How to avoid paying VAT ?

[GiGoGo]

I don't know how to avoid VAT. But why don't you increase your prices for the customers who incurrs VAT, by the amount of VAT? And be upfront with them about it.

"Boddy, you're from EU, and therefore I'll have to pay VAT, therefore, a price for you will increase by 21%".

Many pages does that, not the first time I have to remind the website I'm based in Hong Kong so they remove the VAT

 

[bru1234]

HK, Singapore and US don't have VAT for digital services online

he runs an ecommerce and so sell goods as far as i understood. The company which effectively sell/store/send the goods will have to pay the VAT and this not on the profit margin but on the sale price.
Thinking you can invoice from a company outside EU is no more possible as even the big marketplace are already or will soon (depend on which one) report all sales so a matching can be made between sellers, their turnover and if they are effectively paying VAT.
moreover some places like amazon or ebay will collect themselves the VAT :/

 

[GiGoGo]

Have a look to a website like dx.com
Do you see them charging any VAT?

 

[Ken199]

No, that setup would not work if you are resident in EU.

Strictly speaking, you can only avoid VAT on sales to non-VAT registered EU persons by not selling to them at all. Even non-EU companies are required to pay VAT.

In reality, a lot of non-EU companies are selling digital services into the EU without charging and paying VAT. This works fine as long as you don't have any assets within the EU that a local tax authority can lay claim to. But if your US LLC is managed and controlled from within the EU, it's an EU company as far as tax is concerned and you need to pay local tax (corporate tax, and VAT).

Your structure looks like Tax Evasion 101 and won't fly. If your business model can't handle VAT, I think the problem is the business model, not the VAT.

I would like to ask something... When you order from Google Ads, they gave invoice with written that "VAT is up to you". End of story, they made invoice with 0% of VAT, and let you pay this if you would like. So if I have an LLC in US can I do like this without caring from when they came from?

 

[chrisgerth]

I would like to ask something... When you order from Google Ads, they gave invoice with written that "VAT is up to you". End of story, they made invoice with 0% of VAT, and let you pay this if you would like. So if I have an LLC in US can I do like this without caring from when they came from?

The procedure they apply is called "Reverse charge on EU VAT", meaning that whenever there is a B2B cross-border sale happening (Google is located in Ireland) they can basically reverse the duty of VAT obligation towards the receiver of the invoice instead of issuer of invoice.

Technically what you can do is set up a company in an EU country (EU company is way better in terms of payment processor etc.) where you do not expect customers to be located. Then you put in your terms and conditions that your website targets exclusively business customers. By having your customers agree to that you have a chance to apply the reverse charge VAT rule on all your customer and thus put the burden of the VAT obligations on your customer.

 

[jkk]

The procedure they apply is called "Reverse charge on EU VAT", meaning that whenever there is a B2B cross-border sale happening (Google is located in Ireland) they can basically reverse the duty of VAT obligation towards the receiver of the invoice instead of issuer of invoice.

Technically what you can do is set up a company in an EU country (EU company is way better in terms of payment processor etc.) where you do not expect customers to be located. Then you put in your terms and conditions that your website targets exclusively business customers. By having your customers agree to that you have a chance to apply the reverse charge VAT rule on all your customer and thus put the burden of the VAT obligations on your customer.

Not an option. You need to get customers VAT registration numbers and put them on each invoice. Even if everyone fakes the number, during an audit the tax authority will notice that these fake numbers on invoices do not match the companies or the payments have not been received from the companies bank accounts.

 

[chrisgerth]

Not an option. You need to get customers VAT registration numbers and put them on each invoice. Even if everyone fakes the number, during an audit the tax authority will notice that these fake numbers on invoices do not match the companies or the payments have not been received from the companies bank accounts.

Right, did not consider that. But afaik the trick does work with digital goods and a company located in Switzerland. But this thread here seems to be about ecommerce.

 

[Ken199]

The procedure they apply is called "Reverse charge on EU VAT", meaning that whenever there is a B2B cross-border sale happening (Google is located in Ireland) they can basically reverse the duty of VAT obligation towards the receiver of the invoice instead of issuer of invoice.

Technically what you can do is set up a company in an EU country (EU company is way better in terms of payment processor etc.) where you do not expect customers to be located. Then you put in your terms and conditions that your website targets exclusively business customers. By having your customers agree to that you have a chance to apply the reverse charge VAT rule on all your customer and thus put the burden of the VAT obligations on your customer.

Not an option. You need to get customers VAT registration numbers and put them on each invoice. Even if everyone fakes the number, during an audit the tax authority will notice that these fake numbers on invoices do not match the companies or the payments have not been received from the companies bank accounts.

And so practically if you would have for example an US LLC Wyoming and you are going to sell a service to Italian people you need add on services +22% of vat or you could have problem? But if in Wyoming there is not invoice for not business..