
Patreon to Europe on #VATMOSS: “Not our problem, mate.” - jakobegger
https://idea15.wordpress.com/2015/02/04/patreon-to-europe-on-vatmoss-not-our-problem-mate/
======
peterarmstrong
If you're an author, you can use Leanpub
([https://leanpub.com/](https://leanpub.com/)). We added #VATMOSS support, so
you don't have to. We did this since we looked at the situation and decided it
was the correct thing to do for our authors, even though we're based in Canada
with our servers in the USA, and with no physical presence in the EU
whatsoever. We also added "bring your own book" support, so you can just
upload your own PDF, EPUB and/or MOBI files instead of needing to use our
(awesome, Markdown-based) book creation workflow.

~~~
jerf
Would you be willing to share approximately what it costs you? I saw your post
here and deleted-before-posting speculation that Patreon simply can't make the
numbers sensibly work out (bearing in mind they have to grow by offering an
attractive package to both those who donate and create; if, for instance, 50%
of the "donations" go into tax compliance there simply won't be any donations
anyhow), but if we can get real numbers that would be even better.

Of course, that's assuming you have a similar problem to Patreon, where the
author claims that every patron would be involved in the VATMOSS transaction,
which I can't speak to at all. If it's just a line-item per book for you but a
line item per EU patron for Patreon that's not comparable.

~~~
peterarmstrong
We integrated Taxamo ([http://www.taxamo.com/](http://www.taxamo.com/)) into
Leanpub, and their posted fees
([http://www.taxamo.com/pricing/](http://www.taxamo.com/pricing/)) start at 20
Euro cents for every EU transaction. Non-EU transactions are free.

In terms of detecting whether the transaction is EU or not, there's a
complicated workflow with 3 pieces of evidence etc, but (a) that's what Taxamo
helps with and (b) if a bootstrapped Canadian startup can deal with this,
presumably so could anyone else.

~~~
jerf
Thank you.

------
chollida1
This is the real story, its buried at the end of the article.

> The UK government is also in the process of introducing the Diverted Profit
> Tax, announced by the chancellor, George Osborne in the Autumn Statement.

> The tax aims to counter the use of "aggressive tax planning techniques" to
> divert profits from the UK to low tax jurisdictions.

> Profits made after 1 April 2015, and diverted to other countries, will be
> taxed at 25%.

This is a pretty watershed moment for world wide business tax strategies. It
will be interesting to see how it plays out.

I would hate to be one of the big accounting firms, or an employee of one,
right now. Inter-country tax laws are about to get alot more complex and my
guess is that at least of of the big accounting firms get bankrupted in the
next few years due to this.

Current tax law is kind of like trying to follow the bible, or quran, to the
letter of the law. There are so many inconsistencies and just plain old
conflicting rules that you just can't do it.

 __EDIT __To clarify, I 'm pretty convinced, mostly from analysts I've talked
to, that sooner or later a PWC or ther accounting firm will give a company tax
advice that a country doesn't care for and they will get taken to the woodshed
by that country. I'm not even referring to outright illegal activity like
Arthur Anderson and Enron.

So yes, more money in the future due to increased tax regulation but a heck of
alot more risk due to it as well.

You have to realize that Arthur Anderson was taken down because a relatively
small team of auditors was corrupt.

PWC has 10,000 partners and almost 200,000 employees. It just takes a team of
50 to mess up and the firm can be gone.

~~~
riffraff
> Inter-country tax laws are about to get alot more complex and my guess is
> that at least of of the big accounting firms get bankrupted in the next few
> years due to this.

could you expand? My feeling would be that with increasing complexity, big
accounting firms stand only to make more money.

~~~
aetherson
It's a mixed blessing. More complexity = more billable hours for accountants,
but also = more liability if they screw up.

~~~
jes
I think your comment is a good one.

But I find myself wondering, if a company like PWC is also "Too big to fail."

In this day and age, I have little trust in very large organizations, as I see
them in league with politicians and bureaucrats.

Edit: Change "too" to "to" in "Too big to fail."

------
simplyinfinity
So basically .. we have the freedom of the internet ... buut we can't do
business on the internet unless we hire 20 accountants 5 accounting managers,
2 layers and we will still be limited to just working within europe?

~~~
stuaxo
Not really - just keep a table of the vat rates and pay the relevant one.

~~~
nostromo
"Simply keep abreast of all tax laws and jurisdictions on planet Earth and pay
accordingly. It couldn't be simpler..."

~~~
jessedhillon
It truly is complicated.

If only there were some kind of service, to whom one would pay a service fee
perhaps, and who in return could promote your work, then collect and aggregate
small, recurring payments from international payers while properly computing
the tax liability.

Some kind of intermediary which enabled people to patronize artists, such that
millions of artists around the world can simply pick up a check and focus on
their work.

~~~
TillE
Heh. Seriously, this is (at least for me, and presumably for every other tiny
indie developer) one of the huge attractions of storefronts like Steam and the
iOS App Store: I'll just give you a license to sell my works, and you send me
the royalties. I'll gladly give them a 30% cut to avoid all that bullshit.

Incidentally, the Google Play store does _not_ do this. Each developer is the
merchant of record. I can only imagine that nearly every smaller business
selling through Google has neglected to pay at least some sales taxes that
they owe.

~~~
cannam
I think Google just changed that, in order to handle this new regulation?

------
zaroth
"Aside from the hideous administrative burden Patreon has now forced onto
their European users..."

Hyperbolic much? Way to blame Patreon for the arduous EU tax policy.

~~~
idea15webdesign
I forgot to include the part where every EU creator will also be obliged to
register as a data controller with their national data protection authority,
to ensure proper reportage and archiving of the VAT invoices which must be
kept in a retrievable format for 10 years.

Compliant marketplaces take care of that for you so that the individual
seller/creator does not have to register as a data controller.

~~~
petercooper
Nothing has changed in this regard. If you need to be registered as a data
controller now, _you should have been before 2015 too._

------
belorn
I thought patreon was a donation based service, as in "I give you money so you
can continue to create" rather than "I give you money in exchange of services
or goods".

Is patreon one of them or both, and how do I know when looking at someones
patreon page?

~~~
idea15webdesign
Even their own tax page (linked to below) says that donations are considered
earned income. HMRC does not care where it comes from or what it's called.
It's income.

~~~
unreal37
I agree it's income, but it's also a tip. Like if I sent $5 to your Paypal
account directly. You need to declare that, but does Paypal care whether I
owed you $5 or it's income?

Good question actually. What's Paypal doing about VAT?

~~~
idea15webdesign
I can only answer for the UK, but we have to go back to last autumn, when
everyone started finding out about VATMOSS at all. HMRC did not communicate
anything about EUVAT to anyone but businesses above a certain size which were
already VAT registered. Their estimate was that only 34k business would be
affected. So part of the outcry was the fact that marketplaces, gateways, and
payment processors were not advised or consulted. They found out the same time
everyone else did, in the same way everyone else did. One of them was PayPal,
who were expected by the EU to be compliant in time for 1/1/15\. This was news
to them. HMRC were forced to admit they had no idea that gateways like Paypal
did not already capture the information required to create the place of supply
burden of proof, nor that your average non-technically minded microbusiness
knew how to handle the API and the information passing through it.
[http://www.clarejosa.com/articles/from-passion-to-
purpose/up...](http://www.clarejosa.com/articles/from-passion-to-
purpose/updates-from-our-meeting-with-hmrc-hm-treasury-and-a-minster-on-4th-
december-2014/)

One would hope that by now that it's all been sorted.

------
falcolas
I imagine Patreon did the calculation of implementing complicated (and in
flux) rules for for a portion of their market versus the lost income to
Patreon from losing their European customers...

I can understand that it's likely that the equation comes down on the side of
the European creators costing them less over the long run.

------
elvis635
Do you think is practical to build an internal invoice system that takes care
of the whole VATMESS? How long do you think it'd take a single developer to do
it?

I know that there are many different services like the ones in this thread,
but as a single developer, on a bootstrapping project they'd still be out of
budget

------
mcguire
[https://www.patreon.com/taxes](https://www.patreon.com/taxes)

seems to be empty for me.

~~~
Sir_Cmpwn
Have you got JavaScript disabled?

~~~
pluma
It's empty for me, too. Logged in or not. JS is not disabled.

~~~
Sir_Cmpwn
[https://gist.github.com/SirCmpwn/0a80875342ec82c813e8](https://gist.github.com/SirCmpwn/0a80875342ec82c813e8)

------
polimorfico
If you're using Stripe or Paypal, you can use Quaderno
([https://quaderno.io](https://quaderno.io)). We're #VATMOSS complaint and
help you to calculate VAT rates and track all the customer location evidences.
Let me know if you have any questions.

~~~
heidijavi
What if I need to do some extra customization or if I want to disclose the
final amount to my customers, do you offer something like that?

~~~
polimorfico
Sure! Everything is customisable.

------
thekevan
Patreon is the U.S. and not subject to European laws.

Patreon is also really just a distributor of money, they don't provide the
person with a service.

Why is a person with a web design business looking to use a site used to help
artists who have trouble connecting art and normal business income?

Finally she tweeted about how many people saw that blog post and said she
should have included a tip jar. It really seems like she cares more about what
she can get out of a situation than anything else.

~~~
unreal37
"Patreon is the U.S. and not subject to European laws."

What makes you think this is true?

Why can't Americans play poker online? Why does Amazon have to collect state
taxes for states they don't have a physical presence in? Google is forced to
censor French and German search results. Facebook is forced to follow EU
privacy laws. And on, and on. Having customers in a country means you're doing
business in that country in this modern world.

IANAL. But you may want to check with one.

~~~
jccooper
"Why can't Americans play poker online?"

American anti-gambling laws.

"Why does Amazon have to collect state taxes for states they don't have a
physical presence in?"

Because those states count things like affiliate programs and subsidiary
companies as a sales tax "nexus". Amazon tends to kill those programs to avoid
being taxable. They only collect sales tax in 24 states.

"Google is forced to censor French and German search results. Facebook is
forced to follow EU privacy laws."

Yeah, because they have operations in those countries, and can thus be sued
there. Also, perhaps, because they might be blocked in the relevant countries,
and would rather stay in those markets.

The EU simply cannot make me collect VAT (or do any other crazy thing they
think up), because I'm not in the EU. They can ban me or my services or
products in their jurisdiction, or make life hard for my customers in their
jurisdiction, which may be enough.

~~~
unreal37
"American anti-gambling laws."

It's more than that. The U.S. actually prosecuted executives of foreign online
gaming companies for providing services to U.S. citizens. The problem is not
that American citizens fall under U.S. law, but foreign companies have to
follow U.S. law for online only services as well. [1]

[1]
[http://en.wikipedia.org/wiki/David_Carruthers](http://en.wikipedia.org/wiki/David_Carruthers)

------
Kiro
What happens if you just ignore it?

~~~
mrcncpt
Surely, if PwC is wrong, and Patreon is responsible (which seems this way) and
HMRC decides to investigate, they will go after Patreon, and not individual
users?

~~~
Kliment
Except Patreon is not in their jurisdiction, but their victims are.

~~~
petercooper
Correct, although I'd be very surprised if this actually happened. HMRC has
enough trouble staying on top of non-compliance and lost taxes in the UK, let
alone chasing people for VAT due in _other EU states._ I can't imagine HMRC
being too quick to rush to become a debt collector for other EU states.

Bear in mind that if people merely keep operating now as they did in 2014,
HMRC loses nothing - it's only the tax authorities in other EU states who lose
out. While no-one should take this as legal advice, I suspect all we'll see is
other EU tax authorities taking action against the biggest non-compliers
rather than individuals.

------
Esifer
Japan is implementing similar law in Oct 2015

------
pluma
It's disconcerting how many US online services claim to be usable
internationally but then turn out not to have done their homework.

~~~
Zietaggen
They did their homework. If you want to use Patreon and you have to deal with
VAT, get to work and don't expect Patreon to do it for you.

Especially all of the unnecessary paperwork for a backwards psuedo-nation.

~~~
pluma
You mean all the unnecessary paperwork for every EU member state affected by
the VAT changes?

And it's of course entirely reasonable to expect your users to know that they
have to do the paperwork for contributions in the 1-10 dollar range themselves
without ever explicitly telling them.

I'm not even sure that level of information is available to the users. If I
were being funded on Patreon, would I have to get in touch with every single
patron and ask them for their VAT details? And what would I do if someone
didn't answer?

This is no different from the borderline criminal behaviour Uber and AirBnB
are encouraging.

~~~
slowmovintarget
Why is it reasonable to expect Patreon to manage compliance and liability for
such a law? If the EU wants to destroy commerce, that should be within the
province of its citizens to address... oh wait. There's the problem.

~~~
idea15webdesign
Because that's what EU law, and its member states, have decreed. For example,
here is the guidance from HMRC in the UK.

[https://www.gov.uk/government/publications/vat-supplying-
dig...](https://www.gov.uk/government/publications/vat-supplying-digital-
services-to-private-consumers/vat-businesses-supplying-digital-services-to-
private-consumers#vat-accounting-options-for-businesses-supplying-digital-
services-to-consumers)

Per this law, the third party marketplace/gateway is responsible for
compliance and liability. That is how everyone in the EU affected by the law
views it, and it is why most marketplaces and platforms are slowly but surely
coming into compliance.

This particular marketplace, on the other hand, hired a consultancy firm whose
raison d'etre is tax avoidance
[http://www.bbc.co.uk/news/business-31147276](http://www.bbc.co.uk/news/business-31147276),
who proceeded to give them what they paid for. That tax advice was so
incredibly wrong it was almost laughable; it misrepresented the "place of
supply", the fundamental piece of information behind the entire continental
tax change. [https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-
ser...](https://idea15.wordpress.com/2015/01/20/vatmoss-place-of-service-is-
not-place-of-supply/)

This issue is not a question of extraterritorial sovereignty or individual
responsibility. It's about dodgy tax advisors giving dodgy advice to a company
which paid good money for it.

~~~
__david__
> Because that's what EU law, and its member states, have decreed. For
> example, here is the guidance from HMRC in the UK.

But Patreon is not in the EU's jurisdiction and therefore isn't subject to
their laws (with the exception of any treaties that the US has with the EU).

> …hired a consultancy firm whose raison d'etre is tax avoidance…

You keep saying that like it's bad. The whole point of tax accountants is make
sure that a business or individual pays the minimum legal amount they have to.

~~~
idea15webdesign
This is where the reciprocity promised to the world by the US over FATCA (the
US's extraterritorial tax law) may begin to rear its head. Every bank and
financial system in the world has had to comply with US tax law with no
choice. Sooner or later the world is going to want to claw back the money it
has had to spend on compliance.

------
idea15webdesign
That escalated quickly...

