GameMaker EU VAT on licence

[gnysek]

Hi,

From what I know, if I'm a registered EU VAT company, and I'm buying from another EU VAT company from another country, I should get a bill to 0% tax and pay it on my side.
However, when I'm trying to buy a licence on YYG website, it still adds me 23% of tax (so the amount I should pay in my country). This way, I need to pay tax twice (once in UK and once in Poland)...

anybody have similar problem ?

 

[Nocturne]

When you purchase you get given a VAT receipt which you then present to your countries tax office and they should reimburse ythe tax you have paid. For me (in Spain) as a self employed person, that's how it works anway. I buy from the UK and pay the tax, but then when I file my tax returns at the end of the quarter I include the VAT receipts and then the Spanish Government deducts the amount I have paid from the tax I owe (or refunds it to me if I don't owe tax).

 

[chance]

I buy from the UK and pay the tax, but then when I file my tax returns at the end of the quarter I include the VAT receipts and then the Spanish Government deducts the amount I have paid from the tax I owe (or refunds it to me if I don't owe tax).

Doing it once yearly is probably the easiest way for small businesses. But (I believe) there's also an option for getting refunds immediately after a purchase. Each EU country has an online portal where its citizens can claim a VAT refund. If you're eligible for a refund (based on your own country's business rules), your claim is passed on to the authorities in the country that charged the VAT.

It's essentially the same thing Spain does to recover the VAT refund they paid you (Noc), which was collected by UK.

EDIT: Here's some info on how businesses can claim VAT refunds. There's some PDF documents with details for each country.

 

[gnysek]

Yeah, but I'm finding info everywhere, that I should get receipt with no VAT, and add it manually in my country, instead of sending request to get refund from UK (Intra-Community acquisition - https://en.wikipedia.org/wiki/European_Union_value_added_tax#Intra-Community_acquisition ).

 

[Nocturne]

I have no idea about that, but I pay a large amount each month (money well spent, too) to maintain a tax consultant who does all this for me and they say that how I'm doing it right now is the standard procedure... shrug

 

[rwkay]

@gnysek - the usual method is the company pays the VAT at the point of sale and then reclaim on your VAT return at the end of the year (you subtract it from the amount you pay at the end of the year) so that is effectively reclaimed (the governments then do something complicated in the background).

That is the method across the EU as far as I know.

Russell

 

[gnysek]

Seems that something's wrong for me here, as this way I will pay tax twice, while I should pay nothing (as this purchase is "cost" for my company, so this VAT should be substracted from VAT of what I sold to people). At least it's how it works here - for example if I buy a computer, I can reduce VAT and Income tax from what I earned this month, so in fact taxes are less by about 33% of computer price.
It should work same with licence - I should pay you the NET price for it, and add tax on my side (23%), but since licence is needed in my company to produce games, I can take this as cost and get this VAT back - so I don't need to pay those 23% to my government at all. This way, licence for GameMaker will be at least 23% cheaper for me.

Seems that I need to find some accountant to ask out how to put it in my tax book, maybe I just should put net price on my side even if you added VAT, and then really ask UK side to get this tax back later.

There's a field here to save money, but seems harder than I thought (at least when reading similar examples online).

 

[rwkay]

The way it works here is that the company will pay the VAT on all purchases but records that figure each year/month lets call this value 'vatPaid' and then it adds VAT to all the services that it charges its customers lets call that value 'vatIncome' then at the end of the year/month it completes a VAT return and pays the government the value of 'vatIncome' - 'vatPaid' if that is a negative figure then the government pays the company that value (or it could be used to offset subsequent years/months).

So you do not end up paying vat twice as it all works out in the wash.

Russell

 

[The-any-Key]

you then present to your countries tax office

In Sweden this only work if the program is sold in Sweden. If bought from another company in another country I must make sure they exclude the VAT. Ex if I buy a asset on the marketplace I don't pay any VAT, so this workswell. But when I buy GM itself I need to pay VAT, because it's not excluded from the price. But this is just a one pay thing so it's not a big deal.

 

[rwkay]

Sweden is in the EU and I know that it does not matter where we pay the VAT in the EU then it all works out (we just need to call it out on our VAT statement) it all still works out.

What does not work is if you are below the company VAT threshold (for being VAT registered and having to file VAT returns) then the company is just going to have to pay the VAT like a normal consumer. Those thresholds may well be country dependent.

Basically for all of this you need to consult a professional for your local country circumstances.

Russell

 

[Christoffer Karlsson]

I did not pay VAT when i bought an excavator from denmark ( i live in sweden )

 

[The-any-Key]

I did not pay VAT when i bought an excavator from denmark ( i live in sweden )

My point. I don't pay VAT to any other companies I trade with in EU. I just provide them with my VAT nr and they exclude the VAT because it's a cross-border transaction between businesses to businesses and use the reverse charge procedure. This is because you only pay VAT when you deal with consumers. Else, if the end user is an consumer, he would pay double VAT. One VAT from the company I bought it from and one when you add mandatory Swedish VAT on the sale. This is only if you intend to sell it. You can use it in your company and therefore don't pay any VAT. Because it's an company investment.

But when I bought GM the VAT was included in the price. But I can never get back the VAT I payed. Its gone. This is because trade between business to business in EU is assumed to exclude all VAT. But like I said it was not a big deal. GM is not that expensive.

Selling to businesses
You do not normally charge your customers VAT. Your customers will pay VAT on the services received at the applicable rate in their country (using the reverse charge procedure).

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

 

[gnysek]

In Sweden this only work if the program is sold in Sweden. If bought from another company in another country I must make sure they exclude the VAT. Ex if I buy a asset on the marketplace I don't pay any VAT, so this workswell. But when I buy GM itself I need to pay VAT, because it's not excluded from the price. But this is just a one pay thing so it's not a big deal.

Yeah, same here - add VAT when same country, no VAT if other EU country.

I think it's same in UK as it's not yet outside of EU. All receipt for VAT-registered companies outside UK but inside European Union, should have 0%. For normal customer - should be same as now.

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@rwkay - I'm not sure I understand it properly as my English was never perfect, but here - https://www.gov.uk/guidance/dispatching-your-goods-within-the-eu (seems to be HMRC official website):

If your EU customer is VAT registered and can provide you with a valid EU VAT Registration Number you can apply the zero rate of VAT to the sale
(...)
If your buyer is not VAT registered, or you can’t obtain their VAT number, then as the seller you must charge the UK rate of VAT..

and also here: https://www.gov.uk/vat-businesses/vat-rates

Zero-rated means that the goods are still VAT-taxable but the rate of VAT you must charge your customers is 0%
goods you supply to a VAT registered EU business - you can check if the VAT number is valid

also, as above says about "goods" and licences are probably "services" as they virtual - https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services

If you are in the UK and the place of supply of your service is in the UK, you charge and account for VAT according to UK VAT rules.
If you are in the UK and the place of supply of your service is in another EU country, you don’t pay UK VAT

Seems as I'm saying. If I have provided existing and valid EU VAT number in YYG account, I should get 0% of VAT added. It's called "reverse charge".

Sad that I found the problem on last day of discount... but if I buy it today, I would be required by local law to pay 23% of tax again in 20 days (while as a normal non-business customer I won't be required...).

 

[Smiechu]

I think you misunderstood something... either way you won't pay the VAT...

If you buy the GMS2 and pay the VAT then you can withdraw that VAT in your yearly tax statement in Poland... so you "get the money back"
If you buy the GMS2 and do not pay the VAT then you can not withdraw it in the tax statement anymore... bonus here is that you don't have to wait till next tax period...

And also on the other hand... if at the end of the tax period in you tax statement it will come to a situation that your "operating costs" are to low... than you have to pay that missing tax...

There are 2 different approaches and both are legal...

 

[The-any-Key]

If you buy the GMS2 and pay the VAT then you can withdraw that VAT in your yearly tax statement in Poland... so you "get the money back"

This may be true to Poland, but not in Sweden. To withdraw VAT this way the company selling the service to me must have a business inside Swedish borders. In Sweden it's illegal to withdraw tax from services bought from other countries.

There is a EU VAT refund service that you can claim if the VAT was 50 Euro or above. But you can only claim after the year has ended until September 30 the year after. If the claim is 400 euro you can send it after 3 months.

 

[rwkay]

All I know is that is how we have been told to implement the VAT for the EU and this has been passed by our local tax authorities but I am not an accountant (nor a lawyer)

Russell

 

[gnysek]

I think you misunderstood something... either way you won't pay the VAT...

If you buy the GMS2 and pay the VAT then you can withdraw that VAT in your yearly tax statement in Poland... so you "get the money back"
If you buy the GMS2 and do not pay the VAT then you can not withdraw it in the tax statement anymore... bonus here is that you don't have to wait till next tax period...

And also on the other hand... if at the end of the tax period in you tax statement it will come to a situation that your "operating costs" are to low... than you have to pay that missing tax...

There are 2 different approaches and both are legal...

Yearly statement? EU-VAT need to be reported before 25th of next month - http://www.finanse.mf.gov.pl/pp/wazne-terminy .
Also, check this article (as from your nick I think you speak Polish): http://www.gofin.pl/podatki/17,1,62,187601,zakup-towaru-przez-internet-od-podatnika-z-kraju.html . It says (3rd bold paragraph):

However, if the contractor doesn't take request (to fix VAT to 0% on receipt) into account, receipt will be taxed twice - once by contractor in his country, second by buyer in Poland, which claims it as Intra-Community acquisition

.
I can however in this case claim to return tax from foreign country, but according to law, it need be at least 400€ of VAT in case I want to do it after 3 months, and at least 50€ if I want to do it for last year. In case of YYG it's about 35€... so I cannot get this back according to law. Of course i can book this as my "cost" and in fact don't pay tax on Polish side, but still - according to EU law, I could get it 23% cheaper and not pay tax in both countries (as long as I wan't use this licence to make games in my company).


I think that problem is somewhere else @rwkay - it's probably because you charge in dollars As dollar isn't EU currency, that may be the cause. Also, on twitter I've got response from YYG, that this is not implemented yet, which means somebody in office know that for EU companies there should be 0% of tax (if they are VAT registered only).


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Edit: what's fun, I've just got "marketplace payment report" and there is VAT mentioned, but not subtracted from final payment (same as publisher amount), which means as I have EU-VAT number in my profile, on marketplace you're charging me 0%...

 

[The-any-Key]

implement the VAT for the EU and this has been passed by our local tax authorities

It's ok to include VAT in all sales. This puts you on the safe side if a buyer is just an individual and in that case VAT should be charged. Or a business and VAT should be excluded but can be added. This gives only some more work for us that run a business and need to file a EU VAT refund request. So all is ok. But it's not EU standard

 

[Tomi Kokkonen]

When customer provides the VAT code from another EU country the transaction should be tax free. If it includes taxes you have to claim them from that the country of the seller. It would be much easier just reduce the TAX in the first place. In some EU countries this is not possible. in 2015 I went to Sweden to Nordic Game Conference and Sweden's tax laws don't allow this front reduction and we had to claim them afterward. I don't know what is the deal with UK.

It's ok to include VAT in all sales. This puts you on the safe side if a buyer is just an individual and in that case VAT should be charged.

Yes, it is possible, but it is bad customer service and all extra work and extra costs sums to a lot.

 

[The-any-Key]

Yes, it is possible, but it is bad customer service and all extra work and extra costs sums to a lot.

Agreed.

I went to Sweden to Nordic Game Conference and Sweden's tax laws don't allow this front reduction and we had to claim them afterward

Yes you where trapped by a clause in the tax law when you travel:
Travel to Sweden from another EU country and buy something in Sweden as business: No VAT reduction possible on buy, claim via EU vat refund service.
Live in a EU country as business and buy from Sweden: VAT reduction on buy possible.

 

[gnysek]

The main problem is, that in my country minimal EU-VAT value to request to be returned is 400€ (if after quarter of year) or 50€ at end of year, so in case of $99 and $149 licences, I cannot get it back (until I buy other stuff from other companies which also adds VAT when they shouldn't). Also, goverment takes 10% of this value.

 

[Mike]

Sorry guys, this isn't going to change. As has been said above, this is how we've been told to implement it and we have to take this guidance from our legal and finance departments.

In anything financial or legal, what they say is final. Sorry.