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

[vp49p3 216]

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?

[Firefrox 1]

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.

[dave2013 1,123]

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

[Matthew Kane 1,343]

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 

[vololiberista 205]

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.

[Firefrox 1]

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).

[mgh 89]

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

[Firefrox 1]

Aerosoft ist quite the opposite of a small business

[Slayer 190]

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? 

[Matthew Kane 1,343]

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

[JASPRUDENTE 0]

If this is a large threat, shouldn't other developers headquartered in the EU be complaining as well? So far I've only seen FSAddon make note of this. Aerosoft and SimMarket are both based in the EU I believe.

[FloG 148]

I'd say that smalles businesses are much more affected by this than larger ones, perhaps other niche industires are affected as well, and we just haven't heard of any so far?

The entire flight simming business is rather small, so I think that "threat" might be the right word indeed (but of course not only for flight sim developers). FSAddon are just too small to be able to afford all the necessary changes; AS and SimMarket have enough money to afford this, but I read a post by Mathijs Kok over at the Aerosoft Foums, where he said that it is extremely expensive even for them, and there is little sense in it.

What might be wrong in with the title, though, is the word developers: As far as I understand it, this is an issue that affects vendors much more than the actual developers (as the example of FSAddons shows).

[mgh 89]

If this is a large threat, shouldn't other developers headquartered in the EU be complaining as well? So far I've only seen FSAddon make note of this. Aerosoft and SimMarket are both based in the EU I believe.

 

My point also - where are all these others, specially as the law is now in force.

 

This change changes only to applies to firms that sell their products direct to consumers. A developer has the option of not selling  to consumers but of using a re-seller.

[JRBarrett 3,034]

This is little different than the issue that larger Internet retailers face regarding the collection of state sales taxes in the United States.

 

Although the USA does not have a VAT tax as such, almost all 50 states have some form of sales tax that residents must pay on purchases. The laws in individual states vary widely regarding which specific kinds of goods or services are taxable, as well as the specific tax percentage charged.

 

Many states now require large Internet vendors (like Amazon) to collect sales tax for products shipped to individuals living in the state(s) in question, even though the vendor may have no physical presence in the state.

 

I believe that the typical state definition of "large" vendor is one with over 1 million dollars in annual revenue.

 

Other states do not require vendors themselves to collect sales taxes, but require individuals to report their out-of-state purchases on their yearly state income tax returns.

 

There is yet no federal (nationwide) regulation regarding the collection of state taxes on Internet sales - but their have been several pieces of proposed federal legislation introduced in Congress - none of which have as yet proceeded beyond the commitee stage.

 

In any case, as Virtuali mentioned, there are already companies in the EU which will provide the back office functions of handling the collection and reporting of VAT taxes on behalf of Internet vendors for a modest per-transaction fee, so it seems that this issue is "much ado about nothing".

[n4gix 4,947]

...AS and SimMarket have enough money to afford this, but I read a post by Mathijs Kok over at the Aerosoft Foums, where he said that it is extremely expensive even for them, and there is little sense in it.

The service* that Umberto (virtuali) posted a link to will take care of the entire process, including supplying quarterly documents ready for submission, processing of all sales, and handle the archiving requirements...

 

...for a modest fee of only € 0.20c/transaction up to 2,000, and scaling down to as low as € 0.02c/transaction as total sales transactions increase.

 

I suggested this to Francois and he immediately rejected it as an viable solution.

 

* http://www.taxamo.com/