Pay EU VAT as offshore company?

[mr782292]

I have an offshore company and I sell digital services to EU customers. From the research I made, my company is supposed to be paying VAT. How can I start doing it without being somehow flagged and questioned about the past?

 

[Martin Everson]

If your company is not in EU then whats the problem to just register? The EU cannot audit your offshore company. In end it maybe easier to just setup an EU subsidiary and trade with EU clients through that. Something like an Estonian company maybe an option with good corporate tax deferment possibility.

 

[Sols]

Start here: VAT on digital services/MOSS: What services are covered?

Under Your Company, tick the option that applies and follow the instructions.

 

[mr782292]

The EU cannot audit your offshore company.

I use European based payment processor. Cannot they just go to them and analyze for how much money I sell services and then tell me to pay VAT on that?

 

[CyprusBusiness]

Hi

@Martin Everson is right - you can open a Company within EU and make your B2C transactions from there. You may consider countries with IP boxes as well as owing intellectual propoerty such as SaaS and/or performing subtantially any R&D activity there are significant tax benefits that can reduce your corporation tax rate to very low levels.

If that is not an option you can follow @Sols instructions above to register for MOSS and you have to choose a reporting country as the designated country from where you would make your submissions and payments.

 

[mr782292]

I got stuck at selecting reporting country - any benefits or differences comes from choosing MOSS country? like does it matter which country I choose? Which one would you recommend?

It's small web hosting business

 

[Martin Everson]

I use European based payment processor. Cannot they just go to them and analyze for how much money I sell services and then tell me to pay VAT on that?

Who will go to payment processor in EU? Unless your based in an EU or UK where some processors give information to taxman like Paypal gives info to UK HMRC then its unlikely. Again I would say to setup a fresh EU subsidiary or stand alone company and right the wrongs of the past by starting afresh. If you are based in EU and selling into EU via offshore company than VAT fraud (even vat ignorance) is something very very serious that often entails jail time sadly. In end its better to sleep at night knowing you started over newly and won't in 5 years time get issues or even home raided at 3am (if you live in EU) related to non-vat compliance.

However speak to companies like the below. Try out there VAT assessment perhaps and fix the issue.

Non-EU providers VAT on e-services MOSS - Avalara

For non-European Union companies providing digital services (software, server facilities, online films, music, books, Ap’s for phones etc.) to European Union consumers, there were special rules for charging and reporting Value Added Tax. This was known as the non-union MOSS.

www.avalara.com

 

[ThatGuysBlue]

One thing I was wondering, is consulting classified as a digital service?

 

[CyprusBusiness]

One thing I was wondering, is consulting classified as a digital service?

No, digital services under MOSS/OSS involve only:

- website hosting
-supply of software
-licence to access databases
-downloading apps or content
-online gaming
-distance teaching

 

[ThatGuysBlue]

Thanks for that. So I guess those that are doing things like supplying software and consulting on two line items would have to split the tax between them?

 

[CyprusBusiness]

Yes that is correct, you need to separate each revenue stream by nature

 

[Dandyline]

Just skip to pay anything. Not like they will ever find out or does any controls anyway. Thats a perk of being offshore.

 

[NicolasMaduro]

Thanks for that. So I guess those that are doing things like supplying software and consulting on two line items would have to split the tax between them?

Yea. So the Consulting Fee is 0% VAT(if u are incorporated no vat country) and the Software would be EU VAT.