International clients and payment

[24-96 Mastering]

Originally Posted by macc

Well, I take about 95% of my funds through paypal as my customers are alllll over the globe.

But I just got the biggest mastering payment I've had for a *proper* label by bank transfer from the US. So at the moment I am a big fan of that method

Big day here

cograts!

[Thor]

I don't know how things are in the UK,

but in most of the world, services for export are VAT free. When I master for clients outside of the country, the invoice I send them is marked 'For Export' and is without VAT. Actually that makes it a lot cheaper for my international clients, they save 25% that the locals have to pay on top of my fee.

Having recently bought a pair of DPA's from an auction in the UK, I didn't pay VAT there either, as they were for export and sent out of the UK to me.

Maybe I'm just confused?

Cheers,
Thor

Originally Posted by Daft

The most troublesome country I have found is the USA.

I had huge problems getting paid by a major label:
- 30% withholding tax was retained until I had visited the US Embassy in person to obtain a TAX code
- Label's refusal to pay VAT
- 18 months form invoice to final payment (and still no VAT)

[Whitecat]

Originally Posted by Thor

I don't know how things are in the UK,

but in most of the world, services for export are VAT free. When I master for clients outside of the country, the invoice I send them is marked 'For Export' and is without VAT. Actually that makes it a lot cheaper for my international clients, they save 25% that the locals have to pay on top of my fee.

Having recently bought a pair of DPA's from an auction in the UK, I didn't pay VAT there either, as they were for export and sent out of the UK to me.

Maybe I'm just confused?

Cheers,
Thor

This is what I thought as well, and I'm in the UK. The record label should not be VAT liable, and I'm pretty sure that should apply across the entire EU as VAT rules are fairly well standardised.

[Lagerfeldt]

Originally Posted by Thor

but in most of the world, services for export are VAT free. When I master for clients outside of the country, the invoice I send them is marked 'For Export' and is without VAT.

Import/export within the EU is VAT exempt if you have a valid VAT No. On services you are generally VAT exempt in the rest of the world too. But this also means you have to compute fractional VAT deduction in your accounting as opposed to full VAT deduction, which makes sense despite sucking a bit. Don't know if you are aware of this?

Actually that makes it a lot cheaper for my international clients, they save 25% that the locals have to pay on top of my fee.

If your company is exporting more than a certain amount each year to private customers in a given country you will have to add a VAT amount based on the import country (not your own country). This is in order to prevent unfair competition. So a German company like Thomann.de has to add Danish VAT - not Germany VAT - to private customers in Denmark, since they're selling in quantities that make them in direct competition with Danish dealers.

[Thor]

Hi Holger,

Fractional VAT? Never heard of it. Nor has my accountant. Maybe it's an EU thing? I deduct full VAT for all sales that require VAT. For those that do not (i.e. clients outside of Norway), there's no sales tax, and nothing for me to deduct. Pretty simple.

Is it different in Denmark/EU?

The other rule as well sounds like an EU specific one, although we're so tightly bound through the EØS (can't recall the English translation) it might well apply to us. I don't know if I'm 'stealing' enough business from my European colleagues to warrant charging their local VAT.


Regardless, it would still be cheaper since the VAT here is the highest in Europe

Looking through Wikipedia, it seems we are tied with Sweden for the worlds most expensive sales tax: Value added tax - Wikipedia, the free encyclopedia, a dubious honour indeed.

Cheers,
Thor

Originally Posted by Lagerfeldt

Import/export within the EU is VAT exempt if you have a valid VAT No. On services you are generally VAT exempt in the rest of the world too. But this also means you have to compute fractional VAT deduction in your accounting as opposed to full VAT deduction, which makes sense despite sucking a bit. Don't know if you are aware of this?


If your company is exporting more than a certain amount each year to private customers in a given country you will have to add a VAT amount based on the import country (not your own country). This is in order to prevent unfair competition. So a German company like Thomann.de has to add Danish VAT - not Germany VAT - to private customers in Denmark, since they're selling in quantities that make them in direct competition with Danish dealers.

[Lagerfeldt]

You have a company that sells product with VAT. You buy equipment with VAT and you deduct the VAT in your accounting. This is normal full VAT deduction.

If you have a company that does not sell products with VAT, e.g. a songwriting business then you cannot deduct VAT.

If you have a company with income that is 60% VAT applicable and 40% true VAT exempt (not just export/import VAT exempt) then you can only deduct 60% of the VAT, i.e. 15% instead of the full 25% of your equipment. This is fractional VAT deduction.

I would be surprised if this doesn't exist in Norway since we usually have more or less identical rules. At least your accountant should be aware of this rule?

Originally Posted by Thor

Regardless, it would still be cheaper since the VAT here is the highest in Europe

Looking through Wikipedia, it seems we are tied with Sweden for the worlds most expensive sales tax: Value added tax - Wikipedia, the free encyclopedia, a dubious honour indeed.

Cheers,
Thor

No, actually Denmark has the highest VAT in the world. Both in Norway and Sweden you have two reduced rates, in Denmark we have none - always the maximum rate.

Add the 25% VAT to our progressive tax system (maximum rate is an astonishing 67%, i.e. you only get $33 for every $100 you earn) and you have a real life tax percentage of around 92% for some people. And that does not include property tax!

Fortunately, once you have a company things look very different. Which is probably one of the reasons why we have so many entrepreneurs in Denmark.

[markus enochson]

in sweden its 25% for most goods and services

books are exempts paying 6% i think

m

[PraiseStudios]

Paypal here as well. Not heard of a better alternative

[jdg]

paypal here.
bank transfer if they eat the fees.

have some clients from northern china that have the weirdest credit card that doesn't work with my merchent visa system, so they use the bank transfer.

[krytikal1]

i take paypal, wire/bank transfer, or credit card as well. in any of these cases i charge the client the incurred fees. i make sure i explain this at the beginning of the bid. no problems yet. gotta love the google language translation capablities as well!!


k