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Originally Posted by plaster
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Listen, I'm with you, the EU is entirely stepping over their boundaries and I don't think they can do a damn thing to US citizens. I don't know what happened with AFF but I'm sure it is more complicated.
But Barry, not even you seem to understand this law. Because the big deal from this website...
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For every lawyer out there that will defend this VAT there will be two more to tear it down... and an argument about if digital services meets the "definition" of what the merchant believes is digital/electronic is certainly up for debate.
Personally and IMO, I see very few US judges taking the EU VAT side over US business owners.
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I understand how the tax office thinks and changes its decisions and promulgates new rules -- from personal experience. These new EU ''VAT Tax Harmonization Rules'' are just a continuation of the mentality. Just remember, if the Tax Authorities can get jurisdiction over you: a Court will have to accept your defense pleadings based on your concoction of the wording of the tax law, get a tax lawyer. Tax Courts will interpret the most narrow meaning and enforce their rules to the letter usually -- anywhere.
This also should serve as an example of the ''States Rights'' advocates here in the USA. These new EU ''VAT Tax Harmonization Rules'' are are a prime example of the states in a confederation's bickering and "I want mine!" mentality. The problem is that the EU member states rely heavily on the VAT Tax revenue for their touted free social services. Luxembourg had a 4% Digital Goods VAT Tax rate and in contrast with the VAT rate of your home state it was advantageous to move your business' domicile from France, Germany or other high VAT rate member states.
What the EU does on taxation within its own territory between member states is its juristiction. What EU persons pay in taxation to their respective member states is their own business. That is called sovereignty. The EU will find it is not sovereign with jurisdiction in the US courts the same as the US authorities have no sovereign juristiction in EU courts, see:
JSTOR:Harvard Law Review (1923) this is basic international law and they know it. They are bluffing. I hope they try in the US courts just to get shut down and create some precedence. In contrast, US digital sellers are not required by state laws to collect sales tax if they have no nexus (physical facilities) in that state.
https://www.law.cornell.edu/supct/html/91-0194.ZO.html there is no parallel code to plead and no basis in US law for cross border sale taxation (like VAT is) -- you are dead in the water.
US global corporations that have nexus in the EU they will have to comply. There is a new dispute in the EU developing that corporations may be required to pay income taxes proportionately to there profits earned in each member state at that member state's income tax rate. Example: a German automaker sells cars in Romania and Romania gets to tax the earnings. Absurd?
Navigating Nexus
AAF has nexus in the EU is my understanding to answer your question.
The foregoing statements are my personal opinions and do not constitute Legal, Accountancy or Tax advice