The EU are trying to stop multinational companies like Amazon and Google avoiding VAT by locating in low-VAT countries like Luxembourg. New regulations which take effect on 1st Jan 2015 require firms selling digital products to charge VAT in the country of sale rather than their own local country.
So far so good? Well the sting in this policy is that it applies not only to the massive firms but also to the microcompanies, sole traders and startups which often drive innovation. These firms will now have to either register for VAT in each of the EU states they are selling to or sign-up for yet another level of bureaucracy in the form of the UK ‘Mini One Stop Shop’ (a.k.a. “VAT MOSS”) which passes the VAT payments to the appropriate EU states.
Worse still, the new regulations appear to require micro-businesses selling digital products to registering for VAT, even if their turnover is below the £81k threshold.
At Ultimateweb we’re all in favour of paying our fair share of tax but please make it easy to collect and don’t force startups to wade through bureacratic treacle before they’ve even started earning decent revenue.
If you’re of the protesting disposition there is a petition worth signing here.