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Comment by bluecalm | Hacker News Reader

Good accountant a small business can't afford to hire. You make a product, you want to sell it. You have no idea where your customers are going to come from or if anyone buys the product in the first place. You have to comply with this madness from day one though.

Oh, and many payment processors won't give you necessary information to comply anyway. You need 2 pieces of evidence from every transaction (address, IP the purchase is made from for example) and you often don't have access to that information.

It's just typical "we know many small business won't be able to comply and we are not going to go after them for now but there will always be something if we need to" kind of thing.

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You need 2 pieces of evidence from every transaction

You need 2 pieces of evidence that agree from every transaction, which is a significantly harder standard to meet.

For now, IP address is being accepted as one of them. However, most estimates seem to put geolocation as accurate only for about 90% of checks, and even if it's accurate, the information you'll get back typically won't be enough to determine which rules to apply in member states that have regional variations in their VAT rules.

It's basically impossible to comply properly with the current rules using a fully automated system, and therefore basically everyone trading on-line is risking compliance issues because you can't avoid them. The whole thing is kind of a joke, except for the not-so-funny part where your number comes up and you get business-destroying levels of overhead dealing with the audit.

Small problems that bureaucrats did not think about:

- the big companies they intended to hit have the resources to deal with the problem, the smaller onces do not.

- There are such things as proxy servers and VPNs.

- many online B2C transactions within the EU are for amounts < 5 euro, the overhead of paying VAT for a single customer from say Slovenia does not weigh up against the profits so entire countries will simply be cut off from being served a variety of services.

It's a huge mess, and let's not get into the Irish authorities incompetence in setting this whole thing up and their communications with businesses all over Europe.

You're right that it's a huge mess. As you point out, it's only larger companies who have the resources to make a complete and ongoing attempt to comply with every little rule. Therefore a market has been created for tools to let small businesses carry on doing what they were previously doing quite happily anyway. Perhaps the most damning indictment of all is that this market will probably be served by... the same kinds of large multinationals that were rearranging their accounts to reduce their tax burdens in the first place, and that will now also be able to cream off a significant margin from many small businesses' transactions as well.

Incidentally, you missed one of my favourite points that the authorities still seem to have overlooked: they apparently continue to assume that those small businesses who do trade on-line are all selling something via some marketplace site, which can therefore take on much of the burden of compliance, record-keeping, and the like. I guess we'd all better start shorting Stripe, GoCardless, and friends, because presumably according to the EU they have no small business customers. ::facepalm::

I just want to launch websites to test an idea, see if it works. But with VAT MOSS I have to go through a mess just to ensure I'm doing everything legally, even though I might not even continue with the idea after 1 month. It's an unnecessary frustration.

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