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Comment by moomin | Hacker News Reader

This is hugely important. The rules themselves are designed to stop people like Amazon abusing the system (and believe me, they abuse it), but there's no provision for smaller companies, no one stop shop for dealing with the VAT authorities. It's going to be a disaster for SaaS startups.

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Amazon do not abuse it, they just run shop from an EU country with low VAT rate (Luxembourg) last I checked.

And yes the VAT rules really do add alot of overheads on a business and bloat, which companies elsewhere are not subjected to.

I have raised this with Revenue in Ireland (pointing at competitors in US, China etc not held back by paperwork) they ignored it and clarified (I wanted it in writing, I recommend every business has a clarification in writing if they are not sure about the VAT position, to cover their asses) that YES we have to charge 23% VAT to ANYONE from EU29 countries, and 0% VAT for outside.

Tho' nothing was said about how this is to be measured, So I am keeping timestamps, ip addresses and billing addresses when accepting payment for our hosting products.

All in all its just a pain in the rear having to jump thru' this loops with no benefit to my company and plenty of downside :(

"Amazon do not abuse it, they just run shop from an EU country with low VAT rate (Luxembourg) last I checked."

They "abuse" it from the point of view from the countries where they don't pay the VAT.... f.e. the UK would like Amazon to pay VAT in the UK, and not in Luxembourg. So this new law is meant to prevent that, but at the same time waltz over small companies.

UK politicians (judging by recent headlines) also want to leave the EU, or at least threatening to do so if they don't get their way.

They might like/want X but they will have to negotiate and endup with X-Y or nothing, since negotiating something as important as VAT while threatening to leave the club is politically counterproductive.

I don't think this law was actually pushed for by the UK. And countries like Hungary where VAT is 27% have much more to gain by it.

Very few UK politicians want to leave the EU.

They are only threatening because the election is coming up and an anti EU party got a surprising amount of votes in the EU election (still not that many in real terms).

They're walking a fine line in "abusing it" though. Why is it correct that a shopper in the UK, who would normally pay 20% VAT on an item if sold from the UK online, or in shop, but pays a lot less because Amazon has the clout and size to setup an operation there?

It's similar to the changes a few years ago to the channel islands that was used (and some say abused) by online CD and DVD stores, including some large high-street names.

Now, the way this has been implemented, and the speed at which a lot of small retailers will have to change their systems is unfortunate, and the EU have shot themselves in the foot there.

Amazon already charge VAT on items at 20% in the UK.

Amazon not only make it look as though they're selling from countries other than Luxembourg, they actually charge their customers the higher VAT rates of those countries when selling digital goods but only pay the lower Luxembourg rate.

not on VAT, there is "no lower" rate on VAT for sellers since it's collected directly for the state. They are having a discount on the profits tax.

It's actually going to benefit these larger companies if people are forced into selling their products via App Stores, Amazon etc. because doing so via their own store becomes impossible.

We're already VAT registered. We already do cross border sales and we have no clear guidance on how to implement this.

There is a one stop shop[0]. The main problem is that there's no longer any VAT threshold for smaller companies (atm you can avoid VAT registration if you're earning less than £81,000)

https://www.gov.uk/register-and-use-the-vat-mini-one-stop-sh...

This same one stop shop that GDS said was unusable and could not go live? [1]

[1] https://gdsdata.blog.gov.uk/vat-mini-one-stop-shop-service-a...

The effective removal of the threshold is another important issue. I'm trying to raise awareness of the impending issue for those companies who are VAT registered.

A good example would be a design agency who also wants to launch a product. Other than freelancers most small agencies are likely to be VAT registered, so they will need to use the MOSS and collect the required data.

MOSS doesn't solve the difficult requirements for proving in which country a customer lives - providing they don't have a VAT number of course.

My understanding is that these rules affect everyone in the world who sells into the EU. It doesn't matter if you are located in the US or South Africa or Australia - you will still be expected to account for VAT and submit the returns.

I have no idea how this will ever be enforced for anyone outside the EU.

That is the case but I'm not seeing US startups worrying too much about complying. As you say, how will it be enforced? I imagine it is likely to be an issue if they have an actual EU presence but otherwise ...?

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