British PM Taking The EU VAT Campaign To EU Chief & We Need Your Help

Posted on by Clare Josa, Mentor To Passionate World-Changers
David Cameron is taking the EU VAT Action Campaign to the President of the EU Commission

As you may know, we have been working closely with the British Government and the Prime Minister himself over the past few months, on your behalf. The Prime Minister was aware of the issues with the EU VAT rules, but discussions between him and the EU Commission had been kept behind closed doors.

Last night his office went public. As the British national newspapers are now reporting, the UK Prime Minister is now publicly challenging Jean-Claude Juncker (President of the European Commission) over the new EU VAT rules, asking for a threshold below which the domestic VAT rules would apply, thereby removing the crippling unintended burden from micro businesses.

This is HUGE news and massive progress for your campaign. For the PM to go public on this, it means he is taking big action. And it will encourage other Member States to follow suit.

And the PM is so supportive of the work you have been helping us to do that we were asked to submit a quote for the Downing Street press release that announced David Cameron’s decision. And this quote has been used widely in the national press today. Your voice is being heard.

In addition, we’re really excited to tell you that the interim analysis of the survey that so many of you have filled in is being officially circulated by Downing Street, as evidence of the hugely damaging unintended consequences of the legislation. So THANK YOU to each of you who has already filled it in.

(If you haven’t yet, we’re still collecting data – here’s where to find it).

And there’s more! Caroline Lucas, MP, has raised an official question for us in Parliament today and she has a second lined up. Again, it might sound like a small step, but this is actually really important in creating the mood for legislation change. Thank you Caroline!

We are meeting with senior officials from HMRC, HM Treasury and Downing Street again this afternoon, and we’ll report back after the meeting.

We are also travelling to Brussels next week, to present to MEPs and senior members of the EU Commission, to help them understand how urgently a suspension of this legislation for micro businesses is needed.

And we need your help!

For any changes to happen, each of the EU Member States needs to agree to them. And the people who need to agree are the Finance Ministers and their EU Fiscal Attaches.

Here’s how you can help: the interim report from the quantitative study makes compelling reading and really helps people to understand that this isn’t a whinge-fest, but a real and painful issue for small businesses.

We need EACH AND EVERY Finance Minister in the EU to read this report, and to get emails from their home-grown businesses, explaining how the unintended consequences of this legislation are damaging them.

Therefore:

 

    • The list of Finance Ministers for each country and their email addresses is at the bottom of this post.

 

  • Please then let us know via the comments that you have done it – and let us know which country you are in.

It doesn’t matter if your country has already been covered – just imagine the impact that getting 100 / 200 / 5000 emails with this report could have THIS WEEK, on the back of this massive wave of publicity from the media! The time to make your voice heard by your own government is NOW!

Then join us over at our friendly and informative Facebook group: EU VAT Action Campaign Group. We would love to see you there.

And above all, thank you for your support, your determined hope and your positivity. Without your help, we wouldn’t have achieved what we have achieved so far. There’s still a long way to go. But today’s news is a truly vital step on that journey.

Thank you!
With love, and gratitude,
Clare & the EU VAT Action Team

For political & media enquiries, please call +44 7437 905 435

EU Finance Ministers

Austria

Hans Jörg Schelling,
Alternate contact: (Assistants)
Twitter: @HJSchelling

Belgium

Johan Van Overtveldt,
Alternate contact: (Policy questions email (via http://financien.belgium.be/nl/Minister/)
Twitter: @jvanovertveldt

Bulgaria

Kalin Hristov,
Alternate contact: (Central email address)

Croatia

Boris Lalovac,

Cyprus

Harris Georgiades, No direct email found
Alternate contact: http://www.mof.gov.cy/mof/mof.nsf/page05_en/page05_en?OpenDocument (Web form)
Twitter: @Georgiades_H

Czech Republic

Andrej Babis,
Twitter: @AndrejBabis

Denmark

Bjarne Corydon,

Estonia

Maris Lauri,
Alternate contact: (Chancellor)
Twitter: @MarisLauri

Finland

Antti Rinne,
Twitter: @AnttiRinnepj

France

Michel Sapin, No direct email found
Alternate contact: (Frederic Glanois: Deputy Head of Office of Ministry of Finance)
Twitter: @Min_Finances (His own account exists but isn’t used)

Germany

Wolfgang Schäuble,
Alternate contact: (Sekretariat)
Twitter: @Wolf_Schauble

Greece

Yanis Varoufakis,
Twitter: @yanisvaroufakis

Hungary

Mihály Varga,
Alternate contact: (Customer service email)
Twitter: @Varga_Mihaly

Ireland

Michael Noonan,

Italy

Pier Carlo Padoan,
Twitter: @PCPadoan

Latvia

Jānis Reirs,

Lithuania

Rimantas Šadžius,

Luxembourg

Pierre Gramegna,
Twitter: @MinFinLux

Malta

Edward Scicluna,
Twitter: @edward_scicluna

Netherlands

Eric Wiebes, No direct email found
Alternate contact: https://www.rijksoverheid.nl/contact/contactformulier (General web form)

Poland

Mateusz Szczurek, No direct email found
Alternate contact: (Central email address)

Portugal

Maria Luís Albuquerque,

Romania

TBC, TBC

Slovakia

Peter Kažimír,
Twitter: @KazimirPeter

Slovenia

Dušan Mramor,

Spain

Luis de Guindos,

Sweden

Magdalena Andersson,
Alternate contact: http://www.gov.se/pub/road/Classic/article/117/jsp/Render.jsp?a=247188&m=popup&l=en (Webform, via Senior Registary Clerk)

United Kingdom

George Osborne,

 

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

EU Digital VAT Thresholds and What We’re NOT Asking For.

Posted on by Juliet McKenna, Co-Founder of EU VAT Action
EU VAT Action Campaign: Thresholds

Our conversations with many officials and elected representatives about the EU’s new digital VAT regulations have one thing in common.

As soon as we mention the word ‘threshold’, they react as if they’ve been stuck with a hatpin. Then they hastily tell us all the aspects of EU VAT thresholds which cannot possibly be discussed for a whole range of reasons.

Then we explain that we’re not actually asking for any of these things that they are so concerned about.

So, for the sake of clarity all round, here’s what we’re NOT asking for.

We’re NOT asking for small business VAT thresholds to be equalised across Europe. We’re NOT looking for every EU member state to accept the UK’s £81,000 turnover threshold before VAT is levied, any more than we’re asking for the UK to accept Spain’s €0 threshold.

We are only interested in establishing a turnover threshold solely in relation to these new regulations relating to sales of digital services and any products supplied as digital files which have been designated as services for the purposes of this legislation.

Small businesses need a turnover threshold below which they are exempt from this legislation because the costs of new hardware and software required and the administrative burdens of compliance are massively disproportionate. This new system was designed with multinational corporations in mind which already have such infrastructure in place.

We are NOT asking for any new regulations to be applied to all small businesses across Europe below this threshold.

Assuming a single turnover threshold is established solely in relation to these new regulations, all other existing national regulations would still apply below that threshold. France’s autoentrepreneurs would keep their status, unaffected, as would Dutch small/medium enterprises, and those in Sweden, Denmark, Croatia – and start-ups in every other EU member state.

We’re NOT asking for anything that would challenge national sovereignty over domestic taxation.

But we’re NOT asking for a threshold based purely on a business’s cross-border digital trade. There are existing and differing national VAT thresholds for cross-border trade in physical goods but that’s easily done because any business sending a product in the post invariably knows where their customer is. They have to, in order to address the package for delivery.

The central problem with these new VAT on digital sales regulations is just how hard it is to know where customers are physically located when you’re dealing with them in cyberspace. At best you may find out once the transaction has been completed.

Setting a threshold that requires businesses to know if their customers are within their own country or outside their borders misses that central point. You still need to know where your customers are in order to separate your cross-border and domestic trade.

So a threshold relating solely to these new VAT regulations on digital sales requiring taxation at place of consumption needs to relate to a business’s total turnover.

We are NOT suggesting a lengthy new round of negotiations between the EU Commission and all the Financial Attachés of 28 member states, attempting to find a threshold every country agrees on. They couldn’t agree on one before which is precisely why we ended up with the default of these regulations applying to ‘all sales’.

There is a quicker and simpler solution available.

The EU has already designated any business with fewer than ten employees and a turnover of below €2 million as a ‘micro’ business. Commission directives explicitly state such micro busineses should be subject to fewer requirements and/or reduced fees for EU administrative compliance.

Micro businesses are already exempt from assorted accounting directives precisely because those impose disproportionate administrative burdens. Because tax authorities know the size of businesses which are worth their while auditing and investigating. Below that sort of level, they know that administering such close scrutiny would cost the authorities more than it could bring in as revenue.

If €2 million sounds an insanely large sum of money, bear in mind that’s turnover, not profit. It’s not uncommon for a business’s profit to be a very small percentage of its turnover. This is especially true of start-ups and enterprises in their early years. In other words, exactly the sorts of companies being hit hardest by these new regulations as they attempt to generate jobs and growth in the new global digital knowledge economy.

It’s a quick and simple solution. Exempt micro businesses from these new digital VAT regulations in the same way that they are excused from other EU directives already considered unduly burdensome.

So a new business starts up and trades under its own domestic rules, with all existing national VAT regulations applying. Whatever proportion of their business is digital can be conducted simply and easily using resources like PayPal Buy Now buttons.

Once that business’s total turnover takes it beyond the status of micro business, then they become liable for collecting and remitting VAT at place of consumption on cross-border digital sales, using the MOSS systems now in place.

That’s a level playing field.

That’s promoting a digital single market across Europe.

For more on the EU’s avowed aims to reduce the burdens on small and micro businesses, see The Small Business Act.

In 2013 an EU public consultation with small and micro businesses identified VAT as the most burdensome legislation BEFORE these new regulations were imposed.

Juliet McKenna, Co-Founder of EU VAT Action
Professional writer of epic fantasy novels with excursions into shorter fiction, darker fantasy, some media tie-in stories. Find her books here.

Contact The EU VAT Action Team

http://www.julietemckenna.com

We Took Your Voice To #10 – And Here’s How You Can Help The Campaign

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action Takes Your Voice To Downing Street

On February 17th, Juliet McKenna and Clare Josa from the EU VAT Action Team met with Daniel Korski, Special Adviser to the UK Prime Minister, and Kirsty Bell, a member of his Policy Team.

We want to say a huge THANK YOU to each of you who has written to your MP and MEPs, who has tweeted, who has visited your MP, who has managed to get local and national press coverage. We are pleased to say that, as a result of everyone’s efforts, the UK government IS now aware of the severity of the problems the new EU Digital VAT rules are causing and they are working hard to find solutions.

We took the Prime Minister’s Special Adviser through the interim analysis of the EU VAT impact survey, to help them see how profound the problems are, as well as walking him through the huge problems that the legislation is causing for you.

They had been previously fed the line that ‘3rd party platforms’ are a reasonable solution, so we helped them see how unreasonable it is to force a business to move from selling direct to having to trade through a 3rd party platform, losing up to two thirds of their revenue, just to be able to stay in business. Here’s an example for how authors are impacted by no longer being able to sell direct via their website. And we also helped them to understand that, for many businesses, third party platforms simply aren’t an option.

The government is also fully expecting technology solutions, combined with help from payment processors, to fix the problems. Alas this is a line they have been fed by a prominent pro-tech lobbying group. And, because it’s what they want to hear (who wants to have to admit that you completely forgot to consider the implications on micro businesses because the EU-wide assumption was that none of us exports and none of us sell direct through our websites…), it’s easy for them to put their faith in tech solutions.

However, the brilliant news is that we now have formal input to these tech solution meetings – so we can help to make sure that:

  1. they actually ARE compliant and
  2. they don’t require a PhD in computer programming for us to implement and
  3. the data processing load at checkout doesn’t cause shared-server-hosting to crash and
  4. the don’t cost any more than the current PayPal / Stripe fees. That’s a really tall order (or the cost of compliance is disproportionate).

However, these solutions are sticky plasters over the enormous cracks in this legislation. They miss the point that the administrative burden of this legislation is disproportionate, compared to the amount of non-domestic EU VAT that most of us will be collecting.

We are pushing hard for as high a threshold as possible, to release the smallest businesses from this legislation. But we need your help on this, or the need for a threshold could be masked by the hopes for tech solutions.

As a result of the campaign work, UK officials are now working in Europe to raise awareness at the EU Commission of the difficulties these new regulations have created. In yesterday’s meeting, as in previous high-level meetings with HMRC and HM Treasury, we discussed short, medium and longer term strategies to achieve different solutions as well as ways in which the EU VAT Action campaign – that’s everyone, including you, not just the core team – can help create momentum in Brussels in favour of change.

 

The Big Problem: Other EU Member States and the EU Commission are still insisting that this is a UK-only problem – because that is where most of the noise is coming from.

The immediate priority is to increase broader European awareness, both among governments and small businesses, of the problems they’ve got coming their way. So those European digital traders and entrepreneurs who are already aware of the issue need to contact their Finance Ministers and Tax authorities, to complain long and loud about the ways these new regulations are damaging their business.

Although we have compelling quantitative survey data and hundreds of EU-wide case studies, what has the most impact is a country’s Finance Minister receiving, say, 100 complaints directly from home-grown businesses, explaining how the legislation is hurting them, disproportionately.

We all know that the unintended consequences of this legislation are severe. We all need to convince the 28 EU Member States’ Finance Ministers that this is the case.

We need to present as much solid evidence as we can to key European Commission policy makers, as soon as we can, to reach the tipping point which will see action. That means alerting the thousands upon thousands of European businesses who are still unaware of this mess, so they can complain to their authorities and also so they can complete our survey and clarify the country-by-country picture that’s emerging (and it’s really not pretty…)

We’re investigating ways to contact European freelancer and small business associations as well as ways to get the story into the European press. The No.10 Policy Unit has offered to facilitate our efforts wherever possible on this.

In the meantime, we have an Action Challenge for you.

We need to get a big noise out in non-UK Europe. Fast.

The new EU Digital VAT implementation will be reviewed as part of the Single Digital Economy work in April this year, at the heart of the EU Commission. BEFORE that happens, we need to convince the key negotiators that the new EUVAT rules are a big enough problem that they need urgent fixing.

We need you to continue to do all you can through your own business and personal connections to spread the word and to convince your European friends and colleagues to speak up. It’s in everyone’s interests, after all!

So please comment below – to let us know how you can help and to share any ideas for how we could get more noise in the media, EU-wide and then please join us in our Facebook group: EU VAT Action Campaign Group

Thank you SO MUCH for your on-going support.

Clare Josa & Juliet McKenna & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

Alert the OECD to the EU Digital VAT Catastrophe

Posted on by Juliet McKenna, Co-Founder of EU VAT Action

The Organisation for Economic Co-operation and Development (OECD) promotes policies to improve economic and social well-being around the world. It provides a forum for governments to work together and share experiences and seek solutions to common problems arising from economic, social and environmental change. They also look at issues like how much people pay in taxes and how this affects business.

At the moment, they are looking at international VAT/GST guidelines on place of taxation for business-to-consumer supplies of services and intangibles. That’s ‘Value Added Tax’ or ‘Goods and Services Tax’ depending on where you live, equivalent to US sales taxes added at the time of purchase. Intangibles means digital products and services.

This is a hugely important opportunity for everyone to voice concerns over the ways in which start-ups and small businesses are being wrecked by the new EU regulations on VAT payable on cross-border digital sales.

OECD_clock-image

It is particularly significant for those in OECD member countries outside the EU such as the United States, Australia, Canada and New Zealand. This is the best way to make your voice heard on this matter.

Getting as many responses as possible is vital. These regulations have been devised with the biggest companies in mind. The OECD needs to know the destructive consequences for smaller enterprises and the damage that will do to grassroots economies around the world. There is currently a Discussion Draft for Public Consultation available here.

We need as many people as possible to comment on this document by 20th February 2015. You need only send two or at most three pages. The more focused your submission is, the better and please use your own words as far as possible. The more individual you make your argument, the more weight it will have.

Having researched previous similar consultations, this is the format we would use:

  1. A brief statement of who you are and the reasons for your interest in the implementation of the 2015 EU VAT changes to electronic B2C services.
  2. General comments on the problems with EU digital VAT, VATMOSS etc, briefly outlining your key concerns. Keep this section concise, just a couple of lines.
  3. Specific issues for you, your business and your particular sector. For each point that you raise, make a direct reference / citation to a specific paragraph in the Discussion Draft. Please cite the paragraph number. If you find the prospect of searching through that document off-putting, please don’t! We have identified the key reference points for you in the detailed guidelines you can download here: OECD Submission Guidelines.
  4. Conclusions/Suggestions. If you’re commenting as an individual, you need not include these. If you’re submitting on behalf of a group, you may or may not wish to include the EU VAT Action campaign’s stated aims. It’s entirely up to you.

Please prepare your response and submit it as a Word document by e-mail to Piet Battiau, Head of Consumption Taxes Unit, OECD Centre for Tax Policy and Administration at .

Once you have sent your submission, please tweet @euvataction with hashtags #OECD and #EUVAT to let us know and to help encourage other people to do the same. Please spread the word about this opportunity for positive action through your other business and social networks.

Juliet McKenna, Co-Founder of EU VAT Action
Professional writer of epic fantasy novels with excursions into shorter fiction, darker fantasy, some media tie-in stories. Find her books here.

Contact The EU VAT Action Team

http://www.julietemckenna.com

Time For An Action Challenge For EU VAT – You Might Enjoy This One – Come And Join In!

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action Challenge - 21st January 2015

Here is a fun – and potentially campaign-changing – action challenge for you – the video is only 2 minutes long and tells you all you need to know:

What to say when you visit them?

  • You might want to talk them through the briefing document (below), to dispel some of the myths, misunderstandings and fob-offs that have been flying around.

    •  

  • Explain to them how, specifically, the legislation is a problem for you and your business – and perhaps present examples from your friends, too. Be real and give them evidence.

    •  

  • If it feels right for you, ask them to insist that your government immediately suspends implementation of the legislation for micro businesses (defined as €2 million or below), whilst they lobby Pierre Moscovici at the EU Commission to exempt micro businesses completely. These micro businesses would then revert to their home country’s VAT rules.

And here is the pdf download for the briefing, in case you want to take something with you:

EU VAT Action One-Pager

You can view it online by clicking the link, or you can right click and choose ‘save as’ (or similar) to download it.

Let us know how you get on. This is your chance to make a real difference.

Thank you so much for being part of the team!

Clare & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

Donato Raponi Is Now Listening – This Is Your Chance To Make Your Voice Heard

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action Meeting With Donato Raponi

Donato Raponi is Head of VAT at the EU Commission. His name may be familiar to you because he was one of the key recipients of the December EU VAT Twitter Storm and the ‘write to your MEP’ campaign at the end of last year. He is one of the top decision-makers on the EU VAT legislation. Following lobbying from you, some dedicated MEPs, some of the campaign’s supporters in the EU Commissions and the EU VAT Action Team, he has agreed to a meeting in the next 10 working days, to discuss options on the new EU VAT rules.

He met with Syed Kamall and Vicky Ford, two British MEPs, today. They presented data we had collated for them, including a wide range of case studies and survey responses, and also evidence of why payment providers, including PayPal, can’t fix the problems faced by micro businesses for this new legislation. They took him through how things are going, since the January 1st implementation. This data proves that the EU VAT legislation causes major problems for micro businesses Europe-wide (actually worldwide) and is not just a UK problem, which was a vital point for Raponi’s team.

Donato Raponi is now beginning to understand the hugely devastating unintended consequences of the new EU VAT rules on place of supply, which have brought boardroom levels of complexity to the kitchen tables of the world’s micro businesses.

We will be representing you in Brussels at the next meeting with Mr. Raponi, supported by the MEPs.

Emma Jones from Enterprise Nation and possibly some businesses representing typical case studies will also be invited, so there will be a strong, well-informed and experienced team to make sure your voice is heard.

We will be presenting the latest data and case studies, as well as lobbying Mr. Raponi’s team to:

Immediately issue a derogation for micro businesses so that they are no longer subject to the new EU VAT rules, but instead revert to their Member State’s previous VAT regulations.

This would remove the unjustifiable burden of this legislation from all businesses below the EU’s definition of €2 million turnover.

We are not making any promises. But the fact that Donato Raponi has agreed to meet us is incredible progress and has taken several months of hard work from the groups who are involved in supporting this campaign.

So thank you for submitting your case studies. Thank you for the letters you have written. Thank you for signing the petition. Thank you for being part of the EU VAT Action Campaign Group.

How You Can Help:

  1. Write to your MEPs and ask them to tell Donato Raponi specifically how the legislation is a problem for you. Please do this ASAP!

     

  2. And if you would be prepared to be a ‘post-implementation’ case study for us to take with us to the meeting, please let us know via the comments.

We will let you know as soon as we have any more news.

In the meantime, please join our group on Facebook to make sure you hear about the next Action Challenge, which we’ll be announcing tomorrow. It’s a really important one – and it’s going to be fun!

Thank you!

Clare & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

EU VAT – How Did The First Week Go? It's Not Pretty…

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action - Week 1 Results

So the new EU VAT rules have been in force for just over a week. We’ve been working with micro businesses to understand how they have been getting on – and here are some of the stories we have seen in the first week of the implementation of these new EU VAT rules.

  • Businesses are closing
    We have heard from 200+ UK businesses who have closed completely because they cannot deal with the administrative burden that the new rules place on them. It was either economically unviable for them to comply or they simply couldn’t face the administrative burden and have decided it’s no longer worth running a business. The case study comments are heart-breaking and are a devastating unintended consequence of this legislation, which could be immediately rectified by applying the existing distance selling thresholds to digital goods – even on a temporary basis.
     
  • Businesses are refusing to sell outside their home country
    We have seen many examples of EU businesses excluding EU sales from outside of their home Member State, to avoid the rules, which of course breaches fair trading & discrimination rules and causes the business to lose money. If you’re selling via a website, then your business is automatically worldwide. It is crazy to have to turn away customers, just to avoid the EU VAT administration burden.
     
  • The EU is becoming an outcast
    We have seen MANY examples of USA companies now refusing to sell to EU consumers, so that they won’t be hit by the new regulations, even though they already applied to the USA. This reduces consumer choice. Prices are increasing, too, to help cover the regulatory burden and the VAT ‘fudge factors’ (see below), so consumers are being hit twice.
     
  • Consumer choice cut and prices rise
    We are aware of thousands of businesses who have now dropped digitally-delivered services from their website, which will potentially damage their business and was never their intention, prior to hearing about the rules. It simply doesn’t make business sense to exclude digital products in this age, but they feel they have no choice.

    Many of those who are keeping digital products have had to put up prices to cover the extra VAT and the huge amount of admin.
     

  • Major 3rd party platforms aren’t complying
    Many of the major 3rd party platforms, including Etsy (massive for sole trading craft sellers) have not been able to comply, even though their compliance was a requirement of the legislation. If they can’t comply, how can a sole trader?
     
  • The sticky plasters are helping, but they’re a temporary fix and taking them off will hurt
    The concessions we have negotiated from HMRC and HM Treasury in the UK have kept many people in business, but will only last for six months.
     
  • The UK won’t get the millions it was promised.
    The news we are hearing this week from businesses is that Estonia has done a good job of publicity and there has been some in the Netherlands and Germany, but that’s about it. France is unofficially exempting those below the VAT threshold and Italy has failed to implement the legislation. The vast majority of affected EU businesses have still not heard about this legislation, which is why the UK is being so much more vocal than non-UK.
     
    The downside of this is that, in the UK, we’re crippling our smallest businesses in order to collect tax on behalf of other countries, who aren’t reciprocating with the same gusto, meaning the £300 million per year of ‘cherries’ that the UK government was promised for implementing this is unlikely to come our way.

Impossible Things To Do Before Breakfast, Including Complying With EU VAT

To help national governments and the EU to understand why their current, “there, there, dear” response isn’t adequate, we have been collating a list of aspects of the legislation that are ‘impossible’ or at best economically unviable and unreasonable, for micro businesses.

It’s a work in progress, as people start trying to comply, but here are five of our ‘favourites’ so far:

  1. Display the correct price.
    You don’t know where a customer is based until the final stage of the checkout process. The UK and some other Member States require you to display the VAT-inclusive price at all times. You can’t do this unless you know where your customer is and if you insist on them declaring their country before visiting your sales page, you’re likely to lose the sale.
    Even if you could get their country, the 90% of businesses below 100,000 € turnover use PayPal’s ‘buy now’ buttons, rather than a shopping cart, so you wouldn’t be able to display the correct price. It’s coded into the website page, not the shopping cart.
    Most micro businesses are having to bypass this by applying a best guess ‘fudge factor’ to cover VAT and then work it out afterwards. This causes UK and worldwide prices to go up unnecessarily, to compensate for Hungary’s 27%, and is already costing people sales because the digital market is so price-competitive. And it’s a completely unjustifiable level of admin for the sale of, say, a €2.99 e-book.
     
  2. Manually email, to bypass the VATMOSS rules, but actually get the email to arrive.
    We have already seen people whose Yahoo accounts have been blocked for spamming because manually sending a pdf to a stranger (a customer) multiple times a day sets off the spam alerts for the main free email providers. This effectively closes this person’s business until they can get their account unblocked. As requested, we will write to the key email providers for statements on this.
    Even if you can send the pdf, most incoming email servers automatically reject emails with large file attachments from people not in your address book or whitelist, because there is a high risk that these are from spammers or contain a virus file.
    So we have moved from instant downloads with happy customers to grumpy customers who have to wait for a manual email that may or may not ever arrive. Getting a reputation for spam can also cause your email address – and even your website server – to be blacklisted as a spammer, meaning you are then dropped from Google search results.
     
  3. Apply the correct rate of VAT.
    Most of these businesses use PayPal or other very small business shopping carts. Some of these CAN handle country-based VAT, but not until the final stage of the checkout process. And they can’t handle multiple rates per country. If you sell an e-book (with ISBN) and a pre-recorded course to a customer in Italy, the transaction requires two different VAT rates.
    If you sell that same e-book with a live webinar, then the e-book is taxable in the place of supply, but the webinar is exempt from the new rules and is taxable in the business’s country. So you could have two different countries in one transaction. Micro businesses are not set up to handle this level of complexity.
     
  4. Accurately collect the place of supply.
    Customers will quickly realise that, for example, pretending to be in Luxembourg gets them a discount. It is easy for a customer to declare a false address on a web page. It is also easy to use software to fake your IP location. As studies have shown this week, IP addresses are also incorrect in up to 10% of cases.
    And if customers buy during their lunch break at work, most companies use secure VPN instead of IP, so you wouldn’t get the IP data. It’s not available from mobile devices. So the customer’s declared address and the system IP address are not reliable pieces of data.
    And most micro businesses don’t have access to data such as the country code of the landline / mobile used for the transaction or the credit card bank details – and nor should they. These businesses simply cannot comply with the place of supply data collection requirements. And if the customer is buying after clicking an email link then they potentially never visit your website, so you have no way of collecting anything other than their PayPal account address.
    And there are huge concerns with them storing this data for 10 years.
     
  5. Get the Member States to agree on what ‘digitally-delivered’ means.
    The UK HMRC has been helpful and has issued clear guidance, clarifying it and adding definitions each time we have requested them. However, these definitions are quite different to those in, for example, Holland and Spain. In those states, the proportion that is ‘digital’ falls under the law and the proportion that is live doesn’t.
    In the UK, any product with more than minimal human intervention is exempt. A business cannot comply with the different definitions for each of the 28 Member States.

These examples illustrate some of the administrative nightmare that has now hit the smallest businesses, as a direct result of this legislation.

The next size up of businesses have had to fund website developers to create hugely complex shopping carts to handle it for them. But even for them the cost has been huge. One business I spoke to yesterday has just had to pay £100,000 to upgrade their server to handle the data processing needed by the hugely expensive EU VAT-compliant shopping cart they have had to develop. This is still a micro business (turnover < €2,000,000), so the compliance has been a huge hit for them this year. The biggest companies, such as Amazon and iTunes, were already geared-up for international sales, so this transition has been easy for them.

Ironically, a major side effect so far has been driving even more micro businesses into the arms of these 3rd party platforms, hugely cutting the micro businesses’ margins and increasing the profits of those whose behaviour drove the creation of this legislation.

If you have news from the first week of implementation or an idea for the ‘impossible things to do before breakfast’ discussions, please let us know at the EU VAT Action Campaign Group on Facebook.

If you’re not into Facebook, please tell us your news & ideas via the comments below.

Thanks!
Clare Josa & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

EU VAT Update – It’s Time To Crank Things Up A Gear – Find Out How You Can Join In

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action Update

January 1st 2015 brought the introduction of the new EU VAT rules, complete with their devastating unintended consequences for the smallest businesses. It’s time to crank things up a gear or 20 – find out how you can join in.

As a result of the campaigning in November and December 2014, the blow was less hard than it could have been, but we have still heard from hundreds of businesses who have already closed because they cannot handle the corporate levels of administration that the changes have brought, and many others who have dropped selling digital goods, which will damage their businesses. And this is just the beginning.

We have achieved some positive concessions, at the sticky-plaster (Band Aid) level, but there are still huge issues facing many businesses, due to the new legislation.

It’s time for the next steps.

The campaign has already grown massively in the past two months and we now have a consultative voice, on behalf of the smallest businesses and sole traders, on key UK committees, as well as having the ear of the EU Commission.

The 2015 campaign aims are:

  1. Immediate: businesses to call their national government to immediately suspend the implementation of the legislation due to the devastating unintended consequences for micro businesses, whilst it is reviewed.
     
  2. Short-term: to obtain a fair and reasonable exemption threshold, to apply worldwide
     
  3. Short-medium-term: to work with the key EU decision-makers to review this legislation from the ground up, reworking it to be practical, fair and reasonable, even for the smallest companies
     
  4. Long-term: to work at a global level to ensure that the other countries who are bringing in similar place of supply VAT legislation learn from the experiences we are having in the EU and avoid repeating the same mistakes.

Although this tax is from EU legislation, we see it as a global problem. And we are seeing more and more nations wanting to apply similar ‘taxation at the place of supply’ models, which could quickly create such an unworkable administrative burden for micro businesses that they become unable to trade outside of their home country. As business owners, we cannot allow the mistakes in the current EU legislation to be replicated internationally. Yet, unless we all take inspired action, that is what will happen.

Over the coming months, we will progress the campaign aims in many ways, including meetings, lobbying, working with politicians, working with the media, getting input into February’s OECD document, Twitter storms (next one likely to be w/c 12th Jan), and much, much more. Please join us on Facebook and keep an eye on our updates here and on our Twitter feed to make sure you know what’s coming next.

But we can’t achieve the campaign goals without you.

How you can help.

Join us – help us get to know you, your business, your unique challenges and how you could help the campaign. And find out how best to make your voice heard – to make a difference. Our campaign group is the ideal place to get answers to your questions, to find out how to get inspired by the Action Challenges, to connect with other businesses and to help each other keep trading and find workable solutions, while the campaign works towards its goals.

Here’s where you’ll find us: EU VAT Action Campaign Group

This is a new Facebook group. The campaign has grown so big that it needed its own space and we would love you to come and join us there.

 
Take Action Now – from signing the petition through to completing the survey through to writing to your MP / MEPs / Congressman through to hassling your payment provider and generally spreading the word, there are so many different ways you can make your voice heard. Here’s some more inspiration.

Today’s Action Challenge – tell us how you could help! If you’ve got an idea for an action people could take, someone we should be speaking to or a skill you could share with the campaign, please let us know via the comments. We don’t pretend to have all the answers and working together is the only way we will co-create the climate for change that is so desperately needed.

Thank you so much, as always, for your on-going support.

Together, we can make a difference.

Clare & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

EU VAT Update – It's Time To Crank Things Up A Gear – Find Out How You Can Join In

Posted on by Clare Josa, Mentor To Passionate World-Changers
EU VAT Action Update

January 1st 2015 brought the introduction of the new EU VAT rules, complete with their devastating unintended consequences for the smallest businesses. It’s time to crank things up a gear or 20 – find out how you can join in.

As a result of the campaigning in November and December 2014, the blow was less hard than it could have been, but we have still heard from hundreds of businesses who have already closed because they cannot handle the corporate levels of administration that the changes have brought, and many others who have dropped selling digital goods, which will damage their businesses. And this is just the beginning.

We have achieved some positive concessions, at the sticky-plaster (Band Aid) level, but there are still huge issues facing many businesses, due to the new legislation.

It’s time for the next steps.

The campaign has already grown massively in the past two months and we now have a consultative voice, on behalf of the smallest businesses and sole traders, on key UK committees, as well as having the ear of the EU Commission.

The 2015 campaign aims are:

  1. Immediate: businesses to call their national government to immediately suspend the implementation of the legislation due to the devastating unintended consequences for micro businesses, whilst it is reviewed.
     
  2. Short-term: to obtain a fair and reasonable exemption threshold, to apply worldwide
     
  3. Short-medium-term: to work with the key EU decision-makers to review this legislation from the ground up, reworking it to be practical, fair and reasonable, even for the smallest companies
     
  4. Long-term: to work at a global level to ensure that the other countries who are bringing in similar place of supply VAT legislation learn from the experiences we are having in the EU and avoid repeating the same mistakes.

Although this tax is from EU legislation, we see it as a global problem. And we are seeing more and more nations wanting to apply similar ‘taxation at the place of supply’ models, which could quickly create such an unworkable administrative burden for micro businesses that they become unable to trade outside of their home country. As business owners, we cannot allow the mistakes in the current EU legislation to be replicated internationally. Yet, unless we all take inspired action, that is what will happen.

Over the coming months, we will progress the campaign aims in many ways, including meetings, lobbying, working with politicians, working with the media, getting input into February’s OECD document, Twitter storms (next one likely to be w/c 12th Jan), and much, much more. Please join us on Facebook and keep an eye on our updates here and on our Twitter feed to make sure you know what’s coming next.

But we can’t achieve the campaign goals without you.

How you can help.

Join us – help us get to know you, your business, your unique challenges and how you could help the campaign. And find out how best to make your voice heard – to make a difference. Our campaign group is the ideal place to get answers to your questions, to find out how to get inspired by the Action Challenges, to connect with other businesses and to help each other keep trading and find workable solutions, while the campaign works towards its goals.

Here’s where you’ll find us: EU VAT Action Campaign Group

This is a new Facebook group. The campaign has grown so big that it needed its own space and we would love you to come and join us there.

 
Take Action Now – from signing the petition through to completing the survey through to writing to your MP / MEPs / Congressman through to hassling your payment provider and generally spreading the word, there are so many different ways you can make your voice heard. Here’s some more inspiration.

Today’s Action Challenge – tell us how you could help! If you’ve got an idea for an action people could take, someone we should be speaking to or a skill you could share with the campaign, please let us know via the comments. We don’t pretend to have all the answers and working together is the only way we will co-create the climate for change that is so desperately needed.

Thank you so much, as always, for your on-going support.

Together, we can make a difference.

Clare & the EU VAT Action Team

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book

Hot Off The Press: Concession From UK HMRC Will Enable More Firms To Keep Trading

Posted on by Clare Josa, Mentor To Passionate World-Changers
Last-minute update from HMRC

Here’s the update we were promised on Christmas Eve! We have been working on this with HMRC and HM Treasury over the past 2 weeks but had to hold off telling you until they had put it in writing, for obvious reasons.

Basically HMRC has agreed that, for those in the UK below the VAT threshold, you can use the information provided by your payment processor ( PayPal or equivalent) as your evidence for proof of place of supply until the end of June.

This is an enormous achievement, due to the thousands of people who have taken action in this campaign, so thank you!

It’s not perfect. It doesn’t fix the rest of the problems. To be honest (see below) HMRC themselves can’t fix most of those. But it WILL allow more people to keep trading, while we all negotiate a reworking of the rules and a sensible threshold.

Here’s the text:
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

Support for MOSS registered micro-businesses until 30 June 2015

UK micro-businesses that are below the current UK VAT registration threshold, and who register for the VAT Mini One Stop Shop (MOSS) may, until 30 June 2015, base their ‘customer location’ VAT taxation and accounting decisions on information provided to them by their payment service provider. This means the business need not require further information to be supplied by the customer.

As payment service providers already collect and hold a minimum of 2 pieces of information about the member state where the customer usually resides, the transitional period, until 30 June 2015, will give micro-businesses additional time to adapt their websites to meet the new data collection requirements.

This is wonderful news for those who have been looking at having to close their doors.

However, the majority of the issues we outlined in our last update still stand, including:

  • We don’t know what the price is until after the sale, because we don’t know the location (and hence VAT rate) until after the checkout
  • We can’t always apply the correct VAT rate because most checkout systems cannot handle the new level of complexity, and most micro businesses are too small to have access to the more flexible ‘big player’ custom-programmed systems
  • You can’t please each EU Member State – many are interpreting the definition of ‘digitally-delivered’ differently
  • The assumptions the EU used to implement the legislation without considering the impact on the smallest businesses and sole traders were fundamentally flawed, because they incorrectly assumed that we don’t trade internationally and that we all use 3rd party platforms – most of whom will not be compliant with the legislation
  • Consumers can still ‘fake’ their IP address (a proof of place of supply) and after this 6 month concession we will still need to have ways to collect and compare the 2-3 pieces of evidence for location
  • The data protection issues have still not been resolved and are a huge cause for concern
  • The administrative burden of having to process even the tiniest transactions to retrospectively apply the correct rate of VAT is unreasonable, compared to the amount of VAT that will be collected from most micro businesses

These issues are beyond the scope of HMRC to include in their initial ‘light touch’ approach and require an urgent re-working of the legislation.

We need each EU Member State’s government to put pressure on the EU decision-makers to remove these unintended consequences and to allow businesses to keep trading in 2015.

We will continue to actively and urgently campaign for a suspension of the legislation, while it is fully reviewed, to make it workable, long-term, with a sensible exemption threshold.

Thank you for your on-going support and positivity. We’ll be bringing you some more action challenges very soon!

Thank you so much for your continued support!

Clare Josa, Mentor To Passionate World-Changers
Author of the Dare To Dream Bigger Entrepreneur’s Handbook.
 
>>> Contact The EU VAT Action Team <<<
http://www.daretodreambigger.biz/book