GoodGuy -> US sales tax or VAT for EU customers? (1/21/2010 1:20:27 AM)
ORIGINAL: Erik Rutins
I think that 2010 should bring some nice store improvements.
Lifelong free downloads of the games you own, an actual working customer service, no VAT anymore for European customers? [:D]
@ Erik: I moved my reply from the other thread to this new thread, to make sure it won't be overlooked.
Here we go:
Actually, if you don't have to have a physical copy, you don't violate any European/national laws if you obtain your digital copy from a US seller, means the transaction then would be tax-free. DR doesn't cater for such cases, so, in fact, Digital River should adjust their policy:
Let's say I had a real store here in my town, and I'd have a customer from the US calling me to send him a certain product. I'd then send him the item, with the invoice stating that it's TAX-FREE, since there is NO export sales tax. If the item exceeds a certain value, he'd then have to pay import taxes in the US.
The same should apply for obtaining a product in the US. Digital River should create an excemption for European customers obtaining digital downloads from US sellers.
I also don't see why I have to pay EU VAT for any digital download with DR, just because DR decided to found and register European departments (meant for executing the physical shipping within the EU)???.
If I obtain a US product then it's my duty to declare / pay import taxes, but it's not DR's business.
Also, I am not sure whether US laws really force sellers to apply US sales taxes for foreign customers or not.
Minnesota (where DR's corp. HQ is located) has tax excemptions for ppl who pick up products in MN but who do not intend to use the particular item in MN.
Louisiana and Texas offer foreign visitors sales tax refunds.
Germany offers tax refunds (refunding 19% VAT) for customers who visit Germany and return to their country as well, this applies to visitors from EU countries (actually the whole EU community territory) and quite some non-EU countries (a long list, including USA, Canada and other countries).
But all these regulations only cover situations where a customer actually resides in the US or a given US state temporarily, to pick up an item.
So, in my books, foreign customers who obtain items via internet (from their respective countries) shouldn't even need these tax excemptions, such sales should be tax-free, generally, no?
1) Erik, I'd like to get a statement that clarifies whether taking US sales taxes from foreign customers is a legit proceeding or not.
Note: I am not talking about DR's option to pick "EU" (thus VAT) on checkout.
Also, IF you pick EU as location, and in case the contracting party for a given Matrix item would be DR (as reseller), then only a purchase from Digital River GmbH (Cologne) would justify a VAT for German customers, it doesn't matter if it's a DD or a physical copy.
If I am not mistaken, DR invoices usually indicate that "Digital River International S.a.r.l." (Luxembourg) is the contracting party.
If so, all items should be invoiced without VAT for all EU customers outside Luxembourg. They still put national VAT on the invoice, although customers are not making business with a national company. That's really strange.
If they'd have a real store in LUX, I'd either make them drop their VAT, or I'd file a request for refund with Lux. authorities.
Whoever's getting the VAT, makes unjustified collections there, even if it'd be my country's tax office that's getting the money.
Another example: If I purchase a digital download item in the UK, it still looks like the seller has to pay national sales taxes, as the price would still be the same.
In fact, the seller could configure his online store in a way that his portal software would list all foreign sales and declare them as "tax-free" export sales (he would have the right to do so), so that the national VAT margin goes in his pockets, since the final price wouldn't change.
That's pretty shady, but I can imagine quite some companies do it.
So, my 2nd and 3rd question:
2) Why is there a VAT, in cases where a German customer makes business with a DR branch (as Matrix reseller) in Luxembourg, in fact?
3) Where does the VAT amount go, if I, as a German customer, make business with a DR branch (as Matrix reseller) in Luxembourg?
Btw, I haven't purchased any Matrix title within the last few months, but last time I checked (2009!!!) DR invoiced a VAT amount of 16% or 17%, even though it's been 19% since 2007, in Germany (it used to be 16% until December 2006). In case they are really obliged to pay 19% VAT to the German tax office, then "someone" may get REALLY pissy, if 2% or 3% per sales are missing, right? [:D]
4) So, is DR just making up the VAT-thingy (and not actually paying it to the German tax collectors), or do they have some kind of weird EU-agreement, or are they just confused? [&:]