On Wednesday, February 25, 2015, Taxamo was invited to make a presentation to the OECD Public Consultation meeting on VAT/GST guidelines. Here's our presentation outlining the invaluable knowledge we have gained since the introduction of the 2015 EU VAT rules on the B2C supply of digital services within the EU.
3. ABOUT TAXAMO
• Taxamo is a SaaS solution for the 2015 EU VAT change
• In development 2 years – custom built around the EU VAT Regulation
• Large number of EU and non-EU merchants
• Firsthand experience working with large, medium and small merchants
looking to implement a practical solution
• Launched Jan 1
4. FEEDBACK FROM EU LAUNCH
1. Lack of awareness – poor communication to e-service merchants
prior to January 1
2. Businesses confused by threat of foreign enforcement
3. Additional difficulties for sellers operating in multiple global regions
5. 1. POOR COMMUNICATION
• Tax Authorities charged with communicating merchant
• Many merchants not aware
Recommend:
Work with key stakeholders who communicate to merchants - PSPs, E-Commerce
Platforms and Shopping Carts are the key stakeholders to enable compliance.
Future launch plans should include meeting with these stakeholders well
ahead of time.
6. 2. CONFUSION OVER FOREIGN ENFORCEMENT
• Unclear guidelines around enforcement of rules by member states
• Unaware of the cost and penalties for non-compliance
Recommend:
Authorities must be responsible for ensuring that e-service merchants submit
domestic VAT returns and that they have properly captured all required
customer evidence.
Consistent approach to tax information services & tax collection is
required by all adopters.
7. 3. DIFFICULTY COMPLYING
• Nature of digital space means that “businesses faced with obligations in
multiple jurisdictions” 3.29 will apply to a majority of e-service merchants
Taxamo’s small EU merchants (less than €5,000 p/m) have
recorded sales to customers in 108 different countries in
January.
8. PROBLEM ISN’T THAT VAT RETURNS ARE
COMPLICATED
…
PROBLEM IS FILLING AND
SETTLING MANY VAT RETURNS
THEREFORE…
9. Taxamo sees most consumer traffic from:
US
UK
Canada
Germany
Australia
Netherlands
France
India
Brazil
Spain
Italy
Sweden
10. International MOSS
Single registration, filing and settlement
Third Party Service Providers
Learn from US Streamlined Sales Tax Project with
policy for Certified Service Providers who can also
settle merchant tax obligation
OPTIONS
11. RECAP
• MAJORITY OF MERCHANTS HAVE MULTI-JURISDICTION SALES
• EVEN A ‘SIMPLE’ REGISTRATION AND REPORTING STRUCTURE WILL RESULT IN
ADMINISTRATIVE BURDEN FOR MERCHANTS
• POTENTIAL MEASURE TO EASE THIS BURDEN:
• INTERNATIONAL MOSS
• THIRD PARTY PROVIDERS
1.IP BIN of CC, Billing address (only UK)
Do you always prompt for User declaration or wait until you cannot collect enough evidence
2. At what stage in the checkout process do you collect the proxies – and if you need more when do you ask you consumer?
Do you collect evidence at the payment page?
Do you stage the transaction at the payment page?
3. What proxy to default to?
How do you manage an audit from another tax authority?
Should you put a contingency in your accounts for non compliant transactions
Austria?
The letter of the law says one thing - is that what you need to abide by?
The Law is the regulations that were passed – not the Explanatory Notes. We have heard in various EU conferences again and again that the explanatory notes are not legally binding. Some countries may interpret the rules differently to how the explanatory notes interprets them. There are use cases in the explanatory notes which you can code to however some country may view that as being uncompliant. Is it likely? Not sure – was at a conference where Austria said they were 99% behind notes – did not specify which bits they weren’t happy with.