VAT Added For Digital Goods : Non EU

MarkeR · 17 Jan 2017 at 18:42

Hey Guys

There is a discussion going on over in the iracing forums at the moment.

Basically, iracing have begun to add VAT on all products sold, beforehand they never did.

Iracing in based in the USA, so someone on the forums has stated that digital goods bought outside the EU below 22 Euros doesn't apply to the VAT laws for the EU.

There have been a couple of links posted, for example

http://europa.eu/rapid/press-release_MEMO-16-3746_en.htm

Where it states, Not a level playing field.

Point 3 of
https://www.gov.uk/government/publi...-thresholds-low-value-consignment-relief-lvcr

Or does VAT MOSS over ride all the above points!

If it does, that would mean that iracing would have to be VAT registered within the UK, and I suppose all the other countries within the EU that it sells to?

Cheers

Mynight · 17 Jan 2017 at 18:58

Would have thought they'd need to be VAT registered to charge VAT.

Energize · 17 Jan 2017 at 19:05

Not a level playing field: under current rules, imported goods bought online from non-EU countries are exempt from VAT if they cost below €22. Companies based outside the EU can fraudulently mark expensive goods such as mobile phones and tablets as costing less than €22, meaning that no VAT is paid. This puts EU businesses at a clear disadvantage to non-EU businesses.

A great example of why sales taxes are terrible. VAT should have been abolished ages ago. The value doesn't even need to be marked as below 22 euros because it's a % not a fixed fee so EU companies will still be massively undercut!

Who even knows how much damage VAT is causing to our digital goods market where there's no way to even estimate sales.

Lmg80 · 17 Jan 2017 at 19:38

Interesting debate on https://pretendracecars.net/

lurkio · 17 Jan 2017 at 22:04

Lmg80 said:
Interesting debate on https://pretendracecars.net/

Wow these guys would give Eagle Dynamics a run for their money for being end of bells
when it comes to handling their customers

Nasher · 18 Jan 2017 at 08:41

Oh well, we will be out of the EU soon so VAT might drop again

It was them that told us to make it 20% to be more "on par" with the rest of the EU

Avenged7Fold · 18 Jan 2017 at 08:49

Nasher said:
Oh well, we will be out of the EU soon so VAT might drop again

It was them that told us to make it 20% to be more "on par" with the rest of the EU

You think we are likely to see a drop in VAT or that the EU forced the UK to charge 20% VAT?

As far as i am aware, the standard minimum VAT for the EU is 15%

Nasher · 18 Jan 2017 at 08:50

If you look at what other EU countries are at, they are all around 20%. Many are higher :/

Avenged7Fold · 18 Jan 2017 at 08:51

Their governments decided that?

VAT rates for eu countries range from about 17% to 27%. The reason why they are more ore less in the same area is to avoid undercutting each-other and to keep trading fair. I would imagine we would see an increase in VAT before we see a decrease and that would be regardless of brexit or not.

Greebo · 18 Jan 2017 at 09:49

Nasher said:
Oh well, we will be out of the EU soon so VAT might drop again

It was them that told us to make it 20% to be more "on par" with the rest of the EU

lol. Successive governments here believe indirect taxation such as VAT,fuel duty and Insurance tax is far more palatable than direct taxation to the voting public.

Which is why we continue to have direct taxes lowered over the years and more and more indirect taxes introduced.

It amazes me that the public dont kick off more about IPT. its now 10% and will be 12% from June and pretty much affects everybody as most people have some form of insurance.

The last budget the chancellor said that freezing fuel duty would save people £100m. However, the increase in IPT he announced costs people £100m a year so basically nobody got anything.

All smoke and mirrors.

Plus has always been convenient for any government to blame the EU when they want to introduce a tax rise.

Avenged7Fold · 18 Jan 2017 at 09:53

Greebo said:
Plus has always been convenient for any government to blame the EU when they want to introduce a tax rise.

From Nasher's comments, it clearly works...

krooton · 18 Jan 2017 at 10:57

Google is apparently upping their Play Store prices too as a result of tax.

koooowweeee · 18 Jan 2017 at 11:13

krooton said:
Google is apparently upping their Play Store prices too as a result of tax.

25℅ I read. Will just push more people into piracy

MajorMaccas · 18 Jan 2017 at 11:38

Nasher said:
It was them that told us to make it 20% to be more "on par" with the rest of the EU

Cite your source(s).

Werewolf · 18 Jan 2017 at 11:57

krooton said:
Google is apparently upping their Play Store prices too as a result of tax.

You mean because they've started to pay some?

Google have been charging VAT on EU purchases for a long time now, since the original loophole for digital goods was largely closed several years ago.

Mercenary Keyboard Warrior · 18 Jan 2017 at 12:11

krooton said:
Google is apparently upping their Play Store prices too as a result of tax.

I thought they were doing it for the same reason as apple, to keep app prices relatively similar in all domains when converted to $

The UK prices rose because on the tanking of the pound post brexit reffy, apple only adjust the prices every so often.

Governments prefer indirect taxation for 2 main reasons,
1) Less headline grabing (so more stealthy)
2) Much harder to avoid by tax dodgers such as some self employed etc

Energize · 18 Jan 2017 at 14:01

Mercenary Keyboard Warrior said:
I thought they were doing it for the same reason as apple, to keep app prices relatively similar in all domains when converted to $

The UK prices rose because on the tanking of the pound post brexit reffy, apple only adjust the prices every so often.

Governments prefer indirect taxation for 2 main reasons,
1) Less headline grabing (so more stealthy)
2) Much harder to avoid by tax dodgers such as some self employed etc

The irony is that VAT is the easiest tax to evade. I've managed to avoid paying over £1000 of tax on photography equipment over the last couple of years because retailers just declare the items as low value.

MajorMaccas · 18 Jan 2017 at 14:16

Energize said:
The irony is that VAT is the easiest tax to evade. I've managed to avoid paying over £1000 of tax on photography equipment over the last couple of years because retailers just declare the items as low value.

A lot of tax is easy to avoid, until HMRC suspect something about your accounts and really dig into them all. I know someone who was investigated back in the late 80's early 90's twice, they can spend 3 months tearing up every receipt, every invoice in your office. I forget if they actually found anything, but when they start doing that, you can bet they will come across something as simple as a false declaration of value. Then you get a nice criminal record for saving a grand.

The irony, as you put it, is you could legitimately save more in tax if the equipment was necessary for your work. Then, you can add the entire value onto your personal allowance, increasing the amount of tax you earn before you pay any tax at all. You get £11,000 tax free this year, if you buy a camera for £1000 incl VAT, then you get £12,000 tax free. This is assuming your profession relies on photography equipment.

Energize · 18 Jan 2017 at 14:45

Actually income tax via paye is pretty much impossible to avoid for a standard employee, this is why it should be the tax of choice, it does not damage the domestic market like consumption taxes do.

I don't work as a photographer, and I haven't falsely declared the value of goods.

Fortunately we are now living in the world of digital currencies like bitcoin where records of financial transactions are next to non existent and the government can't monitor your assets, we are beginning to see society being liberated from unethical taxation.

touch · 18 Jan 2017 at 15:10