[ozzy47]

I mean think about it:

Currently each individual EU country enforces the law themselves, via tax audits.

VAT is an ‘end-user-tax’ so EU companies get to reduce any VAT they have paid, which is why their book-keeping has all the information tax authorities need.

Consumers don’t keep books on their VAT purchases. Consumers do get tax reductions from certain goods, so they’ll save the receipts and send them to tax authorities. Most of those are physical goods like work clothing, but there are also some goods that could be digital, e.g. work literature.

However, there are small businesses which aren’t registered for VAT yet. They may keep books already, yet they are categorized as a consumer by this law. As a rule, if an EU company cannot provide you a VAT code, they are a consumer. Yet they’ll keep books, save all receipts and are a target to tax audits.

There’s also a separate enforcement system. You must register as a VAT payer in each of the countries where you have consumer sales. Another option is to register to VAT on eServices (VOES) system in one EU country. VOES is a similar system than MOSS (UK), but for non-EU businesses. Each country has their own system, but it’s enough to register just in one country.

When you are registered, the authorities can then follow up that you send the reports and payments on a regular interval.

But if you aren’t registered, there’s very little enforcement.

To really enforce the law in the US, EU would need help from the US tax authorities. At the moment US tax authorities show little interest in enforcing this – moving wealth from US to EU isn’t in their best interest.

So I just do not see how they will enforce this on a US based small company that is providing software such as vBulletin addons for sale.

If I really wanted to get around it, I could just sell my users credits, that they can use on the site to do various things, such as a usergroup title markup, increased PM space etc. But they also could use these credits to purchase downloads. So I am really not charging them actual money for downloads.