# VAT



## RiffWraith (Jun 10, 2016)

Trying again here....

So, I am once again being asked to pay VAT for work in an EU country, even tho I am remaining here in the USA.

Has something changed recently?

Thanks in advance.


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## Kejero (Jun 11, 2016)

Wait, you as an american composer are working for a european client, and are asked to pay VAT? By whom? Or am I getting it completely wrong?


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## Daryl (Jun 11, 2016)

If you buy services from the EU you may have to pay VAT. If your business buys services you may not. It is a complicated area and you should speak to your accountant to find the most tax efficient way of working.


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## RiffWraith (Jun 13, 2016)

Kejero said:


> Wait, you as an american composer are working for a european client, and are asked to pay VAT?



Not exactly. I am planning on doing a recording session in the EU, and the company wants to add VAT to my bill.


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## RiffWraith (Jun 13, 2016)

Daryl said:


> If you buy services from the EU you may have to pay VAT.



Ok, I was under the impression this was not the case, that goods exported from the EU to non-EU countries ware not subject to VAT.

http://ec.europa.eu/taxation_custom...works/index_en.htm#vat_on_imports_and_exports

"For the purpose of exports between the Community and non-member countries, no VAT is charged on the transaction."

I will talk to my accountant, but am I missing something?

Thanks!


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## Daryl (Jun 13, 2016)

RiffWraith said:


> Ok, I was under the impression this was not the case, that goods exported from the EU to non-EU countries ware not subject to VAT.
> 
> http://ec.europa.eu/taxation_custom...works/index_en.htm#vat_on_imports_and_exports
> 
> ...


Goods and services are different things, so it is something you need to discuss with your accountant.


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## babylonwaves (Jun 13, 2016)

RiffWraith said:


> Not exactly. I am planning on doing a recording session in the EU, and the company wants to add VAT to my bill.



An european business can deduct VAT for two reasons:
- it sells to a business with a valid VAT ID within the EU located in another EU country.
- it sells to a business outside the EU

http://europa.eu/youreurope/business/vat-customs/cross-border/index_en.htm

(click on the Services tab)


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## RiffWraith (Jun 13, 2016)

Daryl said:


> Goods and services are different things, so it is something you need to discuss with your accountant.



That's actually a good point - thanks for bringing that up.


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## RiffWraith (Jun 13, 2016)

babylonwaves said:


> An european business can deduct VAT for two reasons:
> - it sells to a business with a valid VAT ID within the EU located in another EU country.
> - it sells to a business outside the EU



Thanks for the link.

Ok, what you said up there ^ is not wrong, but it's incomplete. That page also tells me that I should not be paying VAT:

*Goods:*
If you sell goods to customers outside the EU, you *do not charge VAT, *

*Services:*
If you provide services to customers outside the EU, you normally *do not charge VAT*

No differential is made between consumer and business on either tab, which seems to suggest that they are treated as one and the same.

I am not sure what "normally" under services means specifically, but this is again telling me that I should not be paying VAT.

I hope I do not seem argumentative here; I am not trying to come across as, "BUT BUT .... I AM RIGHT!!!!" Not at all. Just trying to understand how to approach this. I am physically unable to do the session in the USA (I am literally being pushed away... arseholes), so I must do it elsewhere. I do have a business, but want to find out if I am off base with my understanding that I as an individual should not be paying VAT, before I try and play the business card.

Any more thoughts, please keep 'em coming. Thanks again.


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## babylonwaves (Jun 14, 2016)

RiffWraith said:


> Ok, what you said up there ^ is not wrong, but it's incomplete. That page also tells me that I should not be paying VAT:


that's exactly what I mean - maybe my english is not sufficient here ... in any case: from what I know they shouldn't add VAT in your case.


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## musicformedia (Jun 14, 2016)

I live in Europe (Ireland). I work with people from the USA. I charge them for services I provide them with and never charge them VAT.

VAT for services is charged only to people who reside in Europe. If you live outside of Europe you should never be charged VAT.


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## Lindon (Jun 14, 2016)

this bit: "I am planning on doing a recording session in the EU" - so their interpretation may well be you are providing a service INSIDE the EU, where you live is arbitrary. But talk to your accountant.


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## RiffWraith (Jun 14, 2016)

Thanks again guys.



Lindon said:


> so their interpretation may well be you are providing a service INSIDE the EU, where you live is arbitrary.



Might be - but where I live is not supposed to matter, as for what I am seeing. My accountant does not know; I have spoken to another accountant in LA who's clients include composers and music industry people, and he does not know either.

Some more info:

_As for VAT, German law states it must be added to any invoice from an individual but not to a registered company._

That from the contractor. I have some more areas of investigation, which I will do tomorrow. In the meantime, anyone from Germany here who can comment on the law, and a proper interpretation?


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## Mihkel Zilmer (Jun 14, 2016)

I'm in the Netherlands, not Germany, but I've heard of this before.

My accountant advised me to include Dutch VAT in my invoices when selling services to private individuals outside of the EU. However, I've never actually dealt with private individuals, because all of my clients have always been companies, in which case I'm not supposed to charge any VAT.


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## lucky909091 (Jun 14, 2016)

I am from Germany. 
So please have the pleasure to read about my experiences.

I have a European VAT number and I have an accountant.
When I charge someone for services I provided, I always have to charge him additional VAT (because I am liable to VAT according to German law).

Case 1:
I buy a good from a company located within the "European Union". 

At the end of the paying process I insert my VAT number into the purchasing form and I do not have to pay any VAT because the software verifies my VAT number during the paying process. 
So I just payed the net book value of the product.

Case 2:
I buy a good from Switzerland, which is not a member of the European Union but located in Europe. 
Here, I have to pay the net price of the product PLUS the additional Swiss VAT. The long price.

At the end of the year my accountant writes something to the finance office and I get the payed additional VAT back.

Case 3:
I buy something from a company located in the US. In this special case I have to pay the full price as stated from the US company and I do not get any VAT refunded.

BUT: I can set the whole sum (including American VAT) off against tax liability.


So @RiffWraith: 
I think you have to pay the complete bill with the additional VAT and when the year is over you can set the whole costs off against tax liability.

What I want to say with these examples: 
I assume that
from US to Europe or vice versa we have to pay the complete sum including VAT, and later we can offset the money paid against our tax debt.


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## Vin (Jun 15, 2016)

musicformedia said:


> I live in Europe (Ireland). I work with people from the USA. I charge them for services I provide them with and never charge them VAT.
> 
> VAT for services is charged only to people who reside in Europe. If you live outside of Europe you should never be charged VAT.



This is correct. VAT should be only added for people residing in Europe.


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## babylonwaves (Jun 16, 2016)

Vin said:


> This is correct. VAT should be only added for people residing in Europe.


EU, not europe. but yes, certainly not for e.g. the US.


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## Kejero (Jun 16, 2016)

lucky909091 said:


> Case 1:
> I buy a good from a company located within the "European Union".
> 
> At the end of the paying process I insert my VAT number into the purchasing form and I do not have to pay any VAT because the software verifies my VAT number during the paying process.
> So I just payed the net book value of the product.



This is called "reverse charging VAT". Between two EU VAT-registered companies, VAT is essentially always charged by the country of the buyer. So if I, in Belgium, buy something from a German seller, I technically have to pay 21% (belgian) VAT, as opposed to 19% (german) VAT. The german seller charges 0% VAT, and the invoice is required to mention that the VAT has been "reverse charged". In my quarterly VAT reports, I have to add up all the reverse charged VAT, but I can immediately subtract it in the same report. So at the end of the ride, I didn't have to pay VAT to the german seller. But in practice, two simultaneous VAT transactions take place when you file your report that cancel eachother out (pay the VAT, and get it back).



lucky909091 said:


> Case 3:
> I buy something from a company located in the US. In this special case I have to pay the full price as stated from the US company and I do not get any VAT refunded.
> 
> BUT: I can set the whole sum (including American VAT) off against tax liability.



I'm confused. Is there such a thing as "American VAT"? When buying from America, you just pay the price as is. There is no VAT involved at all, no?


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## Vin (Jun 16, 2016)

babylonwaves said:


> EU, not europe. but yes, certainly not for e.g. the US.



You are, of course, right - I meant EU, not Europe


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