
Krita Foundation in Trouble - gcp
https://krita.org/en/item/krita-foundation-in-trouble/
======
dbrgn
Just a quick reminder, if everyone here donates just 3-5$, the expenses will
be paid in no time :)

Krita is a great software, and even though I'm not an artist it's worth
supporting.

~~~
rplnt
You are not supporting the software but bad practices resulting in fines and
fees. But there's hoping a lesson was learned. It would be a shame if
something like this damaged the product.

~~~
DanBC
You say bad practices, but they got advice from a registered qualified
professional in a complex area of tax law.

~~~
Sujan
If this were the case, wouldn't that person be liable then?

~~~
gcp
They would need to prove they suffered loss (and an actual error!). That's not
clear in this situation. Not paying taxes you were due isn't extra costs _due
to_ your accountant, although fines and interests may be.

~~~
Sujan
So it doesn't work like this?

A: Hey B, how do we have to set up our company/foundation so this doesn't blog
up and we have to pay non-sensical taxes only because of the way we are set
up?

B: Do it this way: ...

(later)

Z: A, you have to pay taxes because your setup is strange and makes no sense
to our rules.

B: Damn, we're liable for the bad advice we gave...

(honest question)

~~~
TheOtherHobbes
No.

Legally, the hired professional is an advisor. The board/management are
collectively responsible for picking a good advisor and double-checking
his/her recommendations.

Bottom line: no one takes responsibility for anything (unless they're on the
board) and _you_ are on the hook for everything.

This also applies to lawyers, property professionals, medical professionals,
engineers, architects, and so on.

Of course this is _outrageously_ unfair, but the reality is that winning
compensation for incompetence and malpractice is incredibly hard and expensive
- and most professional contracts include explicit disclaimers of
responsibility in an attempt to make it even harder.

~~~
Tyrek
There's no reason why this is _outrageously_ unfair. An external consultant is
only held to an advisory standard _because_ they are external - they are not
party to the detailed nuances that management may have inadvertently or
deliberately concealed.

~~~
TheOtherHobbes
It's outrageously unfair because when you hire an advisor you typically know
so little about their domain of expertise you have no idea what questions to
ask them.

So you have _no effective oversight_ over the quality - or otherwise - of
their work.

Of course you can hire another professional to double check the advice of the
first professional, but that soon gets expensive, you're pretty much
guaranteed some angry muttering, and you're still not guaranteed a reasonable
outcome.

It's a remarkable fact that consumers have more rights when buying a toaster
than when hiring an accountant or lawyer - and the toaster is going to be more
reliable, and _much_ less expensive to run.

------
gghh
I'd like to drop a note on how much I appreciate Krita. I'm not an artist by
any mean, I'm a programmer and while I think I write/draw/sketch a lot on
paper. A few months ago I switched from paper to digital hand-writing and
bought an old Wacom Intuos drawing tablet. I'm on Linux and Krita works great
with a stylus; very comfortable and intuitive, I haven't looked back.

~~~
JakiesKonto
same attitude but im still missing that Wacom, thx for info about linux

~~~
davidgerard
Huion are good as well, and very cheap.

~~~
boudewijnrempt
There are some problems with Huion, but they really try to work with us and we
with them -- the latest drivers even fixed the rocker-switch click bug :-)

~~~
davidgerard
Huion tablets are way cheaper than Wacom of course ;-)

------
DangerousPie
> The Foundation was created to be able to have Dmitry work full-time on
> Krita. Because we sell stuff, the tax inspector has determined that we’re a
> company, and should have paid VAT in the Netherlands over the work Dmitry
> has been doing in Russia. Even though there is no VAT in Russia on the kind
> of work Dmitry is doing.

As someone who has dealt with VAT in the EU a bit this sounds really odd to
me. Even if the inspector determines that VAT needs to be charged on these
services, shouldn't it be Dmitry who is paying them, not the foundation?

In other words, they should be coming after the person providing the services
for the VAT that he neglected to charge, not after the foundation who just
paid the invoices they were given.

~~~
asb
This is an understandable assumption, but it's actually not the way it works.
I'm sure the Dutch tax authorities have equivalent documentation, but the UK
description of the 'reverse charge' should explain the basic principle
[https://www.gov.uk/guidance/vat-imports-acquisitions-and-
pur...](https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-
from-abroad#services-received-from-overseas-suppliers)

~~~
1110001110
Link to the Dutch Tax Authority:

\- [1] Reverse-charging VAT (English)

\- [2] Calculating VAT for services to and from non-EU-countries (Dutch)

[1]
[https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/...](https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/business/vat/vat_in_the_netherlands/vat_relating_to_services/reverse-
charging_vat)

[2]
[https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/...](https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/btw/zakendoen_met_het_buitenland/zakendoen_buiten_de_eu/btw_berekenen/btw_berekenen_bij_diensten_naar_en_vanuit_niet_eu_landen/btw_berekenen_bij_diensten_naar_en_vanuit_niet_eu_landen)

------
_Codemonkeyism
I would like to leanr from the article, but it is low on facts (I may have
overlooked them while reading).

What is the relationship between Krita Foundation (Krita) and Dmitry?

Is Dmitry an employee to Krita living in Russia? How can there be any VAT
involved?

Is Dmitry a freelancer who sends invoices to Krita? Do those invoices include
VAT? If they do, why does Krita need to pay VAT to Dutch authorities? Does he
have a VatID on the invoice?

Do they just send money to Dmitry?

~~~
boudewijnrempt
Dmitry is a freelancer who lives in Moscow, not an employee. For the kind of
work Dmitry does, there is no VAT appliccable in Russia. If the Krita
Foundation had been Russian, no VAT would have been applicable. There is no
VAT ID on his invoices, but he does send invoices. He also keeps ownership
over his work, and the Foundation doesn't tell him what to work on...

But since the Krita Foundation is in the Netherlands, the tax authorities feel
that the VAT is transfered to the Foundation. Like I said below... If 100% of
our income had been from donations, no VAT would have been transfered. If 100%
had been from sales, it would have been transfered, and then we would have
claimed it back. Since it's a mixed bag, 100% is transfered, and we could only
claim 15% or so back.

I still don't understand the logic behind that, though...

~~~
KayEss
They think you should pay VAT on imported services? That sounds very fishy to
me. I've never heard of such a thing (and I have been exporting into the EU
for many years).

~~~
boudewijnrempt
Yes... It's no wonder that my first accountant never realized that this could
be possible.

~~~
Michielvv
Seems if you click enough, the tax site does mention it in some obscure tool.
I always thought it only applied to goods.

For the dutch:
[https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_ui...](https://www.belastingdienst.nl/rekenhulpen/diensten_in_en_uit_het_buitenland/)

------
asah
Donated.

Btw, a business model: let artists pay to enter their names in a directory of
artists for hire. They can charge clients extra (eg fee) to pay for these ads.
True, it would be ideal to include reviews etc but links to their portfolio
are often good enough, and it further highlights the power of krita... If
interested, contact me via my HN profile - I've done this before successfully,
both for startups and at scale, and I don't need your money. :-)

------
Jonnax
That's really sad to hear. With how complex laws are, it's scary that going to
a professional may not be sufficient.

But when you're totally unfamiliar with what the requirements are what can you
do?

Do large law/accountancy firms give a guarantee for their advice in the case
that it was incorrect?

~~~
mrkrabo
Say what you will but this is simply fraud. If they were selling stuff, they
should've collected and paid the VAT for Dmitry. You are NOT a non-profit if
you sell stuff.

There is absolutely no complexity about this. Didn't they see anything wrong
with selling stuff without collecting the VAT from every transaction?

And the best part: they are now separating the sales from the foundation so
they can avoid paying taxes. This is the kind of stuff HN abhors... ooops it's
not Amazon, it's Krita! Then let's allow it!!!

~~~
princekolt
What defines a non-profit is that none of the income it generates should go to
members, directors, or officers; and not that it can't sell stuff. [0] Most if
not all non-profits I know sell stuff to pay the bills.

[0]: [https://www.law.cornell.edu/wex/non-
profit_organizations](https://www.law.cornell.edu/wex/non-
profit_organizations)

~~~
jimktrains2
Pedantic, but income can and does go to employees through salary. Profit is
not split among share holders and must be reinvested or saved.

------
sandGorgon
Can I buy something rather than donate ? Its hard for me to donate using my
company account - but very easy to buy stuff. It doesnt matter even if its a
license to email you 10 times a year.

~~~
jordigh
I hear this all the time with Octave too.

What exactly constitutes a purchase? How can we help you fool your company
into thinking that you're buying something?

~~~
patio11
You're not fooling anyone. You're assisting your user in navigating
organizational complexity required to pay a preferred software vendor.

At my previous companies, the only thing I would need to purchase software was
an invoice/receipt I could point to to show that I had purchased a software
license. The contents of that license don't matter, and in fact, I even told a
few projects "Please invoice me for a commercial license of your software. If
you don't have a commercial license, I will accept your existing [e.g. MIT]
license as a commercial license. If you do not have a price list already, I
will accept a quote of $1,000 without any further negotiation required; just
send me an invoice for it."

I think that software developers are really weirded out that the same bits can
be free-as-in-beer and _also_ cost $1,000. [+] But _software buyers want to
purchase outcomes, not bits_. The outcome I want to buy is "$PROJECT continues
to exist in the world." I have sufficient internal authority to purchase this
outcome, as does the other commentator on this thread -- we've announced that
fact loudly, as does anyone else who either requests a quote or actually pays
you. I have sufficient legal authority to purchase that outcome as an officer
of the company I was employed at, which enjoys an incredible amount of
discretion in how it chooses to spend its own money in the pursuit of its
legitimate business objectives, and which has chosen to invest that discretion
in me. Reasonable third parties might disagree with our expensing policies (or
think they shouldn't have hired me), but reasonable third parties don't get a
vote.

[ + ] I sold trial-based software, and a fair bit of it, for many years. The
difference between a trial version and a registered version was... nothing at
all, if you just compared the binary artifact. The sole thing that
distinguished the two was that, if you proved to the software's satisfaction
that you were a paying customer, it would act like it was registered
(displaying that fact and removing the trial limitations). This was,
literally, a single if statement.

Could I have sold software on that same model without the trial limitation at
all? Clearly yes; registration would then only cause the software to display
you were a registered user. Could I have sold software on that same model with
the only display that you were a registered user being outside the software?
Yes. How about if that were _only displayed on the purchase confirmation email
itself_? Absolutely freaking fine.

None of this gets harder or legally murkier with OSS in the picture.

~~~
jordigh
But I don't want to actually sell anything. I just want your money. You can
get the software, working or not, with or without the money. You are telling
me that in order to get your money I have to sell essentially nothing.

It's a stupid dance for a donation while we're telling the people paying that
it's not really a donation. We have to fool them and pretend like it's a
business transaction.

I wish we could just be honest and lose the stigma around donations.

~~~
pchristensen
Your code, coming from an organization that is sufficiently funded and
therefore more likely to be maintain it in the future, is significantly more
valuable than the identical code coming from a less funded organization with
murkier future prospects. "Maintenance security", "peace of mind", "de-risking
adoption for users", "ongoing delivery of feature development", or however you
want to phrase it, is a product that you could choose to sell. patio11 is just
telling you the language that businesses and their accountants speak -
documentable expenses = YES, donations = NO.

------
sequence7
The link's not working for me, google text only cache:

[http://webcache.googleusercontent.com/search?q=cache:g-C8yv4...](http://webcache.googleusercontent.com/search?q=cache:g-C8yv4ZnH4J:https://krita.org/en/item/krita-
foundation-in-trouble/&num=1&hl=en&gl=uk&strip=1&vwsrc=0)

~~~
distances
Or head to [https://planet.kde.org](https://planet.kde.org) for an aggregated
version of the full article.

------
lunchables
I have to admit, I really respect the absolute transparency.

------
ericfrederich
I just bought a Lenovo X1 Yoga which came with a Wacom stylus. I got it to be
recognized in GIMP with pressure sensitivity. I was looking for other painting
apps and forgot about Krita. I'll give it a try and see how I like it.

Good for them trying to get donations directly. They might get more money
through GoFundMe or having a KickStarter for v4.0 or something. Those sites
would offer a little transparency in that you can see how much they've already
received... but try direct donations first.

Also, where is the BitCoin donation address?

------
amiga-workbench
Chucked some money their way, I suggest others do too. The last thing we need
is less competition for Adobe.

------
i6ruce
Donated some euros. I hope they'll make some announcement if this donations
helped them.

~~~
boudewijnrempt
The response has been great. I cannot currently edit the website... But we've
had donations worth about 1000 euros in total now.

~~~
dvirsky
While I don't personally use Krita, I've been following its development for
years and really admire the work that's gone into the app. Just donated a few
Euros, good luck!

------
miscreanity
A simple solution would be to incorporate outside of such a convoluted and
destructive tax regime. There are much friendlier locations.

------
skywhopper
This is a good reminder that for very small organizations, it's important for
the founders themselves to understand at a basic level the relevant applicable
tax laws and typical exceptions. The level of accounting consultancy a small
organization is going to be able to afford is unlikely to be comprehensive,
and all the right questions may not be asked when making plans. But if the
founders who do know all that's going on have a basic understanding of the
parameters of tax law, they will have a much better chance of figuring out
what exceptions might be applicable to their organization. A few days or weeks
of research early on could have saved many months of stress and many thousands
of euros when the problems were discovered.

~~~
rexreed
This comment is correct. People seem to rush the legal and tax implications
and end up paying for it in the long-term. Legal and tax advice is inexpensive
at the earliest stages and a lot of those expenses can be deferred or reduced.
But this isn't the case when you're already in legal or tax jeopardy.

------
r1ch
I've been thinking about creating a Dutch foundation for one of the open
source projects I work on in order to provide a legal entity to collect
donations and apply for services like code signing in a organization name.
This makes it a whole lot scarier!

------
Bromskloss
I had no idea that there even existed a foundation or that the development
used money.

~~~
babuskov
Maybe they should add a popup dialog that shows up every 100th time you run
the program and tell users about it. Something like "Hey, you started Krita
for the 200th time. Please consider donating a small amount to help the
further development" and a link to the donation page.

------
rexreed
Could all of this have been avoided with good accounting / tax advice to begin
with? I don't mean to be that person that gives 20/20 hindsight, but this is
the sort of legal and tax problem that gets many startups into trouble. A lot
of startups just wing it with legal and tax advice and end up paying more in
the long run with tax liabilities and legal problems.

~~~
gcp
Yes. They got bad advice, probably from an accountant without enough
experience in this matter.

------
neves
Maybe a little off topic. I've just learned about Krita. The birthday gift for
my son was a Wacom board. How would the opinion of my fellow HR about the
included software (Art Rage) compare to Krita for a 11 years old. I'm all for
open source, but usability is a main issue here.

------
csomar
I don't get it. Isn't Dmitry the guy responsible for paying the VAT for the
Dutch authorities?

~~~
lmm
If they were within the EU they would be. But because Dimitry is outside the
EU, whoever's importing their work from outside the EU is responsible. (This
prevents avoiding VAT by having your work done outside the EU). The EU has no
way to go after an outside entity, so that's how it has to be.

~~~
csomar
Maybe I'm not quite intelligent but doesn't the VAT only work in the same
jurisdiction? I mean, if we are on different tax jurisdictions then VAT should
not be applicable. That's, at least, how it works in my country.

~~~
bluGill
Right, if I (in the US) buy something from Krita that was made in Russia:
Kritia needs to pay the VAT when they buy the work from Russia. Then when they
ship to me they get a refund of that VAT. The sum collected is zero, but a lot
of paperwork had to be done correctly to get there.

A simplified explication is Krita's situation is so complex nobody in the
world can figure out how to get the paperwork correct, but they are not in
trouble because they didn't. Tax law doesn't care if you can figure it out how
to do it right, just that you do it right.

------
hennsen
Cannot be loaded and seen. Can you put your text on some public blogging
service instead of a weak small server that overloads when people on
hackernews actually are interested on your thing?

~~~
lima
Text only Google cache:
[https://webcache.googleusercontent.com/search?q=cache:https:...](https://webcache.googleusercontent.com/search?q=cache:https://krita.org/en/item/krita-
foundation-in-trouble/&num=1&strip=1&vwsrc=0)

------
JakiesKonto
software looks cool, will play around... love the idea of ur project - just
donated 10 euro, hope you will be all good!

------
alexfisher
Why don't they have an Ethereum, Bitcoin, or other donation address?

------
valoriez
Donated, and tweeted about it. Join me!

------
vondur
Donated!

------
Chris2048
Did the same accountant that advised them in the first place bag the 4k for
cleaning up the mess?

~~~
boudewijnrempt
Definitely not. When we got the notification, I asked Ton Roosendaal which
accountant the Blender Foundation uses, and approached them. My thinking was,
they at least had experience with one open source organization.

~~~
Chris2048
Ah, good :-)

------
col_rad
Donated 20EUR

------
esaym
I freaking hate tax. Especially those on the left yelling to tax the "rich"
(very few are actually rich nowadays). This is the end result. Innocent
companies go out of business (and then there is nothing to tax).

~~~
golergka
Taxation is theft by definition, but getting rid of it altogether is a
completely unrealistic endeavor. All we can hope for is reducing tax rates and
educating people about "taxing the rich" (label that is usually used to
advocate raising taxes on capital gains).

~~~
dragonwriter
> Taxation is theft by definition

No, it's by definition _not_ theft. Theft is the unlawful taking of property
without consent of the owner; taxation is _by definition_ done by legal
authority, and, _ipso facto_ , is not theft.

Now, if you dismiss any moral status of legal authority (not merely legal
authority which lacks some proper accountability, but all legal authority
irrespective of accountability and structure), then, sure taxation is the
_moral equivalent_ of theft without being theft. And if you take the more
moderate view that _some_ legal authority is morally relevant, but that that
depends on structure and accountability to the governed, then taxation by an
_improper_ authority is morally equivalent to theft.

But, by definition, taxation is not theft.

------
contingencies
Why not fold it and move to Bitcoin-only donations?

The authorities will have nothing to chase, the problem can't re-occur,
accounting will be transparent, and accountants will not be required in
future.

Seriously, Dutch should start a petition against their tax authorities for
victimizing an open source project.

~~~
LyndsySimon
> Why not fold it and move to Bitcoin-only donations?

I'm a huge advocate for Bitcoin, but this is a terrible idea. They're trying
to support staff and the last thing you want to do in that circumstance is to
limit the potential donor pool.

I also don't see how changing the currency of the problematic transactions
changes the tax implications.

~~~
bluGill
In fact changing currency doesn't change tax implications if you intend to be
legal. If you want to be illegal and risk not getting noticed you can hide
behind bitcoin but the first auditor will notice this and report "I don't know
how much, but there is tax fraud here so lets give maximum fines".

~~~
contingencies
Yes, but folding the entity means in most cases you are no longer liable for
those past accounting hiccups.

In future, you don't have to pay accountants, or waste time dealing with the
state.

Immensely practical.

As far as donor pools go, if there is no way to obtain a monthly subscription
from people via cryptocurrency then build it, as there is clearly demand.

