Comment by flexie | Hacker News Reader

Comment by flexie | Hacker News Reader

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Best solution would be to have a common EU VAT-rate applying to all goods and services.

It's going to be terrible situation for tech start ups but it's been bad for everyone for a while who sells across borders in EU. You have to find out what strange box defined by eurocrats that your business fits into (if any). It's not that easy.

I'm a lawyer selling most of my services across borders. Some of my revenue is purely digital (downloads of documents and may be hit by the new rules), some would be characterized as consultancy services. If my client is in another member state and is VAT registered (like most, but not all companies) I don't have to charge VAT. But instead I am left to explain to my client that the mess is now theirs due to the weird chargeback rules (that they only know if they are used to selling B2B or buying from suppliers in other member states). If I sell services to private persons or companies that are not VAT registered, I have to charge the VAT of the country my law firm is in.

If I had given legal advice related to real estate I would be subject to yet other rules.

When I sell to companies outside of the EU it's a different set of rules again.

Most bookkeepers and accountants are very insecure about these rules. If professional accountants are not comfortable advising on the rules, the system is too complicated.

> Best solution would be to have a common EU VAT-rate applying to all goods and services.

That would appear to fulfil a long-term aspiration of the European project.

Indeed. And if they then put the VAT rate at 0 it would hurt businesses even less ;-)

Consumers pay VAT, not business.

Similar to the sales tax in the US/Canada

Actually VAT is paid by every business (with a few exceptions) on the extra value it creates.

http://en.wikipedia.org/wiki/Value-added_tax#Comparison_with...

Yep, you're right. It's a more complicated calculation

But there's VAT to be paid on the sale, which is kind of similar.

It would hurt businesses even less, because the less you tax a consumer on sales, the more disposable income they have to purchase even more goods (and or businesses can charge more for the same items). The parent didn't say businesses pay VAT, they said it would hurt businesses less if you lower the VAT.

Businesses in the UK which aren't VAT-registered certainly pay VAT.

"Best solution would be to have a common EU VAT-rate applying to all goods and services."

There are politicians and policymakers in the EU who would like to see that happen. However, every country in the EU has different VAT exemptions for goods and services - harmonising that across EU nations would be extremely difficult. Politicians will have an impossible task persuading the public that goods and services that were never subject to VAT will now be taxed.

What the EU should have proposed is a common VAT rate across the EU for digital goods. (This could still include exemptions or reduced rates for certain goods such as e-books.) I suspect this would have faced less opposition from member countries and it would eliminate much of the bureaucratic and administrative burden these new laws introduce.

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