A new set of European Union regulations for VAT (Value Added Tax) will come into effect starting January 1, 2015. These regulations directly impact customers located in the EU, and sellers located in every country of this planet.
CinemaPlugins.com always aims to stay on top of all financial and legal requirements worldwide to make sure you are benefiting from a seamless and fully compliant buying experience.
As a provider of electronic services, CinemaPlugins will continue to comply with these new regulations. Customers will automatically be charged the correct VAT according to the new VAT regulations starting in 2015. The new regulations are fairer for the customer.Per the new regulations, any electronically delivered services, sold in the EU will be taxable in the Member State where the customer resides. This means that all the purchases made by EU shoppers will be charged a VAT rate according to the customer’s country of residence or establishment.
This is much fairer for the customer.As they will be charged VAT based on where they are, and not where seller is.
For example. The VAT in Germany is 19% and the VAT in Holland is 21%. As of Jan 1st. German buyers pay 19% and dutch buyers pay 21%, regardless of where the seller is located.
If you sell software, plugins or any digitally delivered product or services, to buyers in the EU, from anywhere in the world, you need to be asking yourself, right now, if you can comply. This is real, and happening as of JAN 1st 2015.
UK based sellers should read these articles.
Every single company or person, selling online to EU buyers is effected. Comply or stop. It’s that simple.
VAT is a TAX. if your charging a TAX you have to be prepared to comply with stricter regulations. These regulations create a paper trail for TAX money. Making it much harder for people/companies to abuse their privileges.
As a consumer , if your being charged VAT , you should ask if the seller has a VAT number. If they don’t have a VAT number, they have no right to charge you VAT. If they do have a VAT number, they must charge you the VAT rate in your country of residence, and not the rate in the country they are selling from. If you live in the EU, the seller has to charge you VAT, no matter where they are, in the world.And is the responsibility of the seller to comply with the new regulations.
What does this mean for plugin, content or preset sellers?
- If you are a seller, anywhere in the world, and you have even the slightest chance that you may sell something in the EU, you must comply with these new regulations. on jan 1st.2015
- If you can not comply, you should stop selling on December 31st 2014.
- There is no grace period. If you sell a single plugin or preset, B2C, to even one EU customer, without having charged VAT, at the correct rate, you are sooner or later, going to get a letter that will fuck up your wonderful life.
- If you ignore these regulations, and think they don’t effect you, you basically don’t give a shit, and you have nobody to blame but yourself when its all over
- This is a game changer. Ignore it at your own peril.Selling digital products or services, is about to change, world wide. Adapt or die.
The EU VAT Directive does not offer a grace period or leniency to merchants who are not ready for January 1, 2015.
The “The EU Commission has reiterated that merchants must apply the new VAT changes beginning January 1, 2015. Merchants have the sole responsibility to make a reasonable decision to apply and collect VAT or be subject to fines and potential prison time.
In 2015, the enforcement of VAT on any and all sales of digital services to retail consumers in Europe will begin.
The new VAT rules apply to digital/electronic services. All of these elements constitute a digital / electronic service:
- Service (i.e. not goods)
- Delivered via the Internet, or an electronic network
- Supply is essentially automated, or involves only minimal human intervention
- It is impossible to ensure in the absence of information technology
VAT rates in the EU vary, and sellers must consider the impact in regards to setting the retail price of digital goods and services for the European market.
Because the VAT rate can vary between 15% & 27%, nonresident sellers must account for these variable rates when establishing prices. The VAT is due at the full standard rate irrespective of the profit margin, if any, the seller earns on the transaction.
Margin = Retail Price VAT due cost of goods or services sold
For VAT compliance reasons, sellers should consider automated billing systems to track and source European sales transactions and collect the appropriate VAT.
There are no minimum sales transaction or revenue to be exempt from the new VAT registration requirement for nonresident sellers.
VAT registration is required for any and all e-services sales, regardless of volume. Unlike the current VAT regulations, the nonresident seller’s obligation to file VAT returns and pay VAT due arises with the very first Euro the nonresident seller earns on sales of its digital goods and services in the EU consumer market.
VAT registration options are available to all sellers of digital services, but they must be made prior to January 1, 2015.
Companies regardless of size have two options for VAT registration:
- They can register for, or declare VAT in any or all of the EU countries in which they have sales.
- They can register with the Mini OneStop Shop (MOSS) system.
Merchants individually select and register in every EU member state where the business has nontaxable customers. Choosing this option can potentially mean registering with 28 separate tax authorities, each with their own tax system and can present numerous logistical, legal, financial and language obstacles.
The company selects one EU tax authority with which to register, and the tax authority will then allocate the relevant VAT to the EU countries in which the company’s sales took place. Companies registering with MOSS are required to file quarterly VAT returns for all of their EU sales.
The strategy of establishing sales subsidiaries in low rate jurisdictions used by U.S. businesses is no longer valid.
The “one business, one VAT rate” for digital consumer sales will no longer apply in 2015. Prior to 2015, U.S. businesses could establish a subsidiary in a low VAT jurisdiction (e.g. Luxembourg). The new rule in 2015 changes that rule and taxes the sales of digital services at the VAT rate of the country in which the consumer is located.
Merchants will need to maintain, have access, and archive specific customer data for 10 years from the date of the transaction.
Any of the 28 EU member states can request an audit of a company at any time within 10 years after a transaction takes place. Also, remember that merchants selling digital/electronic services to nonbusiness customers (no VAT number) must provide two nonconflicting points of address proof for each customer.
- Credit card details
- Bank details
- Landline number
- SIM card country code
- IP address