VAT within europe

[padersync]

Hello,
does anyone have a good understanding about the VAT payment requirements when it comes to sales on OVI? I am working within europe and usually have to pay VAT for my sales within the EU. Now I need to know if OVI already takes out the VAT percentage and pays it to the tax authorities. Asking this question to the publisher support email, note that I asked explicitly for VAT, got me this repsonse:

"All taxes involved with the sale of the content have been paid by Nokia
in the country in which the content was downloaded. You are only
responsible for the tax your business would pay on any other type of
revenue."

Now, does "taxes involved with the sale of the content" include VAT? I might have to ask this question to the publisher support, but chances are good that I get a faster response here

Regards,
Thorsten.

[intellsys]

Yes, Nokia already collects the VAT ("All taxes involved with the sale of the content" includes VAT). And for sure we do not receive it, otherwise the 70% revenue share would be a joke. So they must pay it to the tax authorities (This is why they need our VAT number, I guess.)

Now, things get more complicated when you are exempt from paying VAT in your country. In theory Nokia should pay you also the VAT in this case. But from what I know you need to send them a written request including all documentation. If anyone has done that I would be interested how bureaucratic is that, we decided not to do it, the amounts are still not significant.

Best regards,
Laurentiu

[ivanlitovski]

Be that as it may, this is not clear anywhere in Ovi terms, FAQ or available documents. For example Ovi terms on this address:

http://wiki.forum.nokia.com/index.ph...and_Conditions

4.6. VAT and Invoicing

Any VAT, sales tax, service tax, business tax, turnover tax, IVA, ISS or any similar tax levied on You in the country where You are registered for tax purposes is solely Your responsibility. Nokia is not liable to You or anyone else to pay any of the aforementioned taxes in addition to the revenue share Nokia remits to You.

You agree with Nokia on a Self Billing arrangement ("Nokia SBI") delivered to You at the email address You provided during registration to the Program, or as updated by You after registration. You certify that Your email address and all Your registration information, as may be updated by You from time to time, are truthful, accurate, current, valid and adequate for Nokia SBI purposes. You are solely liable for issuing any VAT, tax or similar invoice as may be required by the laws of Your country if such document is required in addition to the Nokia SBI, and You certify that such invoice or document will show exactly the same details as the Nokia SBI and reflects the same amount which the Nokia SBI shows in Euros (the currency in which Nokia will make payments to You). Nokia is not liable for any tax or legal consequences if Your invoice or document deviates from the Nokia SBI details.

I, for one, have not received the Nokia SBI. I also got ambiguous responses to queries about this. Since there are so many questions regarding VAT, perhaps it is time to clarify in simple terms? Also, it would be great to have this explanation in the Ovi FAQ (https://publish.ovi.com/help/faq) which is quite outdated - it still makes forward statements about Q3 2009 which was some months ago...

[gafgafgaf]

If I understand correctly, Nokia does not send you VAT, at least if you are in the EU. I asked them for an "invoice" about one of the payment they made. The document contained this row:

VAT rate: 0 %, Reverse Charge, Article 56 EU VAT Directive 2006/112/EC

[jimgilmour1]

Hi,
This VAT problem is exemplified by the HMRC tax document

In an effort to tackle VAT fraud in small, high value goods some member states have sought
to apply the reverse charge mechanism to these goods. For example, the UK has been able to
apply a derogation, adopted on 16 April 2007, and uses a reverse charge system for mobile
phones and computer chips, according to which the tax liability is placed on the taxable
person to whom these supplies are made.1 By designating in those cases the person to whom
the goods are supplied as the person liable for the VAT, the derogation removes the
opportunity to engage in the missing trader fraud.

Yes you many not have spotted "uses a reverse charge system for mobile
phones and computer chips". Why mobile phone, well this is where most fraud has occured

Since intra-Community transactions are zero-rated, such transactions can give rise
to VAT evasion either in the supplier country (because the supplier, after having declared an
intra-Community delivery, retains goods for sale in the domestic market without VAT) or in
the country of destination (because the recipient fails to pay VAT due on arrival) or by
operating the so-called missing trader fraud.
Furthermore, the invoicing mechanism of the VAT system is open to abuse through falsified
invoices. In addition, the time delays between invoicing and VAT returns involved in the
process any paying invoices means it is far more difficult to identify and chase fraudulent
behaviour, and gives time for fraudulent traders to “disappear”.
Missing trader fraud
Missing trader fraud (also known as Carousel fraud) often extends over several Member
States and involves numerous companies.

The Reverse Charging system is similar to the U.S. and Finland "With Holding tax", but not the same.

If you don't pay VAT as exempt then you must pay as self employed in your tax return which you would have to offset against invoiced costs.

HMRC UK tax will agree as long as you have paid tax, preferably from a recognized source, Nokia, they will not charge you more tax.

In the UK I would rather pay 17.5% VAT than have to pay 22.5% as of Jan 2010 personal/self employed tax!.

If your turnover is more than £68,000 UK GBP, this is really your auditor/accountant problem and thats how they should earn their money, keeping your tax.

Most of us would not let an accountant program of applications for fear of creating problems.

In my humble opinion the difference between 17.5% and 22.5% is 5% and 5% of you 70% or 35% for SMS is about £0.03 in pound of tax paid, remember this recovery is not on gross, but tax paid!.

references from VAT EU 2004 2009
thanks

Jim

[ivanlitovski]

VAT rate: 0 %, Reverse Charge, Article 56 EU VAT Directive 2006/112/EC

Thanks for that. I've looked up Article 56 explanations and found this:

If you provide the service of ... to a customer who is a taxable person established in another Member State then the place of supply is where your customer is established (Article 56 of the Directive 2006/112/EC).

It is then your customer who is responsible to pay the VAT under the reverse charge procedure (Article 196 of Directive 2006/12/EC).

You should mention on your invoice a reference indicting that the supply is subject to the reverse charge procedure and mention your customer's VAT number (Article 226 of Directive 2006/112/EC).

In this case you should not charge VAT to your customer.

Note that invoicing must be done correctly as above for reverse charging to work.

This would all be much easier if there were some clear explanations in FAQ and perhaps even invoice templates...