It is not related to your IP, but on your post address. So feel free to enter the address of your vacation home in Dubai and you will find that you don't have to pay VAT. This is true for all stores that charge VAT.. and clearly only problematic if you want to order Hardware... where it makes kind of sense that you pay VAT.

Good point,Simon. I'll leave it at that, as I have no intention of ever buying from Aerosoft again.

6 hours ago, skelsey said:

Strictly speaking of course even US based sellers are supposed to ensure that VAT is paid at the appropriate rate for all sales to the EU.

What I will say is that I don't like paying taxes any more than the next guy, but at the end of the day businesses are bound to comply with the law. Do we really want to lose all our locally-based companies by sending all our cash off to less scrupulous retailers in the States or wherever in the name of dodging a bit of VAT?

It's not up to me to tell a US company how to run its business. I provided my home address and the rest is up to them. I can assure you the company I buy from is well known and scrupulous.

43 minutes ago, vc10man said:

Good point,Simon. I'll leave it at that, as I have no intention of ever buying from Aerosoft again.

If you want the Honeycomb Aeronautical yoke/throttle you will only be able to buy from Aerosoft as they're the official European supplier.

1 hour ago, Ray Proudfoot said:

If you want the Honeycomb Aeronautical yoke/throttle you will only be able to buy from Aerosoft as they're the official European supplier.

Then,Ray, I'll either skip it,or if push comes to the shove, will get my USA-based sister to buy it and them mail it to me. There is more than one way to skin a cat, if you get my drift!

Good alternative Rick. It might be possible to buy direct from Honeycomb. Keep that in mind.

5 hours ago, w6kd said:

No, I don't think that's correct about VAT/sales tax collection across the pond.  I don't know of any strictly US-based retailers collecting VAT for the EU, nor do I know of any EU-based retailers collecting US sales tax.

Now, if your company has presence in both venues, or you use a billing service located in the other or both venues, the rules may well change.

I don't think that a US retailer selling downloads to EU customers without collecting VAT is at all unscrupulous, just as the large european software houses sell to US customers without collecting sales tax.

Regards

 

Hi Bob,

It is definitely the case that any company selling (in particular digital services such as software downloads/subscriptions etc -- as obviously hardware imports tend to get 'trapped' at customs anyway) to an EU consumer is required to comply with EU VAT law. https://www.vatlive.com/eu-vat-rules/distance-selling/2015-eu-vat-changes-to-electronic-b2c-services/ is a relatively pain-free summary (I did start trying to wade through the orginal legislation but I glazed over within a couple of lines!)

However, how well-known this is for small businesses outside the EU I don't know and I would imagine the likelihood of the taxman going chasing non-EU companies to be quite small, at least for now.

Regarding US sales tax -- a (very) quick bit of research suggests that this may well start to change soon as many states are now starting to require international sellers to collect sales taxes if their sales in to the state exceed a certain threshold.

Frustrating as it may be for consumers, the international tax system is, very slowly, starting to catch up with the times. The fundamental problem is that the tax laws were designed for an economy where people bought all their stuff from a local bricks and mortar shop, and almost all the importing of goods and services was done on a business-to-business basis. However, with the advent of the Internet of course sellers can locate themselves literally anywhere in the world virtually at the click of a button, and electronic purchases such as software downloads, video, e-books etc plainly never go through a physical customs border in the way that physical goods do. The result has been a huge imbalance against bricks and mortar stores who have no real way around their local tax regime, and increasingly a huge imbalance favouring foreign retailers of electronic goods against locally-based suppliers. In the long term, this is not great for anybody -- not least the taxman. As a consequence, I would imagine that as time goes on cross-border tax arrangements and legislation will become increasingly robust, because it's in no government's interest to turn a blind eye to what effectively become duty-free electronic imports.

The EU can make laws requiring its own citizens to pay and their businesses to collect a VAT...but as far as their ability to make enforceable laws imposing any sort of duty upon foreign nationals located outside the EU to do their collection work for them, well, good luck with that.  As I recall, we yanks fought and won a war about 235 years ago, a long bloody war which started in large part over the very issue of taxmen working for a foreign power named George III chasing our countrymen.  Dang, now I have this vision of thousands of Aerosoft scenery CDs floating next to a container ship in Boston Harbor...  😉

The argument about the effects of online sales on brick-and-mortar stores isn't really pertinent to downloadable software...it's not like there's an at-risk local download shop with a storefront and a guy sitting there answering the phone.  Physical goods are different.

BTW, does the company in the banner on your signature collect sales tax from their US customers?  (Hint--no, they do not)  Surely you don't think that makes them less than scrupulous?

Regards

 

 

9 hours ago, w6kd said:

The argument about the effects of online sales on brick-and-mortar stores isn't really pertinent to downloadable software...it's not like there's an at-risk local download shop with a storefront and a guy sitting there answering the phone.  Physical goods are different.

I’m old enough to remember when software — even games — was sold exclusively in brick-and-mortar stores. And I’m not really that old. 😀

Not saying I want to go back to that world, of course. Just sayin’.

James

10 hours ago, w6kd said:

The EU can make laws requiring its own citizens to pay and their businesses to collect a VAT...but as far as their ability to make enforceable laws imposing any sort of duty upon foreign nationals located outside the EU to do their collection work for them, well, good luck with that.  As I recall, we yanks fought and won a war about 235 years ago, a long bloody war which started in large part over the very issue of taxmen working for a foreign power named George III chasing our countrymen.  Dang, now I have this vision of thousands of Aerosoft scenery CDs floating next to a container ship in Boston Harbor...  😉

😂 now there's an image!

I agree with you about the enforcability, at least at present, but I still think that going forward we'll start to see more reciprocal agreements about this sort of thing.

The issue of protecting high street stores aside, it's as much about government revenue streams: as James alludes above, in the pre-download era, the software would have had to have been shipped to the US on CDs, where the US tax authorities would have taken a slice of import tax, followed by a further slice at state level from the sales tax on the purchase by the consumer (not counting the other taxes on the store selling the CD).

Now, instead, the same person in the same place can purchase the same software and the US government sees nothing -- likewise for any other countries where someone purchases the software. If one was to locate one's virtual download shop in somewhere like Grand Cayman or Barbados, for example (and with no physical premises for it's a lot easier to do that with a website than it is an actual store!), the net result is that the tax authorities in all the places where previously the consumer would have paid some form of VAT/sales tax by virtue of purchasing the item in a store physically located in that country see nothing. Hence the shift toward charging VAT online based on the location of the purchaser, rather than the location of the company as it was in the past. As I say, maybe I'm just cynical but I can't see the governments of the world being prepared to just shrug their shoulders and wave goodbye to that revenue for ever, hence why whatever the situation now, I would not be at all surprised to see increasingly tighter regulations and more aggressive enforcement at some stage in the future, whatever that may look like.

Re: you second question: I have no doubt that the internationally-recognised (and US-based) vendor that handles the storefront for the company in question is compliant with the relevant legislation; if and when a particular US state passes a law stating that sales tax on electronic software must be paid based on the location of the purchaser I am almost 100% certain that would be reflected. At present I think most, if not all states where there is such a requirement have a $100,000 sales volume threshold (i.e. a company -- including those based abroad -- has to be turning over more than $100,000 per tax year in sales from within the state) before they are required to collect sales tax, but I am by no means an expert on the US tax system!

Australia has removed the minimum limit so all imports are taxable and at least in the case of strores such as Amazon makes the paymewnt medium responsible..eg Paypal.

Not quite sure how it works.

https://www.vatlive.com/vat-news/australia-gst-on-e-commerce-1-july-2018/

https://www.smartcompany.com.au/finance/tax/eofy-smartcompany-explainer-gst-changes-online-purchases/

and New Zealand to follow

https://www.radionz.co.nz/news/political/356351/govt-announces-amazon-tax-to-apply-gst-to-online-goods

Edited September 19, 20187 yr by harrry