Archive for VAT news

Food For Thought: VAT for U.S. companies

Some of the content that I use for my “VAT basics” webcast is now published by the Institute of Professionals in Taxation (IPT).

Enjoy and share!

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India: GST in April 2016 (?)

“A GST roll-out is most likely April 2016″

Every fall there is an Indian official who seems to be designated to make a statement that federal GST implementation is a year and a half out. The big issue is a constitutional amendment (in addition to all the states being in agreement). Parliament in India seems to be interested in picking up the issue.

See (subscription!) for more.

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Mind The VAT Gap…

An estimated €177 billion in VAT revenues was lost due to non-compliance or non-collection in 2012, according to the latest VAT Gap study published by the Commission.

“Algirdas Šemeta, Commissioner for Taxation, said: “The VAT Gap is essentially a marker of how effective – or not – VAT enforcement and compliance measures are across the EU. Today’s figures show there is a lot more work to be done. Member States cannot afford revenue losses of this scale. They must up their game and take decisive steps to recapture this public money. The Commission, for its part, remains focused on a fundamental reform of the VAT system, to make it more robust, more effective and less prone to fraud.””

The lowest VAT gap for 2012 was in the Netherlands – the highest was in Romania, where (almost) half of the VAT due is basically missing (!!!).

See here for the press release:

Next up: Vertex Exchange from this Sunday to Wednesday in New Orleans. I will be speaking on VAT and environmental taxes. Come and see Andy Hallsworth and me on Tuesday morning for our epic “Two Men And A Pen” VAT show-and-tell! It’s going to be a fun couple of days. See

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Sale of software outside the U.S.

That was a quick but fun call this morning with the good people from Collobos Software. They produce software that is typically purchased by businesses and they have a growing customer base outside the U.S.

For VAT in the EU, the sale of software business-to-business means that the place of supply is where the recipient is resident.

Does Collobos have any overseas offices? “Nope, and we don’t plan to for now.” Any servers overseas, or office-less employees “No.”. OK, then you’re good. No VAT liabilities.

Same applies in most countries outside of the EU – actually I would not know any country that requires a non-resident company to register for tax under these circumstances.

“Thanks Mark – what can we do in return?” Spread the word!

So I just saw this twitter message. Thanks Collobos!

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Next up: Costa Rica

The Wall Street Journal writes about Costa Rica’s plan to accelerate the introduction of a 13% VAT:

“One of the reasons why Moody’s decided to downgrade us was because the incapacity of governments in the past to agree with the legislature for comprehensive tax reform,” Mr. Solís said in the interview.

Hat-tip: Peter Devlin

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Oh, those 2015 rules…

It seems like every VAT consultant, in the US and in the EU, has jumped on the new EU VAT rules that kick in on January 1, 2015. I have not paid as much attention to the changes, simply because the impact on U.S. companies is rather limited.

As a reminder, this is about the supplies of online services (downloads of all sorts of automated supplies, like video, games, music etc) to EU based individuals. VAT is due at the rate of the country of the buyer. See for more information.

For a U.S. based company there are really only two things to keep in mind:

1. If the U.S. company has an EU branch or subsidiary  – then the rules that used to apply to the U.S. parent company now apply to the EU branch or subsidiary as well.

2. If these online supplies to EU individuals are only made from a U.S. based company, then the U.S. company was required to register for VAT. Under certain conditions, the U.S. company could register for VAT in a single country (in practice this was mostly the UK). From January 1, the U.S. company will have to change its registration to the so-called mini-one-stop-shop (“MOSS”) registration. See for the guidance of the UK tax authorities.

Here is an email that one of my clients recently received from HMRC. It is a tough read, but the gist is that the US company has to change the VOES registration into a MOSS registration… Yes, it sounds weird, but they say that this swap is painless.

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Scandia – supplies to a branch

In a wholly unsurprising ruling the European Court of Justice ruled last week that supplies by a head-office to a branch are within the scope of VAT if the branch is part of a VAT group / fiscal unity.

The Netherlands at least has had this rule in their regulations for decennia, but see here at LinkedIn for the UK view, which is rather different.

I pdf’d the ECJ ruling below. Like all ECJ rulings, this one is not very easy on the eyes…

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