The economic consequences of Brexit (Vol 2)
Discussion
king arthur said:
Mrr T said:
I am actually talking about both. Although different they both present significant problems to tax.
If we look just a digital product let’s take 2 examples.
1. I want to buy a piece of software sold by a US vendor. I log onto their web site pay and down load.
How do you tax that, the vender is outside the UK so not subject to tax, the payment was by credit card so no direct link to the purchase accept in the systems of the vendor, and the download could be anything from a picture to a manual.
2. I work in the UK for a large company headquartered outside the UK they sign a global licence for a piece of software with a vendor. The vendor supplies a master copy of the software outside the UK. I need the software so ask for its instillation. IT department installs the software on my PC. No web traffic, no connection between the licence fee and the installation.
I don't see why UK tax should come into the picture in your second scenario?If we look just a digital product let’s take 2 examples.
1. I want to buy a piece of software sold by a US vendor. I log onto their web site pay and down load.
How do you tax that, the vender is outside the UK so not subject to tax, the payment was by credit card so no direct link to the purchase accept in the systems of the vendor, and the download could be anything from a picture to a manual.
2. I work in the UK for a large company headquartered outside the UK they sign a global licence for a piece of software with a vendor. The vendor supplies a master copy of the software outside the UK. I need the software so ask for its instillation. IT department installs the software on my PC. No web traffic, no connection between the licence fee and the installation.
In the first, the purchase would be subject to VAT. When I purchase domain names for example, from GoDaddy, because I'm in the UK they add VAT to the price. Presumably that is currently collected by the EU and obviously all that will have to change upon Brexit.
This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
As for the second example. All I am saying is I have received vendor software which if I had bought in physical form would have been subject to VAT but because of the nature of the way it was bought is impossible to apply VAT.
Mrr T said:
I do not know much about GoDaddy. If you pay VAT on your purchase I assume they are registered for VAT in the EU or they are making extra profit!!!
This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
All businesses selling digital products into the EU have to register for VAT in the EU and add VAT in the country of the purchase under rules brought in in January 2015.This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
Mrr T said:
This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
Absolutely false. If you sell 'digital services' in the EU from the UK, you must identify the 'home country' of each customer and account for VAT on a per-country basis and report monthly, with no minimum sales threshold. It's a nightmare, with virtually no off the shelf accounting solution as there are so many variations on the sales structures that have to be allowed for.https://www.gov.uk/government/publications/vat-sup...
Mrr T said:
I am actually talking about both. Although different they both present significant problems to tax.
If we look just a digital product let’s take 2 examples.
1. I want to buy a piece of software sold by a US vendor. I log onto their web site pay and down load.
How do you tax that, the vender is outside the UK so not subject to tax, the payment was by credit card so no direct link to the purchase accept in the systems of the vendor, and the download could be anything from a picture to a manual.
2. I work in the UK for a large company headquartered outside the UK they sign a global licence for a piece of software with a vendor. The vendor supplies a master copy of the software outside the UK. I need the software so ask for its instillation. IT department installs the software on my PC. No web traffic, no connection between the licence fee and the installation.
The 'sale' for the software has been done by the HQ country and the accounting for that will be done there. Normally in corporates - within your company there will be a internal charge for the software that will be paid out from your teams budget to the IT department and that will pay for the license (Hence why your manager has to approve any non-free software).If we look just a digital product let’s take 2 examples.
1. I want to buy a piece of software sold by a US vendor. I log onto their web site pay and down load.
How do you tax that, the vender is outside the UK so not subject to tax, the payment was by credit card so no direct link to the purchase accept in the systems of the vendor, and the download could be anything from a picture to a manual.
2. I work in the UK for a large company headquartered outside the UK they sign a global licence for a piece of software with a vendor. The vendor supplies a master copy of the software outside the UK. I need the software so ask for its instillation. IT department installs the software on my PC. No web traffic, no connection between the licence fee and the installation.
If you yourself had downloaded the software from a US company as an individual, then I think VAT would be applicable under the 2015 EU VAT rules changes. Why else would Apple bother charging VAT on iTunes?
hmrc said:
Electronically supplied services
The rule change only applies to ‘e-services’ that are ‘electronically supplied’ and includes things like:
supplies of images or text, such as photos, screensavers, e-books and other digitised documents for example, PDF files
supplies of music, films and games, including games of chance and gambling games, and of programmes on demand
online magazines
website supply or web hosting services
distance maintenance of programmes and equipment
supplies of software and software updates
advertising space on a website
Businesses outside the EU (for example, the USA) that supply digital services to consumers in one or more EU member state are also affected by the changes.
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#sales-not-affected-by-the-changeThe rule change only applies to ‘e-services’ that are ‘electronically supplied’ and includes things like:
supplies of images or text, such as photos, screensavers, e-books and other digitised documents for example, PDF files
supplies of music, films and games, including games of chance and gambling games, and of programmes on demand
online magazines
website supply or web hosting services
distance maintenance of programmes and equipment
supplies of software and software updates
advertising space on a website
Businesses outside the EU (for example, the USA) that supply digital services to consumers in one or more EU member state are also affected by the changes.
Edited by hyphen on Monday 8th May 15:53
Mrr T said:
FFS. Look at the world even the advertising agencies are worldwide. So large companies will not have multiple advertising agencies they will have a very limited number and some of those will only be providing specialist services. The marketing department of Samsung will not be one old man it will be a massive team and head of marketing will be a very important role. They may get add agencies to come up with ideas, even shoot the add, and recommend placement. However, you can be sure contacts between large companies and companies like FB and IE are now largely directly negotiated. The add agency may not even know the terms.
...Old school so still use IE. It's like FB because it relies for adds for revenue
Im confused as to the point of all that, so will stick to the latter part. Internet explorer is a web browser. It doesn't 'sell' anything, it doesn't cost anything as its free? It doesn't host any ads within itself and just shows the page....Old school so still use IE. It's like FB because it relies for adds for revenue
Mrr T said:
I can only say from my experience, I do not use FB, but 99% of adverts are for products sold in a multiple of countries.
Source?Mrr T said:
You have still to explain how you will apply tarriffs?
Well the way it normally works, is that HMRC come up with a criteria, and when companies meet the criteria they pay...Facebook will know about every single ad, and who it was shown to. As this data will be a requirement by the advertiser who will want all the particulars related to his spend..
king arthur said:
Mrr T said:
I do not know much about GoDaddy. If you pay VAT on your purchase I assume they are registered for VAT in the EU or they are making extra profit!!!
This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
All businesses selling digital products into the EU have to register for VAT in the EU and add VAT in the country of the purchase under rules brought in in January 2015.This maybe because they sell .co.uk domain names. However, if they had no presence in the EU and where not registered for VAT then they do not have to charge and there is very little HMRC can do about it.
One for slasher:
"One of Canada’s largest pension fund managers has picked London as its new European headquarters, insisting the UK capital “is and will remain the financial centre of Europe”.
http://www.cityam.com/264389/canadian-pension-fund...
"One of Canada’s largest pension fund managers has picked London as its new European headquarters, insisting the UK capital “is and will remain the financial centre of Europe”.
http://www.cityam.com/264389/canadian-pension-fund...
Mrr T said:
These are EU rules which cannot be enforced against companies outside the EU unless they choose to abide by them. Now I am sure many non EU companies selling digital products apply them because they have a presence inside the EU against which enforcement could be made.
Whether they can be effectively enforced or not is neither here nor there. The rule exists and plenty of firms, even small ones, play by the rules. The same goes for many rules. If the stakes were considered big enough, countries would look to enforce more readily. I'm sure at some point some quid pro quo could be brought into force if required.
And as technology "improves", the ability to trace this kind of thing will become more commonplace/straightforward.
London424 said:
Ineresting, thanks for the link.One of his first thoughts won't go down well with project managers for Project Fear (II):
Article said:
The chief executive of Barclays has said he sees no reason to shift British jobs to Europe as a result of Brexit and described the restructuring required as straightforward compared with other challenges faced by the bank,
turbobloke said:
London424 said:
Ineresting, thanks for the link.One of his first thoughts won't go down well with project managers for Project Fear (II):
Article said:
The chief executive of Barclays has said he sees no reason to shift British jobs to Europe as a result of Brexit and described the restructuring required as straightforward compared with other challenges faced by the bank,
All the banks know this. Brexit is a convenient excuse for them for no end of ills over the next 2-3yrs.
alfabadass said:
I like coming in here.
It's like a who's who of crazy mofos.
You've all been played by Murdock and his right wing loonies.
Unfair, there's also bed pissers who've been played by project fear.It's like a who's who of crazy mofos.
You've all been played by Murdock and his right wing loonies.
And then there's the inquiring minds of the majority, who are just trying to make sense of the course events might take and refuse to be drawn by propaganda in either direction.
I've never fully subscribed to the binary "fight or flight" concept, because there's a common third way which is to stand, like a rabbit in the headlights of an oncoming car, quietly soiling yourself. I've had the good fortune to be tested on a number of occasions and know which way I go, every time. There seems, with some remainers, to be a mania almost akin to PTSD or shell-shock, that 'accepts' doom and laughs at anyone who thinks we'll make it out alive. Me, I'll take each armageddon as it comes.
Murph7355 said:
MrrT will have passed out
All the banks know this. Brexit is a convenient excuse for them for no end of ills over the next 2-3yrs.
I think we're all aware that anything bad that happens now would have happened regardless of Brexit, and anything positive that happens to the economy is a direct result of our iminent departure from the EU in around 10 years' time.All the banks know this. Brexit is a convenient excuse for them for no end of ills over the next 2-3yrs.
PH economic analysis at its finest.
This is significant: https://www.ft.com/content/b1ddc338-3574-11e7-bce4...
The US is warning the EU against any stipulation that clearing will have to be done within EU and not London.
The US is warning the EU against any stipulation that clearing will have to be done within EU and not London.
zygalski said:
I think we're all aware that anything bad that happens now would have happened regardless of Brexit, and anything positive that happens to the economy is a direct result of our iminent departure from the EU in around 10 years' time.
PH economic analysis at its finest.
I see you're back in your binary nonsense world?!PH economic analysis at its finest.
sidicks said:
zygalski said:
I think we're all aware that anything bad that happens now would have happened regardless of Brexit, and anything positive that happens to the economy is a direct result of our iminent departure from the EU in around 10 years' time.
PH economic analysis at its finest.
I see you're back in your binary nonsense world?!PH economic analysis at its finest.
Interesting reading between the lines in the recent debate about a had or soft border in Ireland....
It would seem that Ireland would veto any decision that the EU would make that would create a hard border within Ireland.
(A hard border being defined by them to mean any form of tariff or restriction on trade movements as well as people movements).
Going by the rhetoric that all 27 members have to agree before anything is signed then it follows that the EU would have to give the UK access to the single market, which is looking more towards free access rather than paid access.
Unless there is a special condition on the Irish border.
But any special condition would be practically meaningless as any UK border with the EU is a UK border by which trade can take place.
I don't think Ireland would agree to any form of restricted trade volumes between Northern and Southern parts .... would they ?
It would seem that Ireland would veto any decision that the EU would make that would create a hard border within Ireland.
(A hard border being defined by them to mean any form of tariff or restriction on trade movements as well as people movements).
Going by the rhetoric that all 27 members have to agree before anything is signed then it follows that the EU would have to give the UK access to the single market, which is looking more towards free access rather than paid access.
Unless there is a special condition on the Irish border.
But any special condition would be practically meaningless as any UK border with the EU is a UK border by which trade can take place.
I don't think Ireland would agree to any form of restricted trade volumes between Northern and Southern parts .... would they ?
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