LLC USA and 2024 VAT Changes in the EU - What to Expect?

[GalacticGazelle]

Hello,
I've come across information indicating that there will be significant changes in data communication between companies operating within the EU and those outside of it, starting in 2024. However, I'm not entirely sure about the implications of these changes.

If I own an LLC in Delaware and sell my digital products or services to customers within the EU, receiving payments through Stripe without adding VAT to my services, what consequences should I anticipate?

Thank you.

 

[ShillGates]

interpol red notice

 

[Don]

Hello,
I've come across information indicating that there will be significant changes in data communication between companies operating within the EU and those outside of it, starting in 2024. However, I'm not entirely sure about the implications of these changes.

If I own an LLC in Delaware and sell my digital products or services to customers within the EU, receiving payments through Stripe without adding VAT to my services, what consequences should I anticipate?

Thank you.

PayPal, stripe will report you directly so you probably will not even able to maintain an account without being compliant

VAT in the Digital Age

On 8 December 2022, the European Commission proposed a series of measures to modernise and make the EU’s Value-Added Tax.

taxation-customs.ec.europa.eu

EU Proposals for VAT in the Digital Age (ViDA)

On 8th December 2022, the European Commission published its proposed VAT in the Digital Age (ViDA) reforms to amend the European Union (EU) Value Added Tax (VAT) system with the view to respond to the challenges of digitalization.

www.ey.com

 

[GalacticGazelle]

I might be missing something, but if an LLC operates primarily in the US and also has transactions in the EU, for example, in Germany, what does the LLC need to do? How and where does it need to register for VAT?

Consulting services with mostly of B2B.

 

[Dandyline]

I might be missing something, but if an LLC operates primarily in the US and also has transactions in the EU, for example, in Germany, what does the LLC need to do? How and where does it need to register for VAT?

Consulting services with mostly of B2B.

B2B is out of scope.

 

[FDS ADS]

Hello,
I've come across information indicating that there will be significant changes in data communication between companies operating within the EU and those outside of it, starting in 2024. However, I'm not entirely sure about the implications of these changes.

If I own an LLC in Delaware and sell my digital products or services to customers within the EU, receiving payments through Stripe without adding VAT to my services, what consequences should I anticipate?

Thank you.

Since I do not know your business model exactly, I can give you just a general view.

If you want to be legal, you must definitely pay VAT.

The EU has introduced the OSS to simplify VAT obligations for businesses selling goods or services to consumers in the EU. Under this scheme, you can register for VAT in one EU member state and declare and pay VAT for sales in all EU countries through a single electronic portal. This can simplify the process significantly if you have customers in multiple EU countries.

 

[daniels27]

If you are selling services for which you are doing manual work, you don't need to do anything. If you sell ebooks or automated services like Skype etc. you need to pay VAT through OSS.

VAT on digital services/MOSS: What services are covered? - Your Europe

Learn more about the MOSS scheme and if you need to register in an EU country you sell to. There are 2 schemes: Union & non-Union scheme.

europa.eu

 

[noname]

Yes, if you’re selling SaaS or digital downloads I suggest you change the payment platform and go with Paddle for example or FastSpring, basically they are merchant of record and collect / pay VAT for you. You just receive your profits to LLC. But for the services manually done then Im not sure how this will work. In my country Bosnia and I believe many others you don’t charge VAT on invoice if you deliver or export services abroad so I can’t disrespect local law regardless what EU will have in place. Although EU VAT rules makes sense, why would local German company charge VAT 19% and then random Indian company sell to German customer some online service and charge 0% causing competition with low prices to local businesses.

 

[daniels27]

The reason is that manual service means either
1. Service to businesses, i.e. consulting
2. Services to consumers

For the first one, there is no advantage as local EU businesses are all VAT registered and any paid VAT is recoverable.

For the second one. I do not really know what this could be. But it will be small in turnover. Who would spend more than 100 EUR on a service as private person for something done remotely? Maybe some Christmas card design. But then, the turnover is the person doing the service will most likely be less than 100,000 EUR per year, most likely much less. In this case the service performer would also be VAT exempt in Germany.

 

[JackieTsan]

PayPal, stripe will report you directly so you probably will not even able to maintain an account without being compliant

VAT in the Digital Age

On 8 December 2022, the European Commission proposed a series of measures to modernise and make the EU’s Value-Added Tax.

taxation-customs.ec.europa.eu

EU Proposals for VAT in the Digital Age (ViDA)

On 8th December 2022, the European Commission published its proposed VAT in the Digital Age (ViDA) reforms to amend the European Union (EU) Value Added Tax (VAT) system with the view to respond to the challenges of digitalization.

www.ey.com

What is this can you summarize?? Added vat in Delaware LLC? Or something changed in Europe? Thank you

PayPal, stripe will report you directly so you probably will not even able to maintain an account without being compliant

VAT in the Digital Age

On 8 December 2022, the European Commission proposed a series of measures to modernise and make the EU’s Value-Added Tax.

taxation-customs.ec.europa.eu

EU Proposals for VAT in the Digital Age (ViDA)

On 8th December 2022, the European Commission published its proposed VAT in the Digital Age (ViDA) reforms to amend the European Union (EU) Value Added Tax (VAT) system with the view to respond to the challenges of digitalization.

www.ey.com

Can you please explain what is this? I understand is for companies only inside Europe, correct? Thank you

 

[Don]

What is this can you summarize?? Added vat in Delaware LLC? Or something changed in Europe? Thank you


Can you please explain what is this? I understand is for companies only inside Europe, correct? Thank you

It means if you have clients in EU, and use payment processing then the local fax authorities will know everything, as these transactions will be reported.

 

[JackieTsan]

It means if you have clients in EU, and use payment processing then the local fax authorities will know everything, as these transactions will be reported.

I use EMI, I don’t mind if reported, everything is clear. I’m not resident in EU. Only customers are there. I need to structure a 0% company OUTSIDE OF EU, (as UAE was before) to get payment properly and not taxed. I’m looking for Ltd not for any passive - LLC company structure.
Any ideas on where I can open a company to use like that? Thank you

 

[Don]

I use EMI, I don’t mind if reported, everything is clear. I’m not resident in EU. Only customers are there. I need to structure a 0% company OUTSIDE OF EU, (as UAE was before) to get payment properly and not taxed. I’m looking for Ltd not for any passive - LLC company structure.
Any ideas on where I can open a company to use like that? Thank you

Georgia virtual zone (but need Georgian employees)
Uzbekistan/Kazakhstan special zones (need employees and right holding company to avoid WHT)

 

[JackieTsan]

Georgia virtual zone (but need Georgian employees)
Uzbekistan/Kazakhstan special zones (need employees and right holding company to avoid WHT)

Thank you for your response @Don . Why not Cayman, Saint Kit, BVI ? Seycheles (which has not the best nane) - or Alternaticves - Easy companies that can be opened fast, in low cost, get 1-2 EMIs and work properly and legally. No requirements for employees there etc.

 

[Don]

Thank you for your response @Don . Why not Cayman, Saint Kit, BVI ? Seycheles (which has not the best nane) - or Alternaticves - Easy companies that can be opened fast, in low cost, get 1-2 EMIs and work properly and legally. No requirements for employees there etc.

Yes those can be considered.
I would set up an EU based payment processing company in such case though, in order to have easier time with banking.

 

[JackieTsan]

Yes those can be considered.
I would set up an EU based payment processing company in such case though, in order to have easier time with banking.

@Don thank you!!!!! Which region you suggest as the easier? No tax audits, no tax fillings (all those processes) to avoid. No problem with ESR as it’s just a form annually and I can do it. I don’t use the company as a structure of other companies (just clear services invoicing directly to eu customers and I need to be getting the amounts as dividends only been shareholder - therefore I need normal company, not LLC which is just passive ). And white listed in EU (or maybe gray listed if is ok?). Thank you very much once again

 

[Don]

@Don thank you!!!!! Which region you suggest as the easier? No tax audits, no tax fillings (all those processes) to avoid. No problem with ESR as it’s just a form annually and I can do it. I don’t use the company as a structure of other companies (just clear services invoicing directly to eu customers and I need to be getting the amounts as dividends only been shareholder - therefore I need normal company, not LLC which is just passive ). And white listed in EU (or maybe gray listed if is ok?). Thank you very much once again

I usually work with Estonia and Cyprus companies when it comes to EU.

 

[JackieTsan]

I usually work with Estonia and Cyprus companies when it comes to EU.

@Don I can in Cyprus but has tax.. around 10% correct? Are you a consuntant? Could we schedule a call (paid for you) to discuss those things, what do you think? Many thanks!