Esignal to Charge VAT on Data-Feeds How Can We Avoid It ?

VAT

OK - here is the scoop.

Data services are an "electronic service" as defined by the new EU Electronic Services Directive - effective 1 July 2003.

This means that VAT is charged based upon where the customer belongs. So if you are resident in the UK you get charged UK VAT no matter who or where the supplier of your data is - UK, US, France, Canada etc. EXCEPT - if your data provider is ALREADY registered for VAT elsewhere in the EU - in which case they can charge you that country's VAT instead. So ALL US companies supplying data in the EU will need to register for VAT somewhere and charge it to EU residents. It is up to them to choose a suitable country - Luxembourg charges VAT at 15%.

On this point about being a regsitered company. Trading in ANY financial instrument is exempt from VAT. This means that no VAT is charged on your trade costs BUT the business concerned cannot recover the VAT that it is charged by its suppliers becasue the input VAT relates to VAT exempt transactions. In certain circumstances you can recover your VAT if your trading counterparties are outside the EU - so if you are trading only US stocks/options/futures etc and you are UK VAT registered then you may be able to recover SOME of your UK VAT.

This new directive is intended to level the playing field for EU businesses - now you pay VAT whoever your supplier of data - making it easier for EU companies to compete.

On collection - you are absolutely right - eSignal COULD absorb the tax - or they can choose to pass the tax cost on to you - as they have elected.

As for enforcement, eSignal has a UK business so it seems easiest, safest and sensible for them to register for VAT in the UK and charge UK VAT.

Others data providers who dont have a presence in the UK will carry on oblivious or until they are caught...or they will register in Luxembourg (Or Madeira - 12%) and charge that country's VAT. Enforcement should be equally interesting on EU companies with the Sabarnes Oxley Act.

I hope that this clarifies it all.

Moondog :)
 
I am interested to know how US based businesses providing data with no base in the UK or Europe are going to get caught and forced to pay VAT ?, in my view it just wont happen.


Paul
 
Trader333 said:
I am interested to know how US based businesses providing data with no base in the UK or Europe are going to get caught and forced to pay VAT ?, in my view it just wont happen.


Paul

Yeah - but same issue for many telecoms companies - and for EU compnaies that may be subject to US reporting under Sabarnes Oxley. Its up to the EU/US to enforce and up to companies to choose whether to comply or not. In my experience, big companies comply, little ones slip through the net until they get big enough.
 
Hmmm....

oatman said:
Futures trading is exempt from VAT. If you set up your business this way you can claim back input tax.
I do. :cheesy:


Cheers

HI...you're in UK, yes? I (that is we, some family members and me) are just starting out trading Forex. We are still at the testing stage...but hope to go live in a coupla months. We still haven't got to grips with the tax (not just VA bloody T) issues...I was interested that you registered a business doing futures and this is exempt from VAT? Can u suggest someone/where I can get information?
 
oatman said:
Futures trading is exempt from VAT. If you set up your business this way you can claim back input tax.
I do. :cheesy:

Spoke to my accountant about this and as a trading business I dont charge vat ad therefore cannot reclaim vat. Otherwise I'd be reclaiming vat and duty on my booze ;)
 
oatman said:
You claim back input tax. It's nothing to do with whether you charge VAT.

It looks like commodity futures are zero rated and financials are exempt, so you could get different treatment. I am investigating further.

It does say if you are a company from 'outside' the UK you can reclaim vat. However if thats another EU country you'll just have to pay vat there and thats usually higher.
Be careful with this because if you're wrong they'll hammer you and they'll analyse your accounts for the slightest flaw for years to come. Also, and investigation can cost quite a bit in time and money.
 
What is the best esignal package to have anyway ?(US stocks), I 'm thinking of signing up but it gets a bit confusing with all the add-ons.

thx.
 
Er well if you only look at US stocks then you only tick the US stocks box........ not very confusing at all. I like the way I can add/remove another service online anytime I like.
 
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