Company based in Germany refusing to sell me software because i am not registered for VAT

Discussion in 'Accounts & Finance' started by wood1e2, Feb 5, 2018.

  1. wood1e2

    wood1e2 UKBF Ace Free Member

    Posts: 2,026 Likes: 161
    Hi,

    I know the law on charging vat between countries of EU changed some time ago, but is really this draconian?

    That a small business in Germany is refusing to sell to me in the UK because I am not VAT registered?

    I told him many companies in the UK would not be VAT registered...he said that German companies can choose to be VAT registered!!?!?

    I told him that for £300 worth of software I not registering for VAT...there is no point.

    Anyway, is the EU that stupid as to force one member company not to be able to trade because the other member country company is not VAT Registered?
     
    Posted: Feb 5, 2018 By: wood1e2 Member since: May 2, 2007
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

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    The EU isn't that stupid. The German business is.
    I always get asked for VAT number, I simply tell them I am not registered as below threshold and my suppliers are fine with that.
    Yours...doesn't want you as a customer?
     
    Posted: Feb 5, 2018 By: Mr D Member since: Feb 12, 2017
    #2
  3. wood1e2

    wood1e2 UKBF Ace Free Member

    Posts: 2,026 Likes: 161
    Obviously not, he is saying because of EU he has to request a VAT number. Normally I would enter into something rather cynical or NONE, but this time the company has an EU VAT checker system on their website

    I have come across this before but just ignored it.

    HIs software isn't that good so I just won't buy.

    Something I did learn whilst telling him he is wrong, and that's the VAT threshold in Germany is EURO 17,300!! Nightmare!!
     
    Posted: Feb 5, 2018 By: wood1e2 Member since: May 2, 2007
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

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    Wow. Good thing I'm not planning to base my business in Germany then, I'll stick to the 100,000 euro threshold.

    https://ec.europa.eu/taxation_custo...at/traders/vat_community/vat_in_ec_annexi.pdf
     
    Posted: Feb 5, 2018 By: Mr D Member since: Feb 12, 2017
    #4
  5. Alan

    Alan UKBF Legend Full Member - Verified Business

    Posts: 5,608 Likes: 1,556
    Looking from his perspective, if he can't get a VAT number, he has to assume you are a consumer not a business, and that creates a new world of pain as he is selling a digital product, so he has to charge & report UK VAT, so in effect has to become VAT registered in the UK ( or if Germany has the equivalent of MOSS use that ). A whole new world of pain supplying digital goods to consumers unless you are doing it on large scale.

    EU VAT rules are nightmare for small digital goods providers, and one reason I sell through a reseller as they have the scale and ability to deal with the tax legislation.

    Prior to that, I just wouldn't sell to European business that could not prove they were business by providing a VAT number - just not worth the paper work.
     
    Posted: Feb 5, 2018 By: Alan Member since: Aug 16, 2011
    #5
  6. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

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    Why is it that other EU businesses will only accept a VAT number as proof that you are a business? HMRC are perfectly happy to accept alternative forms of evidence when supplying services to other EU businesses if they don't have an EU VAT number (so that you can remove the VAT).

    Otherwise, it's pretty much as Alan says. If they cannot be satisfied that you are a business (and I guess if the only evidence they'll accept is a VAT number, then you're unlikely to change their mind) then it becomes a B2C transaction and the German supplier is presumably unwilling to sell to non-businesses due to the headaches of VATMOSS.
     
    Posted: Feb 5, 2018 By: TheCyclingProgrammer Member since: Jul 15, 2014
    #6
  7. atmosbob

    atmosbob UKBF Ace Free Member

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    I seem to remember that EU regulations say that no business in the EU is allowed to refuse to supply to another country in the EU. I used this many years ago against Kodak when the only film I needed in the UK was faulty.
     
    Posted: Feb 5, 2018 By: atmosbob Member since: Oct 26, 2009
    #7
  8. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

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    I'm not aware of any EU regulations that prevent businesses from refusing to only supply other businesses and not consumers though.
     
    Posted: Feb 5, 2018 By: TheCyclingProgrammer Member since: Jul 15, 2014
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    From what I've seen with suppliers they can refuse to provide service / product to whatever business they want.
    We don't get the same protection as consumers.
     
    Posted: Feb 5, 2018 By: Mr D Member since: Feb 12, 2017
    #9
  10. The Byre

    The Byre UKBF Ace Free Member

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    It's very, very simple. In Germany it is possible to be a common trader (e.g. recreational or part-time flea-market trader) and not be VAT registered (up to a very low threshold) but to be a pukka business, you must register as a business and as such, regardless of turnover, you are automatically registered for Mehrwert-Steuer (MwSt) and you must file a complete set of books.

    The German trader's number and the MwSt number are one and the same thing. There is one integrated system and therefore, there is only one entry in the German on-line tax system, when completing a B2B transaction. The tax authorities require your VAT number to be entered into their system. Without it, he must add either MwSt or VAT. He has no other option.

    I am sure that he would be perfectly happy to sell to you, but the tax system would then class you as a consumer and therefore have the right to return goods for no reason and he would have to provide you with a three-year guarantee. That means he would have to charge a completely different price and has to add either MwSt or VAT - obviously!
     
    Posted: Feb 5, 2018 By: The Byre Member since: Aug 13, 2013
    #10
  11. Alan

    Alan UKBF Legend Full Member - Verified Business

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    And being digital needs to charge VAT at UK rates and report that to UK VAT authorities, I'd assume that Germany has the equivalent of MOSS - but if they didn't it would require the German company to register for VAT in the UK too. The rules created to catch the giants ( mainly Amazon ) do create a lot of pain for small digital businesses.
     
    Posted: Feb 5, 2018 By: Alan Member since: Aug 16, 2011
    #11
  12. atmosbob

    atmosbob UKBF Ace Free Member

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    Posted: Feb 6, 2018 By: atmosbob Member since: Oct 26, 2009
    #12
  13. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

    Posts: 801 Likes: 173
    Posted: Feb 6, 2018 By: TheCyclingProgrammer Member since: Jul 15, 2014
    #13
  14. atmosbob

    atmosbob UKBF Ace Free Member

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    I said that is a start. Spend a few more hours on research.
     
    Posted: Feb 6, 2018 By: atmosbob Member since: Oct 26, 2009
    #14
  15. TheCyclingProgrammer

    TheCyclingProgrammer UKBF Regular Free Member

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    So what’s OP going to do, complain to the EU?
     
    Posted: Feb 6, 2018 By: TheCyclingProgrammer Member since: Jul 15, 2014
    #15
  16. wood1e2

    wood1e2 UKBF Ace Free Member

    Posts: 2,026 Likes: 161
    No i am self-employed. And not currently buying any digital goods in the EU.

    As I am certainly not interested in registering for VAT just to satisfy some EUROcract!!! And their really really stupid ideas.

    Seems to me like most things in life these days rather than enforce the current law they invent a new one!! over simplification!

    And being the nature of 'unforeseen consequences' are unforeseen and they have consequences.

    I presume will be alot easier once we are out as there they won't have to charge VAT at all.
     
    Posted: Feb 6, 2018 By: wood1e2 Member since: May 2, 2007
    #16
  17. Mark T Jones

    Mark T Jones UKBF Enthusiast Free Member

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    It might be that their system is set to interpret the rules on in certain way and, being German, won't allow flexibility

    Alternatively they might have simply decided that their target customer will be large enough to need to be VAT registered, hence you are outside their range
     
    Posted: Feb 6, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #17
  18. Mr D

    Mr D UKBF Legend Free Member

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    Once we leave the EU the plan is to charge VAT on all sales rather than the current you supply VAT number and they don't charge VAT at all.
    Impacts cashflow. Means businesses will have to pay VAT they don't currently pay and claim it back later.
     
    Posted: Feb 6, 2018 By: Mr D Member since: Feb 12, 2017
    #18
  19. atmosbob

    atmosbob UKBF Ace Free Member

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    This has nothing to do with the EU. It is entirely down to your supplier. When we leave the EU it will be Tariffs, duty and VAT you will have to pay on imports with no chance of deducting the VAT if not registered.
     
    Posted: Feb 6, 2018 By: atmosbob Member since: Oct 26, 2009
    #19
  20. The Byre

    The Byre UKBF Ace Free Member

    Posts: 6,335 Likes: 2,468
    That is as uninformed a posting as this forum has seen for many a year!

    VAT and how it is collected in the various member states has nothing to do with the EU (though I will admit that the EU Commission has made various inept and inelegant moves to coordinate VAT collection across the EU, such as the hopeless VAT-MOS system).

    It has everything to do with two factors -

    1. German tax law requires every full-time business to be MwSt (VAT) registered and that registration happens automatically, when you register as a business. Your business registration and your MwSt number are one and the same. The same principle applies to non-German businesses and has nothing to do with a threshold. This is in no small part, because the German tax authorities (Finanzamt) want to prevent people representing jobs as micro-businesses.

    2. German businesses sign a series of interlocking contracts, for example, as wholesalers and with manufacturers. It is the rule, that a manufacturer will require the wholesaler of retail goods to only sell to B&M retail outlets that are open full-time, six days a week. They may even require the wholesaler to inspect the retail outlets they supply and ascertain that they come up to certain standards for staffing, size, location and cleanliness. One of those requirements is always that the retail outlets are registered businesses and therefore also MwSt registered.

    So you see that your tirade against the European Commission is totally misguided. VAT collection has as little to do with the Commission, as the UK's bonkers H&S culture.
     
    Posted: Feb 6, 2018 By: The Byre Member since: Aug 13, 2013
    #20