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Geek Culture / how does vat work?

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bitJericho
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Posted: 1st Dec 2009 05:17
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Hey all,

I'm designing an invoicing system, but I'm not sure how to support vat for my european pals. It just doesn't make any sense to me :S

Attached is a sample invoice. How would a VAT entry be added. How is vat calculated. What cases is VAT not charged. What info should be on file and on an invoice if vat is not charged? Is vat charged local to local, or just international?

Where can I find this type of info?:S

Thanks!

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Seppuku Arts
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Location: Cambridgeshire, England
Posted: 1st Dec 2009 07:01 Edited at: 1st Dec 2009 07:05
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VAT is usually a percent of the net price and it varies per country. I can't remember what it is in the UK, as I believe it changed not too long ago...I think it's 15% so obviously, that's £15 on top of a £100 product.

VAT is just 'value added tax'.

This might come in handy:

http://www.hmrc.gov.uk/vat/index.htm

And this one (It should answer all of your questions...in relation to UK and giving you an idea of VAT):

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015895

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Cash Curtis II
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Posted: 1st Dec 2009 07:46
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It's local to local. In EU countries it's like US sales tax, but fancier and more expensive. No need to charge it because there is nobody to pay it to.


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David R
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Posted: 1st Dec 2009 12:01
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VAT in the UK is nice though, because whilst it sucks that it even exists, retailers have to explicitly mention it in the price of an item. That's the one thing I disliked about the US - tons of cheap stuff etc. but a lot of shops dupe you by not mentioning sales tax (and they don't have to, although I guess it varies by state?)

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Cash Curtis II
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Posted: 1st Dec 2009 12:38
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Sales tax is not included in the price. It's around 8.5%, depending on what state you're in. In most states food items don't have tax.

It's been so long since I've paid sales tax, being around military bases and whatnot for the past several years. Now I pull out exact change while I'm waiting in line, in the States you need a calculator to do it properly. Annoying. It should be included in the display price.


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bitJericho
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Posted: 1st Dec 2009 15:19
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Thanks for those links, it looks like it'll be easy to support. I'll just give the option to the business owner to choose if tax is charged based on the address of either party, and choose a percentage off the total.

Thanks!

Also, I plan on selling this if I finish it, so I want to support it even though I personally won't have to deal with it

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Rudolpho
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Posted: 1st Dec 2009 15:26
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Quote: ".I think it's 15%"

Quote: "It's around 8.5%"

Ouch, in Sweden the corresponding percentage is 25

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Phaelax
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Posted: 1st Dec 2009 16:20
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25% sales tax? That's insane!

Quote: "It's around 8.5%, depending on what state you're in. In most states food items don't have tax."


I think Ohio is around 7%, while places like Virgina have 0 sales tax.


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BatVink
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Posted: 1st Dec 2009 20:40
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Quote: "Thanks for those links, it looks like it'll be easy to support."


you may be in for a shock.
Is it VAT for Sales or Services? Does your system know the difference between when goods are ordered and delivered? Will you ever be taking part payment? How about returning goods between VAT rate changes - a high probability over the next few years. You'll need to track VAT rates and periods in which they were charged, understand VAT registration codes and their format, possibly have to report INTRASTAT on the sales. Not all goods attract the same VAT rate etc, etc, and once again etc.

One last daunting prospect - if you get it wrong, you as the software vendor may be liable. So don't do it half-heartedly!

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bitJericho
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Posted: 14th Dec 2009 05:41 Edited at: 14th Dec 2009 05:41
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Thank you for your feedback! Do you think this database layout would be sufficient for tax/vat? As the vendor of the software, I certainly would try to get this right and to assist my customers in making sure it's right, but I'd make it clear that I can't be held liable for any incidental, consequential, and etc from usage of my software outside of the cost of the software.

Perhaps I should stick this on the code board, but uh, I already got a thread here

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Indicium
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Posted: 14th Dec 2009 23:52
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Uk is 17.5%
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Diru
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Posted: 14th Dec 2009 23:53
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It's 15% at the moment, but going back up to 17.5% on Jan 1st I think.
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Diggsey
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Posted: 15th Dec 2009 00:12
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Also, you don't pay VAT on these items
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000136&propertyType=document#P450_39029


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Indicium
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Posted: 15th Dec 2009 18:45
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Oh, well, i didnt know that lol
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