US LLC VAT obligations
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No, that article is about EU companies ("cross-border VAT rates in Europe").
I guess you mean this part:
That is correct and logical.
It means that if an Italian company sells coaching services to a French person (from Italy), the Italian company has to charge the Italian VAT (22%).
But if an Italian company sells a software subscription (electronic services), the Italian company has to charge French VAT (20%).
It has nothing to do with OP's case.
Really, it's simple logic. The EU wouldn't want to give a competitive advantage to non-EU companies.
I guess you mean this part:
That is correct and logical.
It means that if an Italian company sells coaching services to a French person (from Italy), the Italian company has to charge the Italian VAT (22%).
But if an Italian company sells a software subscription (electronic services), the Italian company has to charge French VAT (20%).
It has nothing to do with OP's case.
Really, it's simple logic. The EU wouldn't want to give a competitive advantage to non-EU companies.
So i guess this is the correct one: Cross-border VAT rates in Europe - Your Europe
"If you receive services for business purposes from a supplier based outside the EU, you should usually pay VAT at the applicable rate in your country, as if you had supplied the service yourself (using the reverse charge procedure)."
Sigh. No!
That article is about B2B!
B2B Non-EU->EU: The seller does not need to register for VAT. They can issue invoices without VAT and the buyer has to add it.
B2C Non-EU->EU: The seller does need to register for VAT and charge the local VAT rate for the customer's country.
Again, simple logic. How would an Italian grandmother add VAT to her invoice for the coaching she received from a US company? She wouldn't be able to, she's a consumer.
"B2B" is a simplification, the correct term is "a business that is registered for VAT". If the customer is a museum or school or doctor and they paid for advice on how to improve their Google ranking, then this would also fall under "B2C" since such customers usually wouldn't be registered for VAT either. The seller has to check that they have a valid VAT registration.
And for the sake of completeness:
B2B EU->EU (same country): Charge local VAT.
B2B EU->EU (cross broder): No VAT (reverse charge).
B2C EU->EU (same country): Charge local VAT.
B2C EU->EU (cross border), digital services: Charge customer's VAT.
B2C EU->EU (cross border), non-digital services: Charge local VAT.
And then for EU countries, there are some thresholds that apply, but not for non-EU countries.
So what you say is that Non EU companies now have disadvantage compared to EU company while selling to individual client within EU?
Here is example:
lets say US LLC sells online coaching to German customer,
First, LLC needs to register first with OSS, get EU tax ID, and add ~20% to every sale to EU customer.
Since LLC is outside EU, its cost and payments do not have VAT.
While if it is EU company, which also adds VAT to each sale of digital coaching to German customer, it will get some of it`s VAT back when it pay any of its operational cost.
No. Where did I say such a thing? Please don't put words in my mouth.
Yes, depending on the customer's country and the product/service you sell.
I don't understand what you mean. Yes, if you are buy something outside of Europe, there is no EU VAT to pay.
Obviously you can claim back the VAT, either through the VAT returns you submit, or directly, in some cases:
https://taxation-customs.ec.europa.eu/vat-refunds_en
Yes, really. If you have a US company and you don't even have customers in the EU, but you buy - for example - a new phone for your company in Italy because your old phone got stolen while you were on vacation in Rome, then you can claim that VAT back later. Crazy, I know. Who would have thought.
Just pay for an accountant to handle this for you. Actually, I believe this will be a requirement anyway, as they will require an EU resident contact person for the VAT registration.
Or just don't offer B2C services to EU customers. Simple.
Mate, thanks for this handy recap.
VAT is one of those topics that for whatever reason is hard to grasp, at least for me 😛
That's for services though... With physical goods, it's different. I have never worked with physical goods, so I don't really know much about them...
If I am non EU company, providing digital education\coaching online to private person in Germany,
The service is done by worker of the company, outside of EU, but according to what i`ve read, the company should still collect and pay VAT in EU, (and register with OSS?)
so since non EU company has expenses\costs of services, which are paid outside of EU, it can't claim any vat refund.
If this is how it works, then non EU companies who sell B2C in EU, will have always more tax the any EU company, since EU company will be able to claim some of VAT as return, while non EU business can't
I really don't understand what you're talking about. Maybe you should give some concrete examples with some made up numbers, like "Company buys new phone for $1,000 in the US" and "Customer in Germany pays €119, of which €19 are VAT", or something like that. And then you can explain where you believe there is a disadvantage for a non-EU company (there isn't).
If you don't pay VAT, you can't get a refund for VAT that you never paid. That is correct.
If you pay VAT, you can always get a refund as a company, it doesn't matter if you're an EU or non-EU company.
If you don't pay VAT, you can't get a refund for VAT that you never paid. That is correct.
If you pay VAT, you can always get a refund as a company, it doesn't matter if you're an EU or non-EU company.
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