New EU VAT Legislation January 1st 2015, Are you Ready For It?

Discussion in 'Internet Marketing Discussion Forum' started by William Murray, Nov 28, 2014.

  1. William Murray

    William Murray Administrator Staff Member

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    DISCLAIMER: The following does not form legal and or accounting advice, I'm neither of those. Seek counsel from the appropriate channels in the first instance, these are purely my thoughts and own opinion.

    For those of you unaware of the current new EU VAT Legislation, which comes into force in January 1st 2015, that's just round the corner ;)

    I've not been in a mad panic about it if I'm honest and will take the new legislation in my stride. Oh and if you think this only affects European Companies, then think again...

    If your company sells even a single Digital Product to a EU resident / business, then your business is liable for VAT in the country of residence of said purchaser, at said countries applicable Value Added Tax Rate.

    An option for businesses is to register for HM Revenue and Customs’ (HMRC’s) VAT MOSS scheme if your business is:
    • based in the UK (union VAT MOSS scheme)
    • a non-EU businesses (non-union VAT MOSS scheme)
    The scheme allows businesses to submit quarterly returns payable to HMRC, who then send the right information and pay each relevant member state's tax authority.

    In general, a digital service is defined as broadcasting, telecommunications and e-services, for example. (Note e-services Digital Marketers).

    Further information on the VAT-MOSS scheme can be found on HMRC's website.

    Taking a side-step for a moment, kind of makes you wonder how EU Member States can enforce to new ruling on companies, who choose not to 'opt in'?

    Personally though, I'm not taking any risks and will be fully compliant, last thing I'd want is for my company to be slammed with a massive VAT bill, out of the blue.

    Should be fun watching the low-ticket space vendors, who frequently launch products month-in, month-out.

    I wonder how many will start leveraging ClickBanks Platform, purely for that business-to-business transaction, and let ClickBank take care of any applicable taxes, in the respective EU countries?

    Here's a snippet from ClickBanks website, which clearly outlines their obligations when it comes to remitting tax, although not clear-cut, I am waiting to speak with Spencer Matthews from ClickBank to get the low-down.

    The full article can be viewed here.

    That's enough from me, I'd be interested to know have you even heard of the new EU VAT legislation yet, and have you seeked professional advice from your accountant?
     
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  2. Amanda Davey

    Amanda Davey VIP Member

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    Thanks for sharing more information on this topic William. I'll definitely be looking at the links you've given.
     
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  3. William Murray

    William Murray Administrator Staff Member

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    My pleasure Amanda, ClickBank looks like a viable solution to me, will let you know more when Spencer gets back to me :)
     
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  4. Alessandro Zamboni

    Alessandro Zamboni VIP Member

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    Hi William, I think this is not a big problem, it's only the end of everything...
    Jokes apart this rule will finish to exterminate internet marketing as we know it, unless big companies will line in for setting up their platforms for European people.

    This is the next law that thinks just to give more power to politicians, and not a constructive thing. I only hope it will not be launched, or that it will be modified. A thing like that could be done with big companies managing thousands of sales, like Paypal, Alertpay, Payza, Clickbank, JVZoo and WarriorPlus, not throwing everything on the face of internet marketers.

    I will see what to do, I will contact my accountant the next week to know more, but I bet here in Italy no one knows yet about that new rule.

    I think also that Cickbank is not a solution, because it's difficult to get products approved, to get paid via check in some countries, and so on. So I will definitely take action against this rule. Or I will move my company oversea, or I will close it forever. I can't manage thousands of sale one by one to see where the customer come from, check the VAT, and so on. If you consider that in this way you must make one invoice per sale, instead of the general one I'm doing now with all sale into a single invoice, that's really crazy.

    For these reason I will ask and decide. I'm just tired of these bad news, bringing always bigger problems.

    Thanks for the updates, and see you soon!
    Alessandro
     
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  5. David Taylor

    David Taylor Well-Known Member

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    Hi William,
    I have started the move to Clickbank already. I was getting ready to release a membership site but when this news came up I stopped and began the process of moving to Clickbank.

    Since, according to Clickbank, they buy the product from me at wholesale and then sell to the end user at retail, officially ALL my sales would be B2B to a US business.
    Also, I remember only having to get the main product approved. You can add 500 products to one account so that's what I'm in the process of doing. Then, come Dec 31st I shut down all JVZoo or W+ products.

    Just need to find the best workaround and, unless I find out differently, this is it.

    Thanks for finding out from your contact at Clickbank. I hope he confirms our understanding.

    All the best,

    David
     
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  6. Sue Fleckenstein

    Sue Fleckenstein Well-Known Member

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    I just heard about this, this week and am totally confused with what to do. I can't see how they can expect to keep track of businesses worldwide. Plus how do you charges VAT when you are selling a product in US Dollars? Will be tracking this thread as my entire business consists of selling digital products.

    Thanks for this info.
    Sue
     
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  7. William Murray

    William Murray Administrator Staff Member

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    It's a complete minefield Alessandro, and connecting with your accountant is the best step :)

    Yeah will be interesting to see how approval will go with ClickBank, I guess I'll find out soon as I will be using them for JV Focus once the new funnel is in place.
     
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  8. William Murray

    William Murray Administrator Staff Member

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    Good move David, are there any limitations in your funnel, for one click upsells? I think there used to be in terms of total items in your funnel and a maximum price?
     
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  9. William Murray

    William Murray Administrator Staff Member

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    Yeah I'd say have a quick chat with your accountant, I'm confused as to how they can enforce this Sue, if I'm honest?
     
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  10. Mike Newton

    Mike Newton Administrator Staff Member

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    Thanks for the share William. Not sure of the long term ramifications for myself yet, but it's good to stay abreast of the situation.
     
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  11. Paul Reaume

    Paul Reaume Moderator Staff Member

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    I really just want to rant about this money grab. But, I will restrain myself. I am inclined to just limit all activity to the USA and developing countries on this continent. It seems a lot easier to convert a webpage to Español than deal with yet another money grubbing socialist entity.

    There I go . . . straight to the rant.

    Seriously, haven't these socialists figured out that business doesn't pay tax? They only collect it. If we have to pay the tax we will simply increase the price to cover it. If you poor SOB's across the water let your politicians get away with this then you won't mind paying, right?

    Sorry for the negative tone here but I've been around far to long and watched far to many good things ripped from the little guy by this tax/legislation creep than I care to admit to.

    Some things are just so blatantly wrong that I can't be quiet any longer.

    It's kinda like the barking dog next door. You get so mad at that dog. But, it's the owner you should be mad at.
     
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  12. Stefan Sandin

    Stefan Sandin VIP Member

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    Once again EU is making it harder for small businesses out there.
     
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  13. Dejan Murko

    Dejan Murko Active Member

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    All my customers are from the US. ;)
     
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  14. William Murray

    William Murray Administrator Staff Member

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    Excellent Dejan :D
     
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  15. Spencer Matthews

    Spencer Matthews VIP Member

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    Hey William,

    Thanks for reaching out! We already collect and remit VAT tax based on the location of the customer at the time of purchase so ClickBank is definitely a viable solution to eliminate this HUGE headache for you.

    -Spencer Matthews
     
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  16. William Murray

    William Murray Administrator Staff Member

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    Thanks Spencer, for the confirmation and looking for to chatting to you later today :)
     
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  17. Miguel Perez

    Miguel Perez Member

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    My business is based in Spain, so this is a huge headache for me (well, my accountant :cool:).

    I think that unless you have a consulting business where you sell high-ticket services to a few customers, it's almost impossible to track where each of them comes from, and be sure that all of them are from outside the EU.

    I sell both info-poducts and plugins from JVZoo. How am I suppose to know where they live if all I have is an e-mail and a name? Should I charge VAT to any names like sound Spanish, Italian, German or whatever?

    // Begin Rant
    Once again, the EU helping its businesses thrive... Then we will wonder why our GDP is not growing as much as it should, why companies close or are created at a slower pace, or why unemployment rates are running rampant.
    // End rant
     
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  18. Paul Reaume

    Paul Reaume Moderator Staff Member

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    Two thumbs up Miguel!
     
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