US Business Registering for VAT MOSS?

Discussions
#22

I have an email into the HMRC to clarify how to deal with location issues related to place of supply for web-based businesses. I have not heard anything back yet in 24 hours.

I also reached out to Braintree Payments, who I am planning on switching over to. They linked me to documentation showing that credit card payments provide a bunch of bank info including “transaction.credit_card_details.country_of_issuance”. https://developers.braintreepayments.com/javascript+ruby/reference/objects/transaction#transaction.credit-card-details.masked-number

Unfortunately I’m only seeing billing country for PayPal payments once the payment is complete. It seems you can set tax rates within PayPal for specific countries, but this doesn’t really help with confirming two pieces of evidence.

#23

Recently I’ve had to wait about 1 month to get a reply from the “written team”. A few months back it was two weeks. So I wouldn’t expect anything too quickly!

@MarkLittlewood - interested to hear how the meeting went!

#24

Brilliant! And also terrifying!

Looking up a standard rate using that service is actually relatively easy. With bit of scripting it could be pulled out into a useful format.

However, the terrifying bit is the regional rates. Taking France as an example, in Corsica and Monaco, VAT rates might be different from mainland France.

There also also a number of areas which have “No Standard Rate” - Lake Lugano in Italy for example. I don’t even know what that means! 0%, or the rate varies depending on the product?

These are somewhat rhetorical questions here, since I realise we need HMRC’s official viewport - although any thoughts are welcome.

#25

Hey Ian, sorry. I am away on long weekend with wife for weddin anniversary. I didn;t get time to update before I left but I wrote this.

Basically, the whole thing seems to be a total mess. Julian Huppert understands the issues but is one voice amongst many MPs. As far as I know he is the only MP who has responded.

Vince Cable, has responded to the petition at Change.org today.

Really, really lame but he is a total idiot. No idea why he exists to be honest.

As the implications for the law are still completely unclear for microbusinesses, I can’t in all honesty suggest you do anything else but wait until the law and its implications are clear and actionable. They simply are not at present.

#26

My current plan is to make a best effort. If HMRC gives me a hard time I will point to my requests for clarification and what Taxamo is doing. My guess is that they’ll just be happy to have me contributing.

From looking at Taxamo’s documentation, it seems that the user can state their country of residence. Because of this, for my place of supply proof, my current plan is:

  1. Geolocate IP
  2. Collect billing address (even for PayPal)
  3. If they don’t match, ask the user to state their country of residence.

If none match, indicate the user what the current information is and ask them to resolve it so two match. It should always be possible for the billing address and country of residence to match even if the user is traveling and their IP is a foreign country.

This approach should be minimally invasive and should work for both PayPal and credit cards (Stripe, Braintree, etc).

#27

There is a definite consensus growing among companies who have implemented something, based on the data that it is feasible to get. I did some digging:

What bothers me with Taxamo is that they seem to have aligned themselves with HMRC as if there is no other option and obviously have an interest in making it all seem very difficult and scary. Their suite of tools might be a great option but other than the fact they have implemented an SMS check to confirm a phone registered in that country (which will make for a super checkout experience) they have access to the same data as the rest of us.

As I mention in my post I think reporting after the fact may well be the most important piece as the important thing is that you can complete the MOSS return correctly - even if you have to stump up some of the VAT yourself.

#28

I finally received a response from the HMRC about my questions regarding proof of place of supply. Desmond Farndell, who is a Senior Policy Adviser at the HMRC indicated that both of the following are perfectly acceptable as evidence for the customers normal place of residence:

  1. The country calling code from the customer’s phone number (http://en.wikipedia.org/wiki/List_of_country_calling_codes)
  2. A web form input where the customer chooses the country they currently live in
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#29

I just went through the UK VAT MOSS registration process. After entering by business details, they indicated that validation will take one week or longer. Just an FYI for others who are going down this path.

#30

This certainly sounds a lot tidier than IP reverse lookup mapping.

#31

Well, you need two pieces of non-contradicting proof. So that works for one.

My current plan is to attempt it with geoIP and dropdown. If those don’t match I’ll ask for phone number. Then the billing address I will have as a backup.

#32

Was approved by HMRC for MOSS today. They asked one question via email and I was approved in a total of less than 24 hours from original submission.

I’m working on some VAT ID validation code today and logic to determine rate based on location. I’ll update this thread with a GitHub repo containing a dump of some Python and JS in case others find it useful.

I also did some work looking into paying the quarter VAT payments to HMRC. It seems most big banks can do international wire transfers to foreign banks, but they usually cost $40-$60 plus currency conversion. It seems there are some third-party services that will do the transfer for much cheaper, such as:

#33

I wrote about the consensus that is building regarding the proof part of this http://rachelandrew.co.uk/archives/2014/12/08/consensus-and-vatmoss/

We’re doing billing address (and we’re sanity checking those by using http://www.postcodeanywhere.co.uk/).

Then logging IP, hopefully that gives us two bits of proof. Then we are also storing the bank location as a backup.

#34

For UK businesses, you no longer need to be registered for VAT:

Following pressure from business groups and the media, HMRC has
subsequently agreed that businesses can in fact register for MOSS
without having to charge VAT on their UK sales, where they are below the
UK VAT threshold, currently £81,000. So, you can now access the help
provided by the MOSS system whilst not having to register for and charge
UK VAT.

http://cleveraccounts.co/blog/vat-changes-supplies-digital-services-eu-countries/

#35

That concession is an insult. It’s basically useless, it misses the real problems here.

I guess it’s useful if you need to compete on price against people who aren’t charging VAT - but presumably all your competitors should be, because they’re subject to the same rules you are.

The thing is that you still have the administrative headache of needing to register for MOSS and submitting VAT returns for EU sales, and the technical problems of adapting your checkout systems to log the pieces of evidence against every sale (you need to prove your sales to the UK were to the UK).

You get all of the problems and costs of being VAT registered, but because you’re still not VAT registered for UK sales, you can’t claim back any of the VAT on your expenses - and if your competitors don’t register for UK sales, you’ll have to charge 20% more if you want those savings. If anything this is worse.

As far as I can tell, the only practical benefit of this is for politicians who can just keep telling people who don’t understand the details “Oh, but it’s ok, we compromised! Everything’s fine now!”

#36

Of course it is! If you read Vince Cable’s reply to the Change.org petition, it was basically:

Blah blah blah I dont understand how digital products work.

By this stage, we have lost the battle, it’s just a case of covering your backside as best you can :smile:

Edited to add: That said, it isn’t all bad. @rachelandrew has some good info on her Github page (http://rachelandrew.github.io/eu-vat/) specifically for me http://rachelandrew.github.io/eu-vat/third-parties.html (as I sell eBooks).

At the moment, I sell mainly via Gumroad, who say they are working on a fix for this, and should have one by January. If they don’t, I’ll move to Fastspring or something similar. They already collect Vat for you (by acting as intermediaries), which means you don’t need to register for MOSS (by my understanding).

I guess it’s different if you run a SAAS, but it should still be doable.

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#37

I just can’t understand it - it’s almost as if the law was made by people who have never run a business and have no idea how the internet works.

There are still optimistic noises coming from http://euvataction.org/ - I haven’t started selling yet, so I’m still in denial, hoping something good will happen before I have to deal with it…

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#38

I built https://quaderno.io/stripe-vat-invoicing/ to deal with this VAT mess. And if you’re using Stripe subscriptions it’s much easier with our javascript library.

Let me know if you have any questions or comments. Happy to help :wink:

#39

Yeah, I agree that it’s very unlikely that this is enforceable. Unless there is a trade agreement with the business’s resident country, the EU just doesn’t have the authority to collect taxes from businesses that are located outside of its territories.

I think this is a wait and see kind of a deal.

#40

The EU VAT Action folk are amazing. I’ve been acting as a technical advisor to them, but they are essentially a group of women who have put their lives on hold to campaign for the interests of the smallest businesses.

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