Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!


Hetzner begins to charge tax for US clients? - Page 2
New on LowEndTalk? Please Register and read our Community Rules.

All new Registrations are manually reviewed and approved, so a short delay after registration may occur before your account becomes active.

Hetzner begins to charge tax for US clients?

2456

Comments

  • German providers also have common practice charge clients to negative when they forgot pay invoice or cancel VPS and send your 2 Euro to collectors agency. And they start annoying you by email increase amount every month. When their local laws isn't valid in other country where you located.

  • @jenkki said:
    German providers also have common practice charge clients to negative when they forgot pay invoice or cancel VPS and send your 2 Euro to collectors agency. And they start annoying you by email increase amount every month. When their local laws isn't valid in other country where you located.

    simple by your logic YOUR law is not valid in the country the provider is located, so they don't do anything you could complain about either. maybe that's why you can't get out of your country too, because the moment you set foot in any other country you already broke their laws and need to be afraid of what comes next. good luck with your logic.

  • jarjar Patron Provider, Top Host, Veteran

    @Falzo said: the moment you set foot in any other country you already broke their laws

    To be fair there's quite a few countries I can't step foot into without having already violated their laws immediately. Typically it's a point of pride for me though lol

    Thanked by 1Falzo
  • verovero Member, Host Rep
    edited October 2021

    GST is Indian VAT. If it works the same way as European and Russian VAT, Hetzner should collect GST from Indian buyers and transfer it to Indian tax collection agency.

  • jarjar Patron Provider, Top Host, Veteran

    @vero said:
    GST is Indian VAT. If it works the same way as European and Russian VAT, Hetzner should collect GST from Indian buyers and transfer it to Indian tax collection agency.

    I don't know a lot about Indian law but I do know enough to say their government would never turn down money lol

    Thanked by 1jetchirag
  • @vero said:
    GST is Indian VAT. If it works the same way as European and Russian VAT, Hetzner should collect GST from Indian buyers and transfer it to Indian tax collection agency.

    GST is a common abbreviation used by many countries. India happens to use this term in recent past as they introduced new system of taxation.

  • If you don't want troubles never provide your ID Passport copy to German providers such a Hetzner. Find a other carrier

  • @Falzo said: good luck with your logic.

    Charge client to negative when they not be able or forgot to pay invoice are illegal and provocation practice. Just cancel or terminate VPS. No need charge to negative. And send client data into collectors agency even when client living outside. Only German providers do that for 2-5 Euro. Time cost more than this amount. But they do.

  • TerokNorTerokNor Member
    edited October 2021

    VAT is confusing indeed.

    I had a discussion with a friend of mine who supplies services to UK, now outside EU law, and he was confused whether he should charge VAT or not.

    The basic principle behind VAT is first to identify the location of the good or service.

    For services, (i.e. renting a server) EU VAT law makes the following distinction: B2B and B2C (business to business and business to customers)

    Arbitrarily it supposes that when a business charges a business, "the services are situated where the customer has estanlished his business", thus when a EU company charges a third country (UK or USA), should not charge VAT

    On the other hand, when a business charges an individual, (B2C business to customer), "supplies of services are situated where the supplier has established his business", thus Hetzner should charge VAT on USA individual customers.

    Please see this clarification for UK during BREXIT (paragraph 1.1)

  • verovero Member, Host Rep

    @TerokNor said:

    On the other hand, when a business charges an individual, (B2C business to customer), "supplies of services are situated where the supplier has established his business", thus Hetzner should charge VAT on USA individual customers.

    This topic was discussed lot of times and regarding digital goods - charging depends on customer's location, not supplier's. Unless something changed recently.

    Thanked by 1TerokNor
  • verovero Member, Host Rep

    @dev_vps said:
    GST is a common abbreviation used by many countries. India happens to use this term in recent past as they introduced new system of taxation.

    Indeed. India is not even among those charged by Hetzner. Right now I can see only these countries (outside EU) are charged with non-zero VAT: Australia, Belarus, Norway, Russia, Singapore, South Africa, Switzerland, United Kingdom.

  • HostSlickHostSlick Member, Patron Provider
    edited October 2021

    GST = German sales tax

    You don't charge VAT/tax on a customer outside EU. Except for UK, which is a different Story. The law still applies.

    The supplies of Service of a digital good is the customer location

    But on a certain amount of cash you need to proof location of the customer if asked by german tax authorities. So it might be that they want to be on safe side.

    Their email Asks to send certificate . So might be that.

    German law says, if you charge VAT even you shouldnt then you have to pay it to german tax Authorities anyway.

    So assume they want to be on safe side and where adviced that by their tax office/lawyers maybe

    German tax authorities can be Aids and ask stupid questions. Once they asked me on phone if we send the dedicated servers to the customer and after rental they send it back or how this works. They also asked what is a datacenter. But we are in a small City here so we might be the only 'digital goods/services' company

    In the end, only hetzner can Answer this to you.

    Thanked by 1w_ho_ami
  • jarjar Patron Provider, Top Host, Veteran

    Makes some sense @HostSlick, thanks for the insight. It's entirely possible that the confusion is all down to a few poorly chosen words, so hopefully we'll know more soon.

  • verovero Member, Host Rep

    @HostSlick said:

    German law says, if you charge VAT even you shouldnt then you have to pay it to german tax Authorities anyway.

    Common to all EU countries, if you are registered VAT payer.

    German tax authorities can be Aids and ask stupid questions.

    Common to all countries.

  • @vero said: This topic was discussed lot of times and regarding digital goods - charging depends on customer's location, not supplier's. Unless something changed recently.

    Oh yes you are right. Oh God, thanks I didn't become an accountant.

  • @TerokNor said:

    @vero said: This topic was discussed lot of times and regarding digital goods - charging depends on customer's location, not supplier's. Unless something changed recently.

    Oh yes you are right. Oh God, thanks I didn't become an accountant.

    depending on which opinion you follow, he is not completely right or at least it isn't that easy.

    your explanation before about the difference of B2C vs B2B is very valid and followed by a lot of businesses. you can probably argue a lot about the category you want to put typical provider activities and stuff into. digital goods, electronic services or whatever you want to call it and this might then change the rules you should/could put on it.

    as @HostSlick already wrote, even the people from tax authorities might not be clear about where to put it and which rules apply.

    so, easiest way from the pov of a provider might be to rather step on the safe side of charging VAT in any case of doubt (and send it to the authorites) instead of being ask later for tons of papers and having to clarify for each client.
    better safe than sorry. the authorities won't complain about money they get without the need to ask for it...

  • verovero Member, Host Rep

    @Falzo said:

    so, easiest way from the pov of a provider might be to rather step on the safe side of charging VAT in any case of doubt (and send it to the authorites) instead of being ask later for tons of papers and having to clarify for each client.

    That is the easiest way to lose customers as well. Competitors will quickly take advantage of this. Correct taxation management is a must in such a competitive industry.

    Thanked by 1Arkas
  • vyas11vyas11 Member
    edited October 2021

    @jar said:

    @vero said:
    GST is Indian VAT. If it works the same way as European and Russian VAT, Hetzner should collect GST from Indian buyers and transfer it to Indian tax collection agency.

    I don't know a lot about Indian law but I do know enough to say their government would never turn down money lol

    Around 136 countries in the world are happy to receive more money

    Global Digital Tax

    https://news.google.com/search?q=Digital tax global&hl=en-IN&gl=IN&ceid=IN:en

  • raindog308raindog308 Administrator, Veteran

    @Falzo said: even the people from tax authorities might not be clear about where to put it and which rules apply.

    I assume tax law is like other forms of law: not designed to definitively state rules but rather to maximize ambiguity and hence, employment of lawyers.

    Thanked by 2MannDude jenkki
  • FAT32FAT32 Administrator, Deal Compiler Extraordinaire

    Yes, all companies who provide digital services to Singapore residents are required to pay GST (aka VAT) starting 1st Jan 2020 if and only if they fulfil such criteria:

    • have an annual global turnover exceeding $1 million; and
    • make B2C supplies of digital services to customers in Singapore exceeding $100,000.

    The benefit is small providers on LET don't have to worry about this. In the case of OVH, they own a legal entity here (OVH Singapore Pte Ltd) and thus they collect GST since the beginning.


    Source: https://www.iras.gov.sg/irashome/GST/GST-registered-businesses/GST-and-Digital-Economy/GST-on-Imported-Services/#title4

  • So, as an Australian and a Hetzner customer for some years now: Hetzner started charging Australian GST (goods & services tax, flat 10% rate) as of this year. But, this was in response to our government changing the laws here a while back and beginning to demand that foreign companies selling to Australian citizens collect GST (if they're doing above AUD $75k in taxable Australian sales). Personally, I think this is batshit insane, and the stated motivation for it does not make sense in reality, but I think that about a lot of things my government does (and other governments seem to be doing much the same now).

    I presume the US hasn't started in on such a scheme itself...?

  • vyas11vyas11 Member
    edited October 2021

    @FAT32 @Shados in light of the Global Digital Tax (link posted in my above message) the local laws in Sg and Au (for that matter, digital tax in India as well) will get superceded. Best to check with local tax consultants, but the new treaty puts the onus on larger entities to collect tax in the applicable 136 countries.
    Applicable for companies with revenues > 750 Mn Euros.

    For those who can read (or care to read)From one of the news articles.

    ....the arrangement requires no newly-enacted digital service taxes or other similar measures are imposed on any company from October 8, 2021 and until the earlier of December 31, 2023 or the coming into force of the MLC (the Multilateral Convention). As agreed, the modality for the removal of existing digital service taxes and other relevant/similar measures will be appropriately coordinated.

    India is one of the countries that levy digital services tax, referred as EL. It was introduced in 2016 and was initially applicable to payments for digital advertisement services received by non-resident companies without a permanent establishment here, if these exceeded ₹1 lakh a year. Last, year, it was extended to e-commerce companies. Now, with signing of the new agreement, India is supposed to end this. In response to a query on when the tax would end, a top Finance Ministry official told BusinessLine: “India will remove EL but only when the new agreement is in place.”

    Amit Maheshwari, Tax Partner, AKM Global, said that countries like India and France have in the past levied their unilateral taxes just like equalisation levy/digital services tax to cover up the tax loss arising due to digital transactions. This was considered discriminatory by the USTR (Office of the US Trade Representative) as such unilateral levies create burden on large US-based companies. The global consensus on the global tax deal is significant as it will ensure a fair share of tax to countries like India and other emerging market jurisdictions.

    “With this consensus, the equalisation levy or SEP which was imposed as a unilateral measure by India on digital transactions will be rolled back and that can also result in corresponding amendments in the domestic tax law (Indian Income Tax Act),” he said.
    The proposal

    This two-pillar solution will be delivered to the G20 Finance Ministers meeting in Washington DC on October 13 and then to the G20 Leaders Summit in Rome at the end of the month. Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. It will reallocate some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether the firms have a physical presence there.

    “Specifically, multinational enterprises with global sales above €20 billion and profitability above 10 per cent — that can be considered as the winners of globalisation — will be covered by the new rules, with 25 per cent of the profit above the 10 per cent threshold reallocated to market jurisdictions,” the statement said while adding that taxing rights on more than $125 billion of profit are expected to be reallocated to market jurisdictions each year.

    Pillar Two introduces a global minimum corporate tax rate set at 15 per cent. The new minimum tax rate will apply to companies with revenue above € 750 million and is estimated to generate around $150 billion in additional global tax revenues annually. Countries are aiming to sign a multilateral convention during 2022, with effective implementation in 2023.

    @Falzo said

    easiest way from the pov of a provider might be to rather step on the safe side of charging VAT in any case of doubt (and send it to the authorites) instead of being ask later for tons of papers and having to clarify for each client.
    better safe than sorry. the authorities won't complain about money they get without the need to ask for it...

    Very true. And if someone claims (and wins) that the tax was incorrectly charged, the tax man (or woman) will say "You can always file for a refund". And we know how that story goes in most cases.


    You know what they say about death and taxes.

  • Actually tax compliance is a nightmare. If you have one hosting client from Thailand, India or some other countries, you - as the provider - are obliged to register for taxes there and pay them. It should be the same in several states of the U.S. (that have taxes on digital services, not all have) if you are above a threshold (which is different per state, or sometimes even smaller regions). THE EU with their reverse charge (B2B) or VIES/MOSS system (B2C) is actually easy compared to the international problems. Just start reading at taxjar and the like.

    Thanked by 1Falzo
  • jon617jon617 Veteran
    edited October 2021

    @w_ho_ami said: Here is an email I received from Hetzner today

    Wow, I received the same email. Does not say how much the tax will be, and it's confusing. Glad to have the advance notice, though.

    @w_ho_ami said: I remembered there was some news about the future expansion of Hetzner to the US last year. Hope it's true and then it would be good news

    I second this guess, and would bet this tax is a sign it's coming very soon. The email says "GST" but I think they really mean "any applicable local and state sales tax", just like @dev_vps 's Netflix example, where Netflix charges local sales tax to customers in a country/bloc where they have physical presence.

    @jar said: making me pay the USD to Euro conversion

    I assume you're in the U.S.? Some US-based credit cards offer no foreign transaction fees. I pay for Hetzner in EUR, no fees, straight conversion to USD based on the day's value.

    Thanked by 1jar
  • PUSHR_VictorPUSHR_Victor Member, Host Rep
    edited October 2021

    @TerokNor said:
    VAT is confusing indeed.

    I had a discussion with a friend of mine who supplies services to UK, now outside EU law, and he was confused whether he should charge VAT or not.

    The basic principle behind VAT is first to identify the location of the good or service.

    For services, (i.e. renting a server) EU VAT law makes the following distinction: B2B and B2C (business to business and business to customers)

    Arbitrarily it supposes that when a business charges a business, "the services are situated where the customer has estanlished his business", thus when a EU company charges a third country (UK or USA), should not charge VAT

    On the other hand, when a business charges an individual, (B2C business to customer), "supplies of services are situated where the supplier has established his business", thus Hetzner should charge VAT on USA individual customers.

    Please see this clarification for UK during BREXIT (paragraph 1.1)

    It is indeed confusing. It is the opposite of what you state actually.
    Here is how it is as of today:

    • EU-based business charges an EU-based business: VAT rate is that of the supplier's country of operation (if customer can provide a valid VAT number then VAT is 0%)
    • EU-based business charges a non-EU based business: There is no VAT charged
    • EU-based business charges an individual residing in EU: VAT rate is that of the customer's country of residence*
    • EU-based business charges an individual residing out of the EU: There is no VAT charged

    *If a supplier has low volume of sells under the VAT MOSS scheme (less than €10 000), then they could opt out of MOSS, and would then apply their own country's VAT rate to individuals who purchase their services, instead of applying the VAT rate of the customer's country of residence.

    Yeah its messed up.

    PS. For UK: A EU-based business is supposed to charge UK VAT rate and then submit it to the authorities in the UK. However, this requires the supplier to be a legal entity registered in the UK. If they are not, they are not supposed to provide services to UK customers. This rule is not being enforced since the UK government basically has no way of restricting EU-based businesses to offer their services to UK customers.

    Thanked by 1Falzo
  • I only know Kate Moss. VAT MOSS sounds pompous, bureaucratic and complex :-)

    Thanked by 1PUSHR_Victor
  • @vyas11 said: in light of the Global Digital Tax (link posted in my above message) the local laws in Sg and Au (for that matter, digital tax in India as well) will get superceded.

    I suspect it won't be that simple. The way the "GST on foreign businesses" thing works here applies to more than just digital services, for one, and for another it appears this "Global Digital Tax" only applies to a tiny handful of the businesses that our existing GST scheme does.

  • @jar said:
    Them charging me taxes for their obligations in Germany would make sense. Because I don't think anyone in Marshall TX is accepting a check from a foreign entity on behalf of the local government lol

    Newspaper headline: "Texas man changes legal name to "Texas Tax Office" and retires.

    Thanked by 1jar
  • Even Aliexpress is charging sales tax for US customers nowadays.

  • jarjar Patron Provider, Top Host, Veteran

    @donli said:
    Even Aliexpress is charging sales tax for US customers nowadays.

    They have an office in California and sell physical products so that makes sense.

Sign In or Register to comment.