VATMOSS & EU VAT changes

[aegisdesign]

I'm wondering how WHMCS or anyone else is dealing with the changes in intra-EU sales coming in to force in January 2015?

 

The change is that instead of charging VAT at the rate of the seller's country, it's at the buyer's country. There is no threshold so if a UK company selling hosting to someone in the EU is not VAT registered they will have to charge VAT to other EU states, account for it and submit accounts to every country in the EU they make a sale into. Or, in the UK at least you have to register for VAT, sign up with MOSS (Mini One Stop Shop) and submit EU VAT returns to MOSS and they sort out paying each country.

 

You can read a very good summary about it from a UK perspective at http://rachelandrew.co.uk/archives/2014/11/25/how-small-companies-and-freelancers-can-deal-with-the-vatmoss-eu-vat-changes/

 

Presumably this requires quite a change in WHMCS in how VAT rates are applied at checkout, how sales tax reports are generated and in retaining data on the purchaser for the 10 years mandated by the change in law.

 

And yes, before someone says it, it's utterly ridiculous for small businesses and freelancers.

[brian!]

this has already been posted about in the thread below...

 

http://forum.whmcs.com/showthread.php?94942-New-EU-tax-rules

 

I suspect the only good news with this is that WHMCS use their own software for billing, and will therefore need to comply with these rules themselves... and I suppose it's inconceivable that they would make a solution only for themselves and not include it in a future release... perhaps as an updated EU VAT Addon.

 

it's been over two months since the last update to v5.3, so I would assume an update is around the corner - i'm saying that with no inside knowledge, just relying on logic!

 

even if there is a v6 beta released soon, I doubt there would be a full release this side of the new year - and v5.3 doesn't go EOL until February, so they'd have to release a VAT fix for v5.3 anyway.

[aegisdesign]

Thanks brian!

 

I'm not sure that thread answers it but yes, WHMCS Ltd are in the same situation whereby they're selling digital goods into other EU states and will have to change their accounting to comply.

 

I'm VAT registered so I'm just going to have to suck up the extra admin for MOSS but this just seems to be likely to kill off small hosting companies, enforce VAT registration or at least stop them selling intra-EU.

[brian!]

I'm not sure that thread answers it but yes, WHMCS Ltd are in the same situation whereby they're selling digital goods into other EU states and will have to change their accounting to comply.

the best answer would be a reply from WHMCS - but similar deadline situations have proved that they're not the greatest communicators!

 

let me go all Mystic Meg for a moment and give you a prediction of what options might occur next...

 

1. they issue their standard "don't panic!" message which will say that they are aware of the situation and hope to have a solution before the deadline.

2. they won't say anything and this issue will be fixed by the next (or next+1) v5.3 release before the New Year (hopefully well before Xmas).

3. Matt will post a blog about the issue - though likely not until after (or just before) an updated release.

4. the New Year arrives with no update.

 

under normal circumstances, (4) might occur (and has in the past!), but I think in this case as the issue is so central to what the software does (e.g billing the customer the correct amount including tax), that it will have to be addressed before the deadline - hence why i'm semi-relaxed about this issue.

 

maybe they're still getting their heads around the details of the rules and how to implement them, but at some point, (1) will have to occur - it really should have occurred already, as surely they know about it and are doing something about it... all we can do is wait and see.

 

I'm VAT registered so I'm just going to have to suck up the extra admin for MOSS but this just seems to be likely to kill off small hosting companies, enforce VAT registration or at least stop them selling intra-EU.

I know a few businesses (including some clients) that these rules will have an impact on, so it will be interesting to see what happens to them.

 

btw - thanks for posting that link.

[mbit]

It's quite interesting to read that businesses not registered for VAT will be obligated to charge VAT if selling to another country.

 

Some funny s*** if you ask me

[easyhosting]

read this

 

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/telecom/index_en.htm

 

The general gist: European Union based customers must be charged VAT starting on January 1, 2015, even if you do not live or provider services from the EU. However, you are not required to charge VAT to businesses.

 

 

so if you are not in the EU you must charge VAT to EU based customers

[MH-Stefan]

You (still) must charge VAT to businesses if they don't have a valid EU VAT number.

 

It wouldn't make sense not to charge VAT if a business isn't eligible for VAT exemption.

 

Consult your accountant if you want to make sure.

[easyhosting]

You (still) must charge VAT to businesses if they don't have a valid EU VAT number.

 

It wouldn't make sense not to charge VAT if a business isn't eligible for VAT exemption.

 

Consult your accountant if you want to make sure.

 

Yes always consult your accountant, but then your accountant can only go off what HMRC or appropriate tax office states, they wont and cant do anything different

[othellotech]

It can already be handled by the 'standard' WHMCS tax system ...

 

You need to create:

VAT-(countrycode) applies to (countrycode)

e.g

VAT-FR applies to FR with the French Rate etc

 

As to reporting - we're working on extending our VAT reports addon to have a MOSS breakdown report too - should post details in a couple of days

[malfunction]

It's quite interesting to read that businesses not registered for VAT will be obligated to charge VAT if selling to another country.

 

Some funny s*** if you ask me

It would appear, from a quick reading, that they expect my California corporation to collect and submit European taxes. Good luck with that

[WHMCS John]

Hi,

In WHMCS at present I expect you currently have individual tax rules for each country but all set at the same VAT rate - that of your country where the business is registered. My understanding of these new rules is that you'd need to adjust the rules to reflect the VAT rate in each particular country. This way, WHMCS will charge the client the appropriate amount of tax based upon the country they select on the order form.

 

So, assuming you're a UK-based company, you'd currently have something like this:

GB - 20%

BE - 20%

CY - 20%

DE - 20%

...

 

From Jan 1st 2015 you'd have:

GB - 20%

BE - 21%

CY - 19%

DE - 19%

...

 

 

It's necessary to differentiate between individuals and businesses. Individuals need to be charged VAT, whilst businesses do not. The EU VAT invoicing addon takes care of this by using the VAT ID number to automatically mark business users tax exempt: http://docs.whmcs.com/EU_VAT_Addon

 

If you didn't wish to charge VAT on sales to individuals in your home country (eg. in the UK because your income is below the VAT threshold) then it would just be a case of deleting the "GB" tax rule. That way no VAT would be charged when a client selected UK as their country on your order form.

 

 

Again I reiterate this is my understanding of the new rules. We have case 5474 open with the development team who are actively investigating and seeking further clarification on the upcoming changes and will be providing an official update in due course.

[easyhosting]

Again I reiterate this is my understanding of the new rules.

Yes John That is how it will be from 1st January

[MH-Stefan]

I guess those who display the net prices (without VAT) on their website just need to update/insert the VAT rates, as John mentioned. However, companies like mine who are forced by law to include the VAT in their prices either need to absorb the additional VAT, or update the prices of all related clients manually. Since the additional VAT is quite significant in our case, I chose to manually increase the prices accordingly.

 

The most difficult part was to make an Excel list of the clients who live in the EU, then filter out which clients live in a country where the VAT rate is higher and don't have a VAT number. Since a few days, I've been manually updating the prices of those clients based on the VAT rate of their country. I could have automated this process a bit through SQL queries, but the manual path is safer.

 

It would have been much easier if WHMCS had an add-on that would update the prices automatically based on the above conditions. For example if the client lives in a country where the VAT rate is higher, have WHMCS calculate the net price of all his/her services at the current VAT rate, and then add the new VAT amount of his/her country on top of the net price.

Edited December 10, 2014 by MH-Stefan

[ikasp]

Hi,

Again I reiterate this is my understanding of the new rules. We have case 5474 open with the development team who are actively investigating and seeking further clarification on the upcoming changes and will be providing an official update in due course.

 

Yes correct, regarding WHMC it not more difficult than that. The accountant however will have to do some extra work, but that is something else.

[hostingstudio]

Thanks everyone who contribute to this thread!

 

We are a UK Ltd company, I would like your help to ensure that my understanding is correct. Please kindly confirm if my understanding is correct. As o 1 January, our WHMCS must be configured as follows:

 

1) EU VAT Addon configured as per attachment (our accountant has told us that GB customers will be invoiced with VAT as they are national customers, regardless of them being businesses or private individuals)

 

2) Tax rules configured as follows, each for every individual country.

 

Is my understanding correct?

 

Also, I know this relates more to accountancy rather than WHMCS, can someone please point us in the right direction (HMRC link? I can't find any that applies) as to what to do in the interim period from 1 January to getting our VAT Number?

 

Thanks so much!!!

[evcz]

Any news about EU vat addon being updated in order to automatically set all the EU values? or shall we not trust it anymore?

[arhost]

Any news on this?

[WHMCS John]

Hi,

Matt has made a post regarding this today: http://blog.whmcs.com/?t=96594

[evcz]

Well, thanks for the post... is there an SQL that we can run to update all the countries with the correct % instead of having to do them all one by one?

[arhost]

Open phpMyAdmin and then go to the table: tbltax and delete all of the rows of the existing VAT rates and then copy and paste the following into the SQL section and then click on Go.

 

 INSERT INTO `tbltax` (`id`, `level`, `name`, `state`, `country`, `taxrate`) VALUES
(2, 1, 'VAT', '', 'GB', '20.00'),
(3, 1, 'VAT', '', 'SE', '25.00'),
(4, 1, 'VAT', '', 'DE', '19.00'),
(5, 1, 'VAT', '', 'LV', '21.00'),
(6, 1, 'VAT', '', 'LU', '17.00'),
(7, 1, 'VAT', '', 'LT', '21.00'),
(8, 1, 'VAT', '', 'FR', '20.00'),
(9, 1, 'VAT', '', 'MT', '18.00'),
(10, 1, 'VAT', '', 'NL', '21.00'),
(11, 1, 'VAT', '', 'PL', '23.00'),
(12, 1, 'VAT', '', 'PT', '23.00'),
(13, 1, 'VAT', '', 'RO', '24.00'),
(14, 1, 'VAT', '', 'SK', '20.00'),
(15, 1, 'VAT', '', 'SI', '22.00'),
(16, 1, 'VAT', '', 'ES', '21.00'),
(17, 1, 'VAT', '', 'IT', '22.00'),
(18, 1, 'VAT', '', 'IE', '23.00'),
(19, 1, 'VAT', '', 'HU', '27.00'),
(20, 1, 'VAT', '', 'AT', '20.00'),
(21, 1, 'VAT', '', 'BE', '21.00'),
(22, 1, 'VAT', '', 'BG', '20.00'),
(23, 1, 'VAT', '', 'CY', '19.00'),
(24, 1, 'VAT', '', 'CZ', '21.00'),
(25, 1, 'VAT', '', 'DK', '25.00'),
(27, 1, 'VAT', '', 'EE', '20.00'),
(28, 1, 'VAT', '', 'FI', '24.00'),
(29, 1, 'VAT', '', 'GR', '23.00'),
(30, 1, 'VAT', '', 'HR', '25.00');

Edited December 31, 2014 by arhost
Luxembourg VAT updated from 15% to 17%. Thanks brian!

[brian!]

just a quick note to those that either followed the outdated pdf link in the blog post to the VAT rates or using the previous SQL code - Luxembourg raises their VAT from 15% to 17% on 1st January 2015, so remember to make that adjustment when entering your rates manually or using the above SQL code.

[andy40]

I was told by my accountant that you charge uk vat for all countries now is this correct.

Edited December 31, 2014 by andy40

[brian!]

I was told by my accountant that you charge uk vat for all countries now is this correct.

http://blog.whmcs.com/?t=96594

 

From January 1st 2015, businesses who sell digital products and services to European customers should begin charging VAT at the rate of VAT in the country in which the customer is based, not their own.

 

These new rules apply to the sale of most digital products and services, and include both web hosting and domain names, as well as software supplied electronically - such as WHMCS itself.

 

Currently, if you sell to a consumer inside the EU then VAT is charged at the rate of the country where you - the seller - are based. As from January 1st 2015, VAT will be charged at the rate applicable in the EU country the customer is located.

 

For example, if you take WHMCS as an example, currently when we sell a WHMCS license to a customer in Italy we charge them the UK VAT rate of 20%. However, as of January 1st, we will need to charge the Italian VAT rate of 22%. This money then goes to the Italian government instead of the British one.

 

As before, if the supply is to a business that is within the EU that has a VAT registration number, but outside your own country, then the customer must account for the tax through the reverse charge mechanism. And WHMCS has supported this for a long time via the EU VAT Addon.

[andy40]

Yes i have read all this but he said they changed it all yesterday i think it was.

[Si]

Yes i have read all this but he said they changed it all yesterday i think it was.

 

Has he a link to an article, news report? It's news to me.