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EU threatens flightsim developers - New EU VAT-regulation is coming in 2015

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"On 1 January 2015, a new EU ruling concerning value-added tax (VAT) on telecommunications, broadcasting & electronic services comes into force. It should ensure more fairness in the EU-wide VAT distribution but tremendously affects small one-man-businesses or startups as they commonly exist in the flightsim community. Francois Dumas effectively closed his FSAddon online store yesterday facing the expenditure connected with the new regulation. What you need to know about regulation number 1042 /2013 can be found over at flusinews.de".

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So here is a good business idea for someone living in the EU.  Start a company that simplifies the process and handles the back end for all of these small businesses.  Charge a very small fee on all transactions.  

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Charge a very small fee on all transactions

And do what? The market would be so small that people will just simply close shops!  The mandarins in EU did it again, trying to squeeze every bit of tax left and kill all the geese.  

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I find this a very strange move, it does indeed appear to make sales incredibly hard. I don't have any knowledge on the topic of the European tax system, but (while it does make sense from the governments' point of view) this seems to be lethal to small vendors.

However, I would like to remind everyone to stay on topic and don't let this become a political discussion!

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It depends entirely on what country in the EU you live in. For example in the UK the VAT threshold is above £80,000. Here it depends on the type of work you do. For example for an artist the threshold is EU5,000 for a self employed professional there is no threshold. The Eu is all about common wealth. But vat totally destroys that.  For example an artist in the UK doesn't pay vat for exhibiting etc. (unless of course their artist's income is over the threshold). But for an EU artist wanting to exhibit in the UK there is no threshold. So no commoness there then!

For a self employed professional here the taxes are the highest in Europe. 23% income tax + 22%vat + 28% inps(national insurance for health and pensions)

So your actual income is only 27% !!

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I've been expecting this for some time.  For example, the U.S. Govt. is also getting more aggressive when it comes to taxing its businesses that are technically headquartered in another country with a lower tax rate.

 

Many may not know this, but U.S. citizens, no matter where they live in the world, have to pay U.S. taxes. Yes, we have to file tax returns regardless of where we reside. Now, you get a credit for any foreign taxes you pay, but still you must comply with U.S. Govt. tax regulations even if you live in another country.

 

I predict that within the next decade, all G20 nations will have some common tax regulations and policies that allow each country to efficiently tax its companies, citizens, and residents no matter where they reside.

 

The solution to high tax rates that hurt small businesses: vote out the worthless politicians who foist these ridiculously high taxes on their own people.

 

Dave

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EU threatens flightsim developers simply isn't true.

The EU is changing the tax rules to cover all sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities).

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" . . . However, I would like to remind everyone to stay on topic and don't let this become a political discussion!"

Hmmm . . . So much for that hey Florian! :lol:

JJ

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Canada also has a lower limit for businesses on collection of our VAT (which we call the GST or HST depending on which province you live in).  I think the lower threshold is $30,000/year.

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" . . . However, I would like to remind everyone to stay on topic and don't let this become a political discussion!"

 

Hmmm . . . So much for that hey Florian! :lol:

 

JJ

Jean-Jaques, you're right - if this isn't a political discussion then I guess noone knows what this actually is. What I wanted to remind everyone was to keep away from political name-calling, and I had the feeling that the post prior to mine (#3) was coming close to that, but perhaps I'm overly sensitive there?

Anyway, I should perhaps think a little more about what I mean to say and what I end up writing :lol:.

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EU threatens flightsim developers simply isn't true.

 

The EU is changing the tax rules to cover all sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities).

Granted the new scheme actually "threatens" all small business owners. However, all such hair-splitting aside, the end result remains the same.

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No one is being threatened. The terms of business have changed and any changes, like these, always result in self-pleading about how it's all terribly unfair,  the world will end, and the sky will fall etc etc. Tthe reality is most companies will survive.

The deadline for this change is now only 2 days away -  on 1 January 2015. How many other flight simulator developers have changed their activities - only one as far as I know?
 

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So here is a good business idea for someone living in the EU.  Start a company that simplifies the process and handles the back end for all of these small businesses.  Charge a very small fee on all transactions.

Already done:

 

http://www.taxamo.com/

 

Fees are very reasonable, 20 cents per transaction for less than 2000 transactions per month, and less if you do more.

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No one is being threatened. The terms of business have changed and any changes, like these, always result in self-pleading about how it's all terribly unfair,  the world will end, and the sky will fall etc etc. Tthe reality is most companies will survive.

Well "duh!", Gerry. Why else would I have put the hyperbole in quotation marks? Must you always be so literal minded?

Fees are very reasonable, 20 cents per transaction for less than 2000 transactions per month, and less if you do more.

That sounds like a very reasonable charge for such a valuable service. It doesn't help the consumer all that much, but for a small business owner it should minimize the pain considerably!

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Hello Folks - I might remind everyone that at present purchases by US and most non-EU buyers are now exempt from paying EU VAT. Whenever I purchase at Sim Market there have always been prices listed with and without VAT. Based on my account profile in Sim Market the posted VAT has always been removed when I check out. Does anyone know if that will change?

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There is no EU-VAT charged for customers outside the EU if you buy from stores in the European Union, so this won't change.

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There is no EU-VAT charged for customers outside the EU if you buy from stores in the European Union, so this won't change.

I've no doubt that the politicians will remedy that in the near future. :wink:

 

Dave

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I don't  think we are too far off of countries charging local taxes for downloads regardless of where the purchaser is from. No different to when I visit Disneyland from New Zealand, even though I am not a US Tax Resident I still have to pay goods and services taxes on my trip.

 

For now keep on enjoying these exemptions while we still can. I am surprised this has lasted this long 

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There is no EU-VAT charged for customers outside the EU if you buy from stores in the European Union, so this won't change.

That's not quite correct. If I'm in the EU and can find a service or product outside that can also be found within then vat is charged to the customer even if they are outside the EU. The price given to the customer is a single price but is vat inclusive from the point of view of the EU vendor.

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Sure, vololiberista. When you buy physical good, this is the case. But not for digital sales (can be seen on the EU commission page linked in the article).

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Aerosoft, for example, has no problems - as I suggested, it never was a problem.
 

New EU VAT regulations     Thursday, 01.01.2015

As you might have heard there is new VAT regulation that went into effect today. Up to this moment you would pay the VAT of the country where the seller is based (in our case Germany), but from now on you will pay the VAT of the country you are in. We determine this from the IP address you are using when connected.  So while the base price of a product is the same, the actual sales price might differ slightly. This ONLY affects sales to EU customers, for non EU customers nothing has changed and no VAT will be charged.  If you have questions we are standing by to assist!

 

http://en.shop.aerosoft.com/eshop.php?action=home&shopfilter_category=Flight+Simulation&s_design=DEFAULT&s_language=english

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Wondering how this pertains to software licenses because in truth you don't own the software you are paying to be able to use it so what exactly are they taxing? 

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Wondering how this pertains to software licenses because in truth you don't own the software you are paying to be able to use it so what exactly are they taxing? 

 

This is why it is referred to as a Goods and Services tax...

 

You buy shoes, you now own shoes, this is a tax on Goods

You get a haircut, you already owned the hair and now have less of it so that is considered a tax on services, same sort of thing when servicing your car etc

 

Software Licence agreement or Software Subscriptions is considered a service and not goods

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