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 🙂
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 🙂
