Any german or european tax specialists here?

[Dan S]

Ok, some of you might remember my IRS troubles last summer.

Well,now I know what they are aiming for.
They want me to pay VAT (Value Added Tax) on ALL my web comissions.

Thats 16% of the gross revenue.

I was 100% sure I wouldn`t have to pay VAT on these comissions.

Is there any german or european webmaster here who went thru this shit before?

Are comissions earned from foreign (mostly US/Canada) VAT taxable?

I need some serious help, please contact me if you know about these issues....

Thank you,

Dan

[Brian911]

I think in germany the magic line is 650 DM (~300 USD)..everything above this is taxable as far as I know


I'm no tax specialist though but that is what they told me in my bank last year


Brian

[richard]

Dan, i researched the situation over here (and my accountant has gone off to make sure what i think is correct is).

In the UK, there is a VAT threshold, ie, if any business turnsover £52k in a year, they have to be VAT registered.

The idea (for those who do no know) is that you must add 17.5% (in the UK) of the retail price that you want to set the good at on top of it.

ie, if you have a product and are selling it for £100, you either sell it for £117.50 including VAT, or you sell it for £85.11 excluding VAT (and charge £14.89 VAT).

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Its a bitch.

BUT, the good news, is that you can claim back the VAT on the goods that you have bought (which works out that you only need to charge VAT on the extra work you do...).

You must have seen prices, say for computers, which say £1000 + VAT , which actually means you would normally pay £1175.

As a VAT registered business, you get the computer for £1000 eventually, but you still have to pay the store £1175.

You then work out the difference between the VAT you have to charge, and the VAT you can claim back.

Which will mean that if you can claim back any VAT, it will not be 17.5%, but less.

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This is all well and good, when doing business in your own country, but the question is, what happens when you start dealing in multiple countries?

Within the EU Dan, i have a feeling that VAT is the pretty much the same as dealing in just your country, in as much as most coutries (if not all) have a VAT system.

Its still really, really, really complicated.

Another very important factor with VAT, is when you import/export a good.

If i import a PC from the USA, i have to pay the government VAT on top of what i have paid for, i think. (as well as the "duty").

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Its a matter for the legal/accountancy experts to sort out really mate.

I mean, you have not actually _sold_ anything, you are providing a free publication for surfers, in which these companies have paid you for advertising space... or is it like you say, a commision?

How can you "export" from Germany a commision? for a surfer in the US buying a US membership!?

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I think i have proved that it is deffo an accountants job to sort this out.

We're lucky not to need to be VAT registered this year, because of the way our accountant has organised out finances. However, we are in the process of registering for the next financial year, so will have more infos then.

Ain't governments a bitch?

Rich.

[Dan S]

@ brian
yeah, that applies to tax on your income
I am talking about VAT

@ rich

yeah, I am not selling "comissions", but I consider my revenues "comissions" because I referred a customer to my sponsor who then pays a comission to me.
All the $ come from outside of the EU.
So where did I add value to a product?
That all looks insane to me man.

Best of all is they want it NOW(!) for the past 3 years.
Sounds like alot of fun, doesn`t it?! http://adultwebmasterinfo.com/ubb/frown.gif

[richard]

thats a freaking bitch http://adultwebmasterinfo.com/ubb/frown.gif

best thing to do is get a professional onto it, its gunna cost ya, but will be worth it i think.

[Crysty]

Dan , why don't you go offshore ?
It's a pain in the ass to report every penny you made.
And, about VAT ; I dont think you have to pay this tax because you didnt sold products or services consumed by german market
If you wanna play fair and pay all the taxes it will be ok anyway , you will have the opportunity to buy any product 16% cheaper http://adultwebmasterinfo.com/ubb/biggrin.gif

[Brian911]

ok didnt know what you meant exactly sry =)

they want it for the past 3 year?!? OMG

[Dan S]

Nope, I can`t buy anything 16% cheaper...
only things needed for the biz/office.

Yeah, for 3 years. But they show me their best site and let me pay monthly LOL.

I will try to fight it though. Hopefully I will find a good pro. Definately get on the fone tomorrow.

[tiamath]

Dan S, there is no way to avoid paying VAT when exporting goods or services no matter where the payment comes from.
On the contrary, richard is wrong about VAT due when importing a PC from the States. The VAT should be restored to the buyer then.

[XM]

Ouch even if I am economic graduate and part time accountant I didn't even thought about VAT yet. I just opened our local VAT law and it seems to be very tricky. In my opinion, what we are doing is EXPORTING services, so the VAT doesn't apply. Why?
Because if you theoretically issued invoice to your sponsor it would be foreign invoice and it would be without VAT for sure.
That's why it would be profitable to register VAT tax as told before so you can claim the VAT paid when buying equipment and services belonging to the business.
Anyway the local rule says I need to have 15.000 USD turnover within 3 months to have to register so I have lot of time http://adultwebmasterinfo.com/ubb/wink.gif

Of course, If your sponsor is residing in the same country, it is not export anymore and you will probably "invoice" him VAT too.

XM

[XM]

Because tiamath is completely WRONG, I will put an example to make it clearer:
Say I am VAT registered and I want to sell a computer to Dan S who lives abroad. So I go to computer shop, buy it for 1.230 USD, from which 230 USD is VAT (23% here). Then I put the comp in the box and send it to Dan S together with invoice, which will say: I invoice you 1 computer at 2.000 USD http://adultwebmasterinfo.com/ubb/wink.gif . The price is WITHOUT VAT because I am EXPORTING. The result is I paid 1.230, I got 2.000, I will claim 230 USD at my tax office, and I will get them, my profit is 1.000 bucks.
If I wasn't registered I couldn't claim those 230 bucks, so my profit is only 670.

If Dan S is VAT registered in his country, he will pay me 2.000 bucks PLUS he will pay VAT to his local tax/custom office at local rate 16%, because he IMPORTED the goods.


The same should apply also to click/signup/whatever sponsor. I am exporting the service (the click of anybody to foreign sponsor link) and the sponsor is IMPORTING my service.

I think I could defend at the tax court now http://adultwebmasterinfo.com/ubb/smile.gif

XM

[tiamath]

XM, I doubt the concept of the laws in different countries of Eastern Europe is much different as it is rewritten probably of the German and English laws.
Well when you issue a foreign invoice it does not have to include information for the VAT part of the whole ammount beacuse the VAT % of every country is differnet than yours. Of course the invoice have to be translated with all the attributes according your law and the ammount of VAT is due to the budget.
There are some exceptions when VAT is not due while exporting but internet services are not one of them for sure.
When importing VAT will be restored to you.
That's the humble opinion of a full time accountant in an enormous coal mining company.

[XM]

What I am sure about VAT concept in here is that if you are VAT registered your principial task is to collect VAT from your sales and claim VAT you have paid to somebody.
So you have some virtual account and each month you make a sum of VAT received an VAT paid. If you received more than paid, you have to pay the difference to state budget, on the contrary if you paid more than received, you will get the difference. In both cases, the VAT issue doesn't affect your income, the real payers of VAT are end costumers, who are not registered of course (and they can not have VAT returned).


Giving up this debate for now, I am leaving to France to check current skiing conditions, I will look into this when I get back.


XM