EU considers tariffs on digital services Big Tech
The European Union is working on countermeasures in response to the tariffs that US president Trump has announced. Commission president Ursula von der
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Edit: Holy crap, so I based my initial comment on how EU Internet friends always complain about how much their iPhone or PlayStation is, so I incorrectly assumed VAT was only for foreign products to encourage purchase of domestic. No, VAT is just a fancy way of saying "sales tax" that is really high and charged everywhere. Strikethrough edits below, but leaving original text.
So the EU, UK, and others have charged VAT for years on foreign goods, including US goods. This is a tax on foreign goods that can add hundreds of dollars/pounds/euros/etc. to the purchase of an American iPhone (made in China or India) for example.
This whole tariff thing is dumber than something a third grader could come up with...but...these countries were already doing it themselves to others. So they should politely STFU, as they are hypocrites.
I get having high income taxes to provide for socialized medicine and such, that's awesome, but also a sales tax that is a quarter of the price of a thing or service, taxed just because? Even if it wasn't made by the nation's citizens? Even if it was?
I'm sure it keeps EUians and UKians from going full Capitalism, but wow, especially given how much infrastructure degrades despite the funding, I recall seeing Germany cutting train routes all over across the country and small towns being cut off from them some years back and flabbergasted, knowing their high taxes go to government things...but also sales tax on top of that? 🤯
What really sucks, is they'll likely stay quiet about this, and join a tariff war anyways, and tack tariffs on top of VAT and their citizens will just be double-taxed. Why do UK-ians and EU-ians put up with this nonsense?
It gets wackier too, from the EU VAT rules site (emphasis mine):
The EU has standard rules on VAT, but these rules may be applied differently in each EU country. In most cases, you have to pay VAT on all goods and services at all stages of the supply chain including the sale to the final consumer. This includes from the beginning to the end of a production process, e.g. buying components, transport, assembly, provisions, packaging, insurance and shipping to the final consumer.
For EU-based companies, VAT is chargeable on most sales and purchases of goods within the EU. In such cases, VAT is charged and due in the EU country where the goods are consumed by the final consumer. Likewise, VAT is charged on services at the time they are carried out in each EU country.
VAT isn't charged on exports of goods to countries outside the EU. In these cases, VAT is charged and due in the country of import and you don't need to declare any VAT as an exporter. However, when exporting goods you will need to provide documentation as proof that the goods were transported outside the EU. Such proof could be provided by presenting a copy of an invoice, a transportation document or an import customs record to your tax authorities.
List of items charged VAT (non-exhaustive):
https://taxsummaries.pwc.com/quick-charts/value-added-tax-vat-rates
https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_en.htm
https://www.globalvatcompliance.com/globalvatnews/world-countries-vat-rates-2020/
https://www.avalara.com/vatlive/en/vat-rates/european-vat-rates.html`___`
VAT is only a tax on foreign goods insofar as it is a tax on ALL goods irrespective of origin. So it's not hypocritical as it is a very different thing.
Yep, learned that! Still mind-blowing how crippling it is.
Most of the world - other than a few places (US included) - switched to VAT ages ago. It's a more efficient system. It's not the same as "sales tax". It's literary a "value added tax" and every purchase and sale includes it - even for materials and half products.
The idea here is that you pay a tax on the amount of value you add in the chain. VAT is an indirect tax, because the consumer who ultimately bears the burden of the tax is not the entity that pays it.
It's also much more transparent, as it must be included in the quoted price. Not like the US, where you see an item on the self for $5.00 and then the total at the register is $9.54 because it now has sales, city, state, and federal tax.
Check the Wikipedia article as well: https://en.m.wikipedia.org/wiki/Value-added_tax
It's a tax on every stage of the process, nobody "switched to it". All for the government, that didn't contribute to the process. That doesn't make a train stop at my mom's home town anymore even though their country is smaller than my state but has all the tax money. Including price in price is nothing. The SIZE is the important part. I balked at 9% sales tax in my state, used to be 6%. Yours is amplified 20% times 5. Design, execution, physical build, assembly, final product. That's crazy.
And why ever say "we switched to VAT". It's just a name. Tax, VAT, Tariff. All words. You're probably a bot anyway.
I balled at 9% sales tax... Yours is amplified 20%, times 5.... It's just a name.
This shows deep misunderstanding in what VAT is and how it works. It's not "a flat out 20% sales tax with a different name". The concept is different. But I do not have neither time or energy to argue on the internet.
And why ever day "we switched to VAT"
Because we used to have sales tax.
You're probably a bot anyway.
Gee. Thanks?
That's not how VAT works. As a business you pay VAT as an input tax. You can deduct that from your VAT liability at point of sale. The business is liable to pay VAT on the sale to the end consumer but can (and does) recharge it to the customer. Not a tax expert at all, so I might be off a bit - but I am sure that you don't pay full VAT on every R&D, production, sale step along the process.
