Paying VAT on foreign hosting

[sga]

I have a bit of a problem here. I've been running a few websites over the past while where the customer base is mostly in the US. So for latency and other reasons, I rent out a dedicated server there (reasonably high-end one).

Now I'm trying to develop this into a legit. business so I want to fix up my tax compliance. However, I hadn't registered for VAT, since again most of my income and costs are in the US, and also, I was way under the VAT thresholds.

The hosting company in the US does not charge VAT to EU customers - it's my understanding that technically they probably should, but there is significant opposition/non-compliance in the US in this regard.

Just wondering has anyone been in the same situation. If I have to back-pay VAT on previous hosting charges without being able to reclaim it, it's going to be tough.

Thanks

 

[mneylon]

If you are under the VAT threshold, in my understanding, then you wouldn't have been able to charge VAT until you were VAT registered etc.,

If you're not being charged VAT by a supplier you can't claim back any VAT

So you wouldn't be liable for VAT for past charges ..

Or did I misunderstand your question?

 

[sga]

Thanks for the reply.

Yes I haven't been charged VAT by the hoster, however I'm not sure if I am liable to pay this under self-assessment. Just as when you order a physical item from the US, if it's over a certain value threshold, you usually get chased up by the courier company for excise duty + Irish VAT on it, even though the US supplier may not have charged you any Irish VAT on the item when ordered.

Bascially wondering how this applies to hosting charges. I'm not so much looking to claim back VAT, as avoid being liable for VAT on previous hosting charges.

 

[mneylon]

I've never heard of anyone having to pay VAT on a service when the VAT was never levied in the first instance.
Even if the supplier should have charged you VAT (which isn't cut and dry) it would be up to them to charge it - not you.

The couriers are a different thing entirely, as they're dealing with physical goods + they're collecting tax for customs and excise / revenue (I think they also chuck a service fee on top .. but am not 100% sure)

 

[sga]

Hmm, I think this was the case up until the EU e-commerce directive.

Council Directive 2002/38/EC, in force from 1[SUP]st[/SUP] July 2003, changes the EU rules for charging Value Added Tax (VAT) on the supply over electronic networks (i.e. digital delivery) of software and computer services generally, plus information and cultural, artistic, sporting, scientific, educational, entertainment or similar services. From now on, these services will be taxed in the country where the customer resides rather than where the supplier is located.

The vast majority of e-commerce supplies (more than 90%) are business to business and in these cases VAT will be accounted for by the customer, under the reverse charge (self-assessment) mechanism, with no obligations for the supplier.

Frequently asked questions - European commission

 

[mneylon]

Talk to revenue so.

 

[sga]

Yeah, looks like it!

Thanks all the same.