Let's talk about VAT - Bytesized Hosting

"Let's talk about VAT baby, let's talk about you and me...."

Today I wanted to take a few minutes and talk about something that I and a lot of my members, probably, strongly dislike: VAT.

It has recently come to my attention that quite some members are 'confused' where they live and this has a big impact on the overall health of Bytesized. Let me explain.

What is VAT?

VAT literally means "value-added tax" and it's a form of consumption tax. Each country in the E.U. has it's own VAT amount which gets added on top any product, material or service that you sell. Now when I charge any of my members VAT it's not money I get to keep. It's money that I'm collecting in the name of your government. Every quarter I generate my VAT reports and pay out the collected VAT to each of the E.U. member states where I have Bytesized members.

So what's the problem?

The problem exists when the country where you live according to the Bytesized website and the country that your Paypal account is registered to don't match up.

Let's say for the sake of argument that you pay 13 EUR a month for the AwesomeBox. The break even price for that particular box is 10 EUR but I charge 3 EUR for my own profit. Now let's presume you told the website that you live in the "United States" an area outside the E.U. so no VAT is applied. You then pay the AwesomeBox invoice with a verified Paypal account from "Hungary". What happens is that the Hungary government will tell me; "well this user was from Hungary" so please pay us the 27% you are holding for us. Sadly I never charged you for the VAT so now that 27% needs to come from my own pocket; I'm paying for your governments consumption tax. In this case from my 3 EUR profit I'm paying 2,70 EUR in VAT leaving me with 30 cents. As you can see this can easily eat away at my margins.

What now?

I guess my point is the following. Please reconsider if your Paypal account country matches your country on the website. If you made a mistake please login to the website and press your name at the top right and change your country under "settings. I would appreciate it.

I hope this will post will have the necessary effect if not I will move the tax logic towards Paypal.