- [1] Reverse-charging VAT (English)
- [2] Calculating VAT for services to and from non-EU-countries (Dutch)
[1] https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/...
[2] https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/...
From the look of it, Dmitry is outside the EU, making the foundation the importer and thus responsible for the VAT.
Example: a dutch company sells a product to dutch consumers. They have to pay VAT. However what if they setup a company in another country that first buys the products for 0.001 cents and then sells the products back for full price to the consumer.
Most, if not all, countries do not apply VAT on exports.
In the end it doesnt matter where it was produced. Its taxed based on where it was consumed.
When an economic union such as the EU refer to an internal market they mean stuff like this. But as a result all VAT in the EU are now almost identical (or else your own producers would be tempted to move the profit to another EU country)
https://en.wikipedia.org/wiki/Missing_trader_fraud
The EU changed its cross-border VAT rules a couple of years ago, and they're now insanely complicated and probably unenforceable.
But unfortunately if a company/charity is domiciled in the EU then EU laws apply, even if the person with a controlling interest is domiciled elsewhere.
Just a clarification: the consumer pays the tax. The company collects the tax and transfers it to the state (deducting the taxes they paid in their activity, so what they actually give to the taxman is a "value added" tax).
It makes a lot of sense, unfortunately it's more of a hassle which hurts small businesses relatively more.
Note that the rules for intra-EU B2B transfers may be different (deferred VAT).
Not doing so would allow unfair competition from suppliers outside the EU. Note that for goods, these are import tariffs.
As someone who has dealt with VAT in the EU a bit this sounds really odd to me. Even if the inspector determines that VAT needs to be charged on these services, shouldn't it be Dmitry who is paying them, not the foundation?
In other words, they should be coming after the person providing the services for the VAT that he neglected to charge, not after the foundation who just paid the invoices they were given.