of a travel agency. They do do 'resell' flights. They act on behalf of the airlines and pass on the money (less their commission) to the airlines. They do not buy the seats from the airline and then try to then sell them to the public.

Likewise with SWREG and so on.. whilst they say they are purchasing the game from you, and then selling to the customer themselves, why then do you not get paid upfront by SWREG? Even treating it as a 'they purchase on demand' system, they still take money from the customer for something they have not yet purchased from you - something which they do not therefore actually have. Further, even when they have sold to the customer, what have they sold? A redirection email to the original supplier to pick up the goods for which they have acted purely as a cashier. They are not storing the goods they do not even come in contact with the goods themselves. Is this not in effect an agent as opposed to a reseller?

Sure, if there is a problem with the payment (maybe they accidentally take it twice). The customer is either likely to then approach you (the supplying indie devver) to complain - in which case, you get in touch, or urge the customer to get in touch with SWREG etc, or the customer goes to them directly. Either way, the same applies with an agent or 'front', if a payment for a flight via a travel agent is taken twice, likewise you go to the travel agent to sort it out, you dont go to American Airlines and complain that Total Travel messed up the CC payment. Doesn't really change anything as far as I can see.

In the 'foreman' example, in which you are employing the foreman to deal with a certain aspect of the job, you are paying him to do so. You are not selling him the house to build so that you can buy it back when finished. With SWREG etc, you are paying them $2-$3 per transaction for the work they do on processing the payment etc. If it were any other way, surely it would say that they will 'purchase' the game from you at a reduced rate so as to cover their costs of payment processing etc.

There must be something simple to all this which I am overlooking.

-Z-

You are looking at this from the wrong perspective. Don't think about our perspective. This comes from Visa/Mastercard's perspective. They deal in trillions of dollars of transactions from thousands of merchants in a field that is ridden with fraud (just forget for a minute that the fraud is partially their fault for failing to implement better technologies). When it comes down to them having a problem, the last thing they want to deal with is a bunch of finger pointing. They want an entity who they know is directly responsible to them. If they need to go to court over a dispute, they want one company they can deal with. They don't want 10 different companies, and to have to have their lawyers deal with 10 different sets of lawyers, and then to get into a courtroom and have the judge say "it seems to me the person responsible is not in this courtroom...case dismissed". I think this is the type of scenario you can end up with if they allowed fronting.

Are things possibly lopsided in their favor? Sure, but I guess that's what you have to learn to accept if a small business wants to work with a trillion dollar business.

Regarding houses, now that my brain-block is gone, the term I was looking for was General Contractor. And my building a house analogy was more as follows: You are the person in power...you have the money. You wish to acquire services to have someone build a house, but you don't want a bunch of people to have to deal with. You want one person responsible for getting things done successfully. You hire a general contractor to be this person and just say "get it done for me". Likewise, Visa is the company in power. They have the money, and they would like business to help them make even more. They don't want to be in a situation where they have several business all partially responsible. They what one business that they have to deal with. Except in their case, it's like building thousands of houses simultaneously. However, for each house, they only want one person they have to deal with.

In the case of the airlines/travel agencies, I would imagine that's different since air travel is government regulated (at least in the US...not sure what air travel is like in other countries).

Anyway, the upshot of it all is, we've had to cut the price of our game to $16.98+VAT (ie $19.95 to you), and kiss goodbye to $3 a sale, as if we weren't already hardly making a bean. Because we're not VAT registered we can't reclaim all the VAT we're losing on running the company. So the next step is to try and convince the local VAT office that we need to be registered because we're being penalised unfairly. I'll let you know how we get on. It'll affect all European developers I suppose.

Cas :)

Originally posted by princec
It'll affect all European developers I suppose.
In some EU countries you can register for VAT, even if you are below the threshold, if your business is run full time (and not as a hobby).
Also, the threshold is different in each member state.

Does anyone know any registration services that will not be charging VAT to European customers and are located within North America? Regnow comes to mind, but I am not aware on what they are doing about the VAT tax issue. Anyone care to enlighten me?

Originally posted by princec
Anyway, the upshot of it all is, we've had to cut the price of our game to $16.98+VAT (ie $19.95 to you), and kiss goodbye to $3 a sale
I guess I just don't get it. I see no reason why you should have to lower your price. What good does that do? I reread you post but don't see a reason to do this. Your game isn't $23...it's $20. VAT is a fact of life in europe, I figured people would understand this. When they see the order form, they should see $20 as the price, plus a $3 charge for VAT. Here in the US it's no different. People understand that under certain conditions, you have to pay a state sales tax. They don't whine to the retailer about it. They might go buy the exact same product from another retailer for the same price without the tax, but being that (I imagine) your game is exclusive to your site, they probably don't have any other options for buying it. And on top if it all, SWREG is charging one of the lower VAT rates (17.5%). VAT in other EU contries goes as high as 26% (?), and I don't think it gets much lower (maybe 15% ?).

Perhaps I'm missing something in all of this. Can you clarify your reason for changing your price?

@prinsec,
I agree with LordKronos, VAT is a fact of life for EU citizens.
I don't think you have to worry about losing sales.
As matter of fact, our EU sales hasn't decreased since we started charging VAT.

@LordKronos,
The VAT ranges from 15% in Luxembourg to 25% in Sweden.

OK, I guess I'm just dense (or tired) becuase after rereading your original post AGAIN, now I see what your problem was: "In the UK it is illegal to advertise wares to consumers exclusive of VAT".

However, are you sure this is correct? I did some checking with other web sites.

http://www.rackspace.co.uk/aboutus/vat.php says "All prices on the Rackspace (UK) website are exclusive of VAT. "

http://www.suse.co.uk/uk/business/products/suse_business/openexchange/prices.html lists priced with and without VAT.

Tons of smaller websites do the same thing. In fact, the only company I could find that was selling inclusive of VAT (without saying it was inclusive or exclusive) was amazon.com.uk

You might want to take a better look to make sure your conclusions on the rules are correct.

Originally posted by LordKronos

Perhaps I'm missing something in all of this. Can you clarify your reason for changing your price?

Simply: he wants to advertise the exact price on the webpage and keep it consistent for North American (USD) and European customers. At first glance, it is not appealing to see the Euro price tag more expensive then the USD price, now is it? Since online taxation is relatively a new thing, it is not intuitive -- people won't automatically assume it's VAT that is costing more and accept it as a fact of life.

He rather compensate the price then to make it inconsistent and having the tax added-on in the shopping basket, making it a last minute unwelcomed suprise to the customer.

On a side note: For these reasons above, I'm dropping SWREG and using Paypal for my next game. They don't charge VAT, but a slightly higher rate which is still cheaper then SWREG's lowest rate. Now that I found a third party download link protection solution (there are many listed in the third party developer section at paypal) I don't need them and infact, paypal will be _significantly_cheaper then using SWREG, especially now with the VAT.

mogul.

Originally posted by LordKronos
I see what your problem was: "In the UK it is illegal to advertise wares to consumers exclusive of VAT".

However, are you sure this is correct? I did some checking with other web sites.
You can advertise without VAT if you're targeting companies.

Personally, I think you can get away with non-VAT prices on the website (directed at normal consumers) if the prices are in US dollars. That way you're not targetting EU consumers, they just happen to buy anyway (and get the VAT added).
Of course, I could be wrong...

LordKronos
VAT is a fact of life in europe, I figured people would understand this.


People here (sweden) are used to prices including VAT and I believe that quite a few would think that you´re trying to deceive them. Hopefully they buy anyway...

We will do the same as princec, have one price for all.

princec
So the next step is to try and convince the local VAT office that we need to be registered because we're being penalised unfairly.


I don´t see how that would help, because it´s SWREG that collects the VAT, not you. Or you mean that you should change provider to someone that let´s you handle the VAT? (like BMT micro)

Originally posted by princec
Anyway, the upshot of it all is, we've had to cut the price of our game to $16.98+VAT (ie $19.95 to you), and kiss goodbye to $3 a sale, as if we weren't already hardly making a bean. Because we're not VAT registered we can't reclaim all the VAT we're losing on running the company. So the next step is to try and convince the local VAT office that we need to be registered because we're being penalised unfairly. I'll let you know how we get on. It'll affect all European developers I suppose.

Cas :)

Don't throw this money away Princec, move to BMT Micro. They offer low rates, and you do not have to charge VAT. Have a look at Mike's Retro 64 site to see what's possible using BMT Micro.

[http://www.retro64.com] [http://www.bmtmicro.com]

Alfie

Originally posted by LordKronos
OK, I guess I'm just dense (or tired) becuase after rereading your original post AGAIN, now I see what your problem was: "In the UK it is illegal to advertise wares to consumers exclusive of VAT".

Does this mean that SWREG is actually breaking the law, becuase they're the ones actually selling the product (remember, they're not fronting)?

You register for VAT in the uk only if your sales exceeds GBP 50,000 per annum.

I use ShareIt and they give me the option NOT to charge VAT which is what I use. How could it be different at SWREG I dont know. SWREG can charge VAT on the commission they take from you not from the actual sale of the product because the product is yours not theirs. You are just paying them for providing a service and they can only charge VAT on their service charge NOT on your product!

princec, just move your order processor to ShareIt or somebody else who gives you the option not to charge VAT. SWREG charging VAT is simply illegal.

Originally posted by Norbyte
@prinsec,
I agree with LordKronos, VAT is a fact of life for EU citizens.
I don't think you have to worry about losing sales.
As matter of fact, our EU sales hasn't decreased since we started charging VAT.



Prices have to be displayed including taxes in europe ( at least in france ), we should be happy not to get sued because we're not displaying the *real price* to the customer. The credit card processing services are actually outlaw by trying to be accurate with the legislation, charging VAT is ok, but when done in the rules, actually they are not. ( VAT should be deduced from our price, not added )

I wish i could get the VAT deduced from my selling price, and not added up ( i'd rather lose 3$ than the whole sale )

Yaskifo ( french merchant ) allows the VAT deduced from your final price, they are quite expensive though and the interface kind of suck, but well that might be an ok alternative to the vat problem.


pat.

Here's the rub: they're doing the right thing, from their perspective. They are selling the product, not me. That's the fronting thing with credit cards. They've got a high turnover so they have to be registered for VAT; ergo, they charge VAT on whatever they sell, and have to return this VAT to HMC&E.

The problem is that we are selling them their stock without VAT. I've looked into this in great detail now and they should actually be charging VAT on the profit from the sale, eg. their commission - NOT on the whole product, which was supplied to them without VAT.

I discovered that bit of information because I used to wheel and deal in company motorcycles. Basically, motorcycles are treated as office equipment for tax purposes (unlike cars); you can claim back all the VAT on new motorcycle if you're VAT registered. When you subsequently sell it to a dealer to part-ex it, it's still subject to VAT, and when they sell it, it's still subject to VAT. But if the company buys a secondhand motorcycle from a private punter, there is NO VAT. If the bike is subsequently sold to a VAT registered dealer for £x, there is STILL NO VAT. When the dealer sells it to a punter for £x+profit, they have to sell it for £x+(profit * 1.175) - that's the VAT.

In short I am beginning to suspect that SWREG have been misinformed, as their policy is clearly out of line with existing VAT legislation. Unless I'm completely wrong.

I've got 2 choices: get VAT registered and start recovering VAT on my company purchases; or ditch SWREG and go back to Share*It. That involves changing my keycode generator, which is a bit of a pain.

Cas :)

When they see the order form, they should see $20 as the price, plus a $3 charge for VAT. Here in the US it's no different. People understand that under certain conditions, you have to pay a state sales tax.


actually, this is one of the strange things to get used to on moving to the uk... the fact that you can pick up small items off the shelf, add the tag prices together, fish change out of your pocket that adds up *exactly* to that price... and that's what it costs! :)

unlike in the states, where I have no head for calculating the tax percentages on top, so if I know I've got $1.50 in tag-price in goods in my hand, I'll fish out $2 to be safe.

also helps cut down on the amount of change you've got weighing you down, since it's useful.

Originally posted by papillon
actually, this is one of the strange things to get used to on moving to the uk... the fact that you can pick up small items off the shelf, add the tag prices together, fish change out of your pocket that adds up *exactly* to that price... and that's what it costs! :)

unlike in the states, where I have no head for calculating the tax percentages on top, so if I know I've got $1.50 in tag-price in goods in my hand, I'll fish out $2 to be safe.

also helps cut down on the amount of change you've got weighing you down, since it's useful.

My first purchase in the US was an ice cream, that was displayed 99 cents, i got so mad when i had to pay, it took me 30minutes to understand that taxes was not included in the price ( nobody told me :) ) . The vendor probably thought i was crazy :)

As a european citizen i felt ripped of a couple of cents. My parents had the same feeling when they went on holidays in the US.

I guess that it'll take time to a lot of european customers to get used to the "ripped off by tax" feeling.

pat.

I know ShareIt offers you various options related to how the VAT is collected.

Firstly they can collect the VAT and pay it on your behalf (like swreg).
Secondly they can total the VAT up allowing you to pay it yourself.
Thirdly they can do nothing.

I know this probably wouldn't work but if the Paypal thing can be counted as a private sale then surely it would work with businesses such as Swreg and ShareIt since they are essentially the same?

On a slightly related note, I do quite a bit of trading over eBay and I the only VAT I pay is on the initial listing fees. Now I don't trade as a business on eBay and as I understand it counts as personal income and all I'm required to pay is tax on my income.

Pas maybe you should check out some of the forums on eBay.co.uk to see what they say on the tax issue?

> £x+(profit * 1.175) - that's the VAT.

Indeed, this is seems very consistent with the VAT regs as far as I am aware too.
If that motorbike was sold to the dealer (without VAT) but missing two tyres for £1000
The dealer then sells it for:
£1000 + £70 (tyres) + £400 (what the dealership is adding) then the VAT should only apply to the £470. The dealership then claims back the VAT on the tyres from their supplier and in effect is only collecting VAT on the £400 (which is his own portion of the invoice)

If the bike was sold to the dealership with VAT included, then they would be required to show the VAT portion of thet on their invoice. £851 + £70 + £400 = £1321 + VAT = £1552
This is because, the dealer will be claiming back the VAT on the purchase of the bike, and for the tyres, and is only adding the VAT to his own portion of the bill.
The customer (who might be a private individual or might be VAT registered) may then be entitiled to claim back the VAT on all elements of the purchase, and in turn will pass on the VAT when/if he sells it on.


Advertising a price which is NOT inclusive of VAT, as far as I am aware, is permissible IF you explicitly say that the price is subject to VAT. You will find the same thing in many trade catalogs etc (which are not solely for business to business sales)

Taking a $3 cut just to keep it looking sonsistent is crazy. Why not just put a note next to the price to say that the price stated is Exclusive of VAT which may be applicable to EU residents.


Im glad there are viable options like ShareIt and BMT Micro, as it is my belief that companies like SWREG are vharging VAT where they shuoldn't be. Granted, they are not allowed to 'front' but surely in practice this is what they are doing since they never touch the goods. Charging VAT o!n the $2-3 dollars sales charge would be fine by me, but not VAT on the product that really has not contact with them.

I suppose the closest real-life situation that I can think of where physical goods are involved would be an auction house, where lots of private individuals are the suppliers to a single company who sells back to lots of private individuals. Person A auctions his dining room table through a large auction company. Person B, the successful bidder then pays the Auctioneer, who takes his commission and Person A gets the rest of the sale value.
The Auction company is most likely well above £56K/year, but is VAT applied to the profit (i.e. the commission) or to the whole amount? I'm going to have to try and do a bit of research here, but if anyone understands that scenario and knows of the correct procedure, I would be interested to know.

I have a feeling I may well be phoning up HMCE again in the near future!

-Z-

Originally posted by princec
The problem is that we are selling them their stock without VAT. I've looked into this in great detail now and they should actually be charging VAT on the profit from the sale, eg. their commission - NOT on the whole product, which was supplied to them without VAT.
My understanding is that VAT has to be paid on the whole thing. If they payed you VAT on the $17 you get, then they would have to pay VAT on the $3 they retain. However since they are purchasing the product for the intention of resale, they were allowed to skip paying you the VAT. However, when they go to resell it they have to make up for the VAT that was never paid, thus charging VAT on the whole purchase.

Dang, the more I learn about this stupid VAT the more I agree with a few guys from the ASP who think it's time for another tea party. :)

Speaking of the ASP, are you a member Cas? If so, they just set up a new VAT newsgroup, and you might want to pose this same question there and see what others there think.

Im still digging and just found the following figures which might be interesting to some:

VAT rates
Belgium : 21%
Denmark : 25%
Germany : 16%
Greece : 18%
Spain : 16%
France : 19.6%
Ireland : 21%
Italy : 20%
Luxembourg : 15%
Netherlands : 19%
Austria : 20%
Portugal : 19%
Finland : 22%
Sweden : 25%
United Kingdom : 17.5%

heh it also seems that both of the 'similar activity' examples I have picked both have special circumstances applied to them

VAT-20
14. Special taxation scheme for second-hand goods, art or collection works and antiques
15. Special scheme for travel agents and tour operators

pah. have given up looking around and have sent off an email to HMCE for more clarification.

-Z-

Originally posted by patrox
My first purchase in the US was an ice cream, that was displayed 99 cents, i got so mad when i had to pay, it took me 30minutes to understand that taxes was not included in the price ( nobody told me :) ) . The vendor probably thought i was crazy :)

As a european citizen i felt ripped of a couple of cents. My parents had the same feeling when they went on holidays in the US.

I guess that it'll take time to a lot of european customers to get used to the "ripped off by tax" feeling.

pat.

Companies would probably be forced to lower their prices if they had to include sales tax in the displayed price. Which is why I'm guessing it's not required by law here in the US. The government seems to be more pro-business. :) Though there is one thing that has tax included in the displayed price -- gasoline.

Originally posted by mogul
Does anyone know any registration services that will not be charging VAT to European customers and are located within North America? Regnow comes to mind, but I am not aware on what they are doing about the VAT tax issue. Anyone care to enlighten me?

RegNow is part of Digital River and will be charging VAT. RegSoft and DigiBuy are also a part of Digital River.

Emetrix is US Based and will not be collecting VAT.

Originally posted by Zoggles
>The dealer then sells it for:
£1000 + £70 (tyres) + £400 (what the dealership is adding) then the VAT should only apply to the £470. The dealership then claims back the VAT on the tyres from their supplier and in effect is only collecting VAT on the £400 (which is his own portion of the invoice)
Ding! I finally made the connection. You added £470 value, and you pay VAT on that. Value-Added-Tax. Duh.

That explains why I was getting confused with the differances between VAT and GST.

Not that this clears up anything else, but I feel a little less ignorant now.

I guess for software terms is the initial price added value out of thin air. You run a bit arranging service which arranges random bits worth nothing and tuns them into ordered bits (software) thus increasing the value from £0 to £15 and order handling company resells the game at £20 adding £5 for the service of letting customers buy the game.

As far as I can tell the cumulative nature of VAT means it doen't handle the possiblility of all of the VAT being summed up at the last step (as is being proposed by the resellers, and seemingly required by this new law).

I suspect the EU has decreed that evey person outside it's bounds is a virtual VAT registree (and everybody inside the EU who isn't registered but deals with someone outside the EU is a registree too) and when something enters the EU someone must make it right (I suspect they don't care who).

The reason for not requiring people to register while under the threshold is specificly designed to reduce the problems involved with lots of small people. I suspect the new law simply hasn't been made with the same allowances. They screwed up.

Put me down as supporting the next Tea Party. :)

Hmmm... now that I think of it, ironic that they'd implement this thing in July... that's the same month a bunch of Brits got ticked off about the taxes 227 years ago and decided they weren't going to take it any more. July 4th to be precise. ;) Looks like they'd have learned by now...

Originally posted by Lerc

I suspect the EU has decreed that evey person outside it's bounds is a virtual VAT registree (and everybody inside the EU who isn't registered but deals with someone outside the EU is a registree too) and when something enters the EU someone must make it right (I suspect they don't care who).




Yeah well the problem is that now nobody is right, because we are supposed to display INCLUDING TAXES PRICES. So we 'll probably get sued one day because we are lying to our european customers...

Price seen is the price you pay!

This gets really complicated.

pat.