How to avoid VAT in EU from the 1st 2024

[delarue]

Hi Everybody,

In case some of you don't know it yet, but from the 1st of 2024 big payment processor like paypal, stripe...will have to report to EU tax authorities transactions made through their processors, which will make it hard to avoid paying VAT even for non EU companies and for digital products (https://www2.deloitte.com/content/d...es/deloitte-nl-fsi-closing-the-eu-vat-gap.pdf).

Do you guys see any loophole to avoid to pay VAT ?

I thought splitting the turn over with a couple of English ltd to avoid reaching the thresold to register for VAT for my EU customers and using an estonian holding to raise the profits.

let me know your thoughts.

 

[Sols]

No, just pay VAT (or use non-EU PSPs). This fight isn't worth fighting.

If you can't afford VAT, there's something wrong with your business plan.

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This is the probably the answer to your question.

 

[JohnnyDoe]

Sols said:
No, just pay VAT (or use non-EU PSPs). This fight isn't worth fighting.

If you can't afford VAT, there's something wrong with your business plan.
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Not necessarily. Perhaps some taxes are simply too high and a court might agree that you did well to not pay VAT:
https://nuovavenezia.gelocal.it/ven...i-di-caleidos-imprenditore-assolto-1.41391935(There are similar earlier judgments)

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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[delarue]

I'm sorry if I don't wan't to give them 23 % of half a million per year
Apart not using a European payment gateway to you see any other option ? I need using stripe

 

[JohnnyDoe]

“When the government violates the people's rights, insurrection is, for the people and for each portion of the people, the most sacred of the rights and the most indispensible of duties.”

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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[Marzio]

Sols said:
use non-EU PSPs
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Do you mean using UK PayPal or UK Stripe?

 

[Dandyline]

delarue said:
I'm sorry if I don't wan't to give them 23 % of half a million per year
Apart not using a European payment gateway to you see any other option ? I need using stripe
Click to expand...

Maybe it can be avoided by using US LLC through Stripe and fall under their US regulations instead of EU regulations.

The UK LTD VAT threshold of 85k GBP per year will be lowered for digital products i think. If not, just load balance the transactions through 5-6 LTD's to avoid VAT.

Always good if you can save the 23% of 500k as you said above, 115k saving.

 

[JohnnyDoe]

You could also consider this:

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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields​

 

[cer955]

Dandyline said:
Maybe it can be avoided by using US LLC through Stripe and fall under their US regulations instead of EU regulations.

The UK LTD VAT threshold of 85k GBP per year will be lowered for digital products i think. If not, just load balance the transactions through 5-6 LTD's to avoid VAT.

Always good if you can save the 23% of 500k as you said above, 115k saving.
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As far as I understand, what matters is not the country of the company but the country of the customer.
So, even if it's a US LLC, if it's selling to EU clients, it will be reported.

 

[delarue]

I trade with a us llc using stripe. But will stripe us report to eur tax authorities from 2024 for european transactions ?

 

[Dandyline]

cer955 said:
As far as I understand, what matters is not the country of the company but the country of the customer.
So, even if it's a US LLC, if it's selling to EU clients, it will be reported.
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What matters is the jurisdiction of the PSP.

 

[cer955]

The article says

...must be reported when funds are transferred by a “payment service provider” from a payer who is located in an EU member state to a payee (the intended recipient of the funds) who is located in another country ”“ either inside or outside the EU.

So I guess, just using a US LLC will not solve the problem. But I don't have more info than you do, of course there's going to be gateways which will be able to not share data, but Stripe and PayPal will 100% do it if they have to

 

[Dandyline]

cer955 said:
The article says

...must be reported when funds are transferred by a “payment service provider” from a payer who is located in an EU member state to a payee (the intended recipient of the funds) who is located in another country ”“ either inside or outside the EU.

So I guess, just using a US LLC will not solve the problem. But I don't have more info than you do, of course there's going to be gateways which will be able to not share data, but Stripe and PayPal will 100% do it if they have to
Click to expand...

And the article says

Based on the language used in the legislative documents, we believe that the reporting obligation will not apply to financial institutions outside the EU

 

[Martin Everson]

Sols said:
No, just pay VAT (or use non-EU PSPs). This fight isn't worth fighting.
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Let him find out the hard way.


P.S They got internet in prison these days so he can still read this site in future.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Samman Kaseeb Sleiman]

Martin Everson said:
P.S They got internet in prison these days so he can still read this site in future.
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If you had internet in prison, you were lucky. But it doesn't mean it's available in each prison.

 

[delarue]

I'm happy to read that there are so many tax law abiding citizens on offshore corporatetalk.


The conclusion is that it will be necessary to use non European gateways if you have a substantial amounts of transactions in Europe and if you want to keep some privacy.

 

[Sols]

delarue said:
I'm happy to read that there are so many tax law abiding citizens on offshore corporatetalk.
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You're behind the times if you think and plan otherwise, unfortunately. If you look through threads here, especially from the last few years, you'll see the tone has shifted towards compliance and optimisation within compliant frameworks. In line with changes to the real world.

The world is full of ways to optimise your taxes. The world is also full of some taxes that you can't avoid. Pick your battles.

While you're wasting time and money on evading VAT (which is only going to get harder, neither easier nor stay the same), your competition is paying VAT and focusing on growing their businesses.

But as Mr. Everson so wisely said, let's let you find out the hard way.

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This is the probably the answer to your question.

 

[Offshore13]

How will this be applied to services with no physical products to an entity in the UAE Freezone?

 

[Marzio]

VAT for services is paid in the country of the service provider, so 0% VAT in UAE

 

[delarue]

marzio said:
VAT for services is paid in the country of the service provider, so 0% VAT in UAE
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The vat is due where is the final customer in b to c sales wherever is the company incorporated, double check your sources