Eu - New Vat Rules

[thynan]

Hi!

 

I'm sure some of you have already heard of the new VAT regulations for EU Countries which apply as of 1.1.2015. There are some things which have to be considered for hosting companies, and I don't know if they are supported in Blesta yet.

 

Here is a nice description of the changes in the VAT law:

http://blog.names.co.uk/2014/11/2015-eu-vat-changes-mean/

Here is a nice overview-picture of the difference of the old and new law:

http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices-the-keep-it-simple-edition/

 

Generally speaking, we have to apply different VAT percentages to customers who are ordering from differen countries. That's not a problem, because Blesta allready supports that, by checking the country of the client profile.

 

However, what's concerning is this: 

 

 

How do I decide what country my customer is in?
The regulations state that you must get and retain two pieces of information that indicate what country your customer is in. This could be a combination of (but not limited to):
* Customer’s address
* Customer’s phone number
* Customer’s bank account details
* Customer’s IP address

 

So in essence, we have to check which country the customer is from (at the time of ordering?) with at least two pieces of information - but at the moment Blesta uses only one piece (Customer's address).

 

So - if I understand correctly -  in order not to risk committing "tax fraud", every EU company that uses Blesta has to check for another piece of information. I think the IP address would be a good bet? You can match IP addresses to a geoIP locator or something, and check if the customer who is ordering (or creating a client profile), is realy located in the country he selected in his profile. If not, there should be some sort of validation which asks for additional information (Tax ID/VATIN, Bank Account details?). Also, there has to be a way to retain the "customer location information" for at least 7 years, in case the governments tax authority comes checking. (at least accoring to austrian law - don't know if the period is the same in every EU country).

 

Are there any other plans how to handle the new VAT regulation in Blesta? If not, maybe we can start a discussion here?

[Blesta Addons]

blesta has already 3 of 4 requiered info

* Customer’s address

* Customer’s phone number

* Customer’s IP address

blesta also is compatible with geoip database (just download the .dat file and activate the service ) .

now what you remain is create a plugin that check 2 of 3 data that already in database , what you can do now?

1 - make all accepted orders pending mode .then verifiy the data manually , then accpet the order .

2- another solution is use maxmind and make the client adress should be belong to the visitor ip .

for edit client info ; install my css js toolbox plugin and

Add Custom js

advanced

Controllers : client_main_edit

Markup to set in : head tag

JS To Add :

 
$(document).ready(function(){
   $("input").prop('disabled', true);
   $("select").prop('disabled', true);
   $("button").prop('disabled', true);
});

you are welcome .

[Michael]

blesta has already 3 of 4 requiered info

* Customer’s address

* Customer’s phone number

* Customer’s IP address

blesta also is compatible with geoip database (just download the .dat file and activate the service ) .

now what you remain is create a plugin that check 2 of 3 data that already in database , what you can do now?

1 - make all accepted orders pending mode .then verifiy the data manually , then accpet the order .

2- another solution is use maxmind and make the client adress should be belong to the visitor ip .

for edit client info ; install my css js toolbox plugin and

Add Custom js

advanced

Controllers : client_main_edit

Markup to set in : head tag

JS To Add :

 

 
$(document).ready(function(){
   $("input").prop('disabled', true);
   $("select").prop('disabled', true);
   $("button").prop('disabled', true);
});

you are welcome .

 

 

I would use the </body> tag or something to keep javascript at the footer mate.

[Blesta Addons]

I would use the </body> tag or something to keep javascript at the footer mate.

yes, you can . and it work also .

all my works/project i inject the js to the footer section .

[thynan]

Hi Naja7,

 

Tanks for the great info! I will look into this. I guess the best way is to write a plugin that matches the IP and Telephone number to the clients country, and moves the order to pending if there is a mismatch. Or maybe just gives the client feedback that he cannot register because there is a mismatch. 

 

I would be however be interested in how other EU based companies/blesta users handle this? Do you all use the maxmind system? Or do most companies just ignore the new tax regulations? Seems kinda strange that I'm the first to talk about this, as it sould affect a lot of companies.

[Paul]

It seems to me if someone provides a fake address to avoid paying VAT, then they are the ones who are committing tax fraud. This makes EU businesses into detectives.

 

Anyway, very good suggestions @naja7host!

[thynan]

It seems to me if someone provides a fake address to avoid paying VAT, then they are the ones who are committing tax fraud. This makes EU businesses into detectives.

 

Anyway, very good suggestions @naja7host!

 

I don't think so. I think it's exactly like you said. EU businesses have to be part-time detectives... it's ridiculous, but that's how i would interpret the regulation.

 

This sentence kind of says it already: 

 

 

 

The regulations state that you must get and retain two pieces of information that indicate what country your customer is in.

(see: 

http://blog.names.co.uk/2014/11/2015-eu-vat-changes-mean/)

 

 

Another blog post explains it like this:

 

The new EU VAT rules introduce some additional compliance requirements that will need to be followed by all ebusinesses, no matter where they are establised, registered [...]. Among other things they will have to:

• Identify their customers and distinguish between B2C and B2B customers
• Identify the country of residence of their B2C customers for eservices
• [...]

[...]

If ignoring the VAT requirements you are essentially committing a tax avoidance

Probably the most practical reason for most of the ebusinesses out there - the European tax authorities will be able to track and reach the offenders and be motivated to do so. 

(see: http://ebiz.pwc.com/2013/01/eu-2015-vat-changes-to-eservices-the-keep-it-simple-edition/)

[Max]

You already had to retain some evidence about the customer's country before.

E.g. to be able to exempt your American customers from EU VAT.

So that is not much new.

 

 

As brought up before, what is far more important is that Blesta is modified so that the information on invoices cannot be changed after the invoice is issued.

If the customer changes his country in the client settings, it shouldn't change the address shown on existing invoices.

The likelihood that a tax inspector notices that the country shown there, suddenly no longer matches the VAT percentage, is far more likely than that a tax inspector cross checks the customer entered country by IP-address...

 

 

Generally speaking, we have to apply different VAT percentages to customers who are ordering from differen countries. That's not a problem, because Blesta allready supports that, by checking the country of the client profile.

 

A problem does is that if you are selling to consumers (not b2b) you are legally required to show tax inclusive prices on your website, price lists and any advertising material here.

You are not allowed to require a customer to jump through hoops and sign-up first, before he can see final pricing.

So either need a simple way for the customer to select his country from a dropdown before hand (or auto-detect it with geoip) and show the correct pricing in the shopping cart and elsewhere.

Or need to use the same tax inclusive prices for all countries, and absorb any VAT rate differences yourself.

[thynan]

as

 

 

 

The likelihood that a tax inspector notices that the country shown there, suddenly no longer matches the VAT percentage, is far more likely than that a tax inspector cross checks the customer entered country by IP-address..

 

The thing is, that you as a company have to do the IP check (or any other check that "proves" where the customer is from), and provide some kind of evidence that you did, if I understand the regulation correctly. But maybe no tax isnspector will ever check for that? I don't know... 

 

 

 

 

A problem does is that if you are selling to consumers (not b2b) you are legally required to show tax inclusive prices on your website

 

Hmm, another solution may be to show all prices with the tax of your country included, and give the customer some information that the final price may be slightly different, and will be shown as soon as he logs in? There is already a message in most of the built in order forms: "Any applicable taxes will be calculated after you register or log in." 

 

So we would have to include some default tax, and change that message a bit. I don't know if that would be enough however? Is there already an option to show prices with a default tax included in Blesta? If there is, i couldn't find it yet.

[Blesta Addons]

So we would have to include some default tax, and change that message a bit. I don't know if that would be enough however? Is there already an option to show prices with a default tax included in Blesta? If there is, i couldn't find it yet.

i se a lot of providers in europe show the price net with out any tax , and then put a message that all price are excluded from (tax) that show be aded (20% ort other percentage ) , others show the price include the tax . and putting a message the prices tax included .

normally blesta show tax when client is logged and then thesystem can calculat the tax he shoud add .

but you can customize the cart with a simple change in the templates to show the the prices with tax , what you need here just to ($price->price * 1.2 ) or any other calculation that feat your need . but do not override the original price ($price->price) .

As brought up before, what is far more important is that Blesta is modified so that the information on invoices cannot be changed after the invoice is issued.

If the customer changes his country in the client settings, it shouldn't change the address shown on existing invoices.

The likelihood that a tax inspector notices that the country shown there, suddenly no longer matches the VAT percentage, is far more likely than that a tax inspector cross checks the customer entered country by IP-address...

that issue was talked before , and we have agreed that the invoice should not be changed after it was isseud , the main probleme was how to achieve this ? and we have talked in this a lot , the simple solution is to save an array of the customer detailles in the same row of invoice , so if the invoice has the customer detailles it should not fetch it from client table .

i believe that this simple tips will be fixed from the staff after the v3.4 .

[Max]

i se a lot of providers in europe show the price net with out any tax , and then put a message that all price are excluded from (tax) that show be aded (20% ort other percentage ) , others show the price include the tax . and putting a message the prices tax included .

 

It is only allowed to display pricing excluding VAT if you sell to business customers.

E.g. store chains like METRO/MAKRO that require you to register as a business customer, and require that you swipe your membership card to enter the store, do can display prices without VAT.

But at any normal supermarket, the price displayed is exactly what you pay at the cashier.

Same online.

It is fine to display pricing excluding VAT for professional business services, like website design at an hourly rate.

Or a datacenter selling $ 500/month dedicated servers. And yes, we also display pricing without VAT for software products for professional customers.

But it is not very credible to claim that hosting companies advertising $ 5 domains and webhosting are not targetting consumers.

If you sell to consumers, prices need to include VAT, period.

[Gareth-Host Red Dragon]

Depends which country in Europe your operating from. Each country has different rules regarding VAT.

[Max]

Depends which country in Europe your operating from. Each country has different rules regarding VAT.

 

If you are in Switzerland -which is in Europe, but not part of the European Union- you can have your own rules.

But for the 28 countries that do are part of the European Union that is simply not the case.

All EU directives have to be implemented into the local laws of all EU member states. Your country can essentially have more rules, but not less.

 

And displaying pricing inclusive all taxes -when selling to consumers, not being companies- is definitely a hard requirement demanded by the EU consumer protection directive.

 

DIRECTIVE 2011/83/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2011 on consumer rights

 

 

Article 6

Information requirements for distance and off-premises contracts

1.   Before the consumer is bound by a distance or off-premises contract, or any corresponding offer, the trader shall provide the consumer with the following information in a clear and comprehensible manner:

(a) the main characteristics of the goods or services, to the extent appropriate to the medium and to the goods or services;

(b ) the identity of the trader, such as his trading name;

© the geographical address at which the trader is established and the trader’s telephone number, fax number and e-mail address, where available, to enable the consumer to contact the trader quickly and communicate with him efficiently and, where applicable, the geographical address and identity of the trader on whose behalf he is acting;

(d) if different from the address provided in accordance with point ©, the geographical address of the place of business of the trader, and, where applicable, that of the trader on whose behalf he is acting, where the consumer can address any complaints;

(e) the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated, as well as, where applicable, all additional freight, delivery or postal charges and any other costs or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable. In the case of a contract of indeterminate duration or a contract containing a subscription, the total price shall include the total costs per billing period. Where such contracts are charged at a fixed rate, the total price shall also mean the total monthly costs. Where the total costs cannot be reasonably calculated in advance, the manner in which the price is to be calculated shall be provided;

(f) the cost of using the means of distance communication for the conclusion of the contract where that cost is calculated other than at the basic rate;

(g) the arrangements for payment, delivery, performance, the time by which the trader undertakes to deliver the goods or to perform the services and, where applicable, the trader’s complaint handling policy;

(h) where a right of withdrawal exists, the conditions, time limit and procedures for exercising that right in accordance with Article 11(1), as well as the model withdrawal form set out in Annex I( b );

(i) where applicable, that the consumer will have to bear the cost of returning the goods in case of withdrawal and, for distance contracts, if the goods, by their nature, cannot normally be returned by post, the cost of returning the goods;

(j) that, if the consumer exercises the right of withdrawal after having made a request in accordance with Article 7(3) or Article 8(8), the consumer shall be liable to pay the trader reasonable costs in accordance with Article 14(3);

(k) where a right of withdrawal is not provided for in accordance with Article 16, the information that the consumer will not benefit from a right of withdrawal or, where applicable, the circumstances under which the consumer loses his right of withdrawal;

(l) a reminder of the existence of a legal guarantee of conformity for goods;

(m) where applicable, the existence and the conditions of after sale customer assistance, after-sales services and commercial guarantees;

(n) the existence of relevant codes of conduct, as defined in point (f) of Article 2 of Directive 2005/29/EC, and how copies of them can be obtained, where applicable;

(o) the duration of the contract, where applicable, or, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract;

(p) where applicable, the minimum duration of the consumer’s obligations under the contract;

(q) where applicable, the existence and the conditions of deposits or other financial guarantees to be paid or provided by the consumer at the request of the trader;

® where applicable, the functionality, including applicable technical protection measures, of digital content;

(s) where applicable, any relevant interoperability of digital content with hardware and software that the trader is aware of or can reasonably be expected to have been aware of;

(t) where applicable, the possibility of having recourse to an out-of-court complaint and redress mechanism, to which the trader is subject, and the methods for having access to it.

 

2.   Paragraph 1 shall also apply to contracts for the supply of water, gas or electricity, where they are not put up for sale in a limited volume or set quantity, of district heating or of digital content which is not supplied on a tangible medium.

 

3.   In the case of a public auction, the information referred to in points ( (b ), © and (d) of paragraph 1 may be replaced by the equivalent details for the auctioneer.

 

4.   The information referred to in points (h), (i) and (j) of paragraph 1 may be provided by means of the model instructions on withdrawal set out in Annex I(A). The trader shall have fulfilled the information requirements laid down in points (h), (i) and (j) of paragraph 1 if he has supplied these instructions to the consumer, correctly filled in.

 

5.   The information referred to in paragraph 1 shall form an integral part of the distance or off-premises contract and shall not be altered unless the contracting parties expressly agree otherwise.

 

6.   If the trader has not complied with the information requirements on additional charges or other costs as referred to in point (e) of paragraph 1, or on the costs of returning the goods as referred to in point (i) of paragraph 1, the consumer shall not bear those charges or costs.

 

7.   Member States may maintain or introduce in their national law language requirements regarding the contractual information, so as to ensure that such information is easily understood by the consumer.

 

8.   The information requirements laid down in this Directive are in addition to information requirements contained in Directive 2006/123/EC and Directive 2000/31/EC and do not prevent Member States from imposing additional information requirements in accordance with those Directives.

Without prejudice to the first subparagraph, if a provision of Directive 2006/123/EC or Directive 2000/31/EC on the content and the manner in which the information is to be provided conflicts with a provision of this Directive, the provision of this Directive shall prevail.

 

9.   As regards compliance with the information requirements laid down in this Chapter, the burden of proof shall be on the trader.

[serge]

i se a lot of providers in europe show the price net with out any tax , and then put a message that all price are excluded from (tax) that show be aded (20% ort other percentage ) , others show the price include the tax . and putting a message the prices tax included .

maybe not in this EU tax context, but tax can be inclusive or not, so display of price should depend of this option.

 

 

Other:

--------

I think EU vat number can be checked from online registry and or key check, I ever saw some billing system controling that automatically

[PauloV]

Blesta should show prices with the default TAX value, if "Inclusive" option is checked on Admin interface

 

@Paulo/@Tyson/@Cody

 

Do you want a feature request for this?

 

P.S- I have a discussion about this yesterday on WHT foruns, and some peiople dont use blesta because blesta dosent inclusive TAX on prices wen enable

[Gareth-Host Red Dragon]

How are we meant to know if the person who is signing up is a business or a consumer until they sign up (ie enter that information)?

How do we know what vat rate to charge them until they enter their country?

I for one will be continuing displaying my prices on my website excluding vat, as the majority of Web hosts do (UK anyway).

If you are in Switzerland -which is in Europe, but not part of the European Union- you can have your own rules.

But for the 28 countries that do are part of the European Union that is simply not the case.

All EU directives have to be implemented into the local laws of all EU member states. Your country can essentially have more rules, but not less.

And displaying pricing inclusive all taxes -when selling to consumers, not being companies- is definitely a hard requirement demanded by the EU consumer protection directive.

DIRECTIVE 2011/83/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2011 on consumer rights

[Max]

How are we meant to know if the person who is signing up is a business or a consumer until they sign up (ie enter that information)?

If you target both, you must at least display the price inclusive VAT. Although you do are allowed to display both the price excluding and including simultanously.

Have you ever seen prices excluding VAT in a brick-and-mortar shop in the EU that caters to consumers?

Why do webhosters think things are different online?

How do we know what vat rate to charge them until they enter their country?

We charge consumers the same total price inclusive VAT, regardless where they live.

That the VAT rate differs is not their problem, it is ours. If they live in a country with a higher rate than the Netherlands we pay more VAT and have slightly less gross turnover, if they live in a country that has a lower percentage we make a little more. It all evens out, and we do not gain or lose from it.

But if you do not want to do that, you are free to prompt the customer for his country the moment he enters your site.

No need to wait for that until he registers, you don't need his full address for it....

[Paul]

Blesta should show prices with the default TAX value, if "Inclusive" option is checked on Admin interface

 

@Paulo/@Tyson/@Cody

 

Do you want a feature request for this?

 

P.S- I have a discussion about this yesterday on WHT foruns, and some peiople dont use blesta because blesta dosent inclusive TAX on prices wen enable

 

Agreed. If you don't mind, please create a new feature request. We've discussed this internally to some extent and want to get this right. I'm not sure if we have a task for it yet, but I'd like Cody to take a look and create the necessary task if not. A new thread would be perfect.

[Gareth-Host Red Dragon]

Have you ever seen prices excluding VAT in a brick-and-mortar shop in the EU that caters to consumers?

Why do webhosters think things are different online?

Actually, yes I have. There is a timber store (chain of them actually), that sells to both businesses and consumers, that displays it's prices excluding VAT. And that's just one example.

We charge consumers the same total price inclusive VAT, regardless where they live.

That the VAT rate differs is not their problem, it is ours. If they live in a country with a higher rate than the Netherlands we pay more VAT and have slightly less gross turnover, if they live in a country that has a lower percentage we make a little more. It all evens out, and we do not gain or lose from it.

But if you do not want to do that, you are free to prompt the customer for his country the moment he enters your site.

No need to wait for that until he registers, you don't need his full address for it....

I'll be carrying on displaying my prices excluding VAT on my site. The customers see the total price when they place the order, and they are welcome to decide whether they wish to proceed or not.