VAT IVA MwST TTC is a big mess right now
It's a mess, examples
+++++
The recipient of the goods is different from the purchaser:
1. If I take an order from a customer in country X for delivery as a gift to a person in country Y. If you fail to include a VAT invoice the country Y will occasional block the packages to asses their value is under the gift limit.
But if you include an invoice, then aunty-flo gets to see how much her gift costs. Either way it's a lose-lose situation.
+++++
Buying goods from other countries:
2. I buy goods from country X, I am in country Y, a B2B transaction. The supplier is supposed to check the VAT number is for that business, and that the goods are used for business purposes at the time of sale. Failure to do so, means they can be liable for the VAT themselves.
So in practice nobody does this for one time orders, it would be too difficult and risky. So instead they always add on VAT, but you can't claim that VAT back in your home country, because it was wrongly added on! One time purchases of goods from the EU is always about 12% more expensive due to this erroneous tax.
+++++
Self employed registration for VAT used as Work Permit
3. Some countries, Belgium is an example, won't issue VAT ids to self employed people unless they a) pass a test, or b) prove they were self employed in another EU country. But b) doesn't work, they ask for documents which don't exist showing unnecessary info, and the test in a) is in French, Dutch or German, creating a language barrier. Without a VAT code, you can't work, so it's a defacto Work Permit.
+++++
VAT for distant sellers
4. If you sell more than 100k in goods to another country, you are required to register for VAT in that country. Which of course requires you to know that countries VAT rules, it's language, it's forms,..... So you sell 100k of goods, make 10k of profit, and end up paying 20k in accounting fees to make a loss.
+++++
What I think they should do with EU vat.
I think,
1. I should be able to sign up to one VAT agency.
2. I should be able to use that agency for all EU wide declarations.
3. I should be able to keep that VAT code whereever I work.
4. VAT is charged on all sale of goods, no difference between B2B and B2C.
5. The VAT is charged at the rate of the buyers country.
6. He can claim it back in his home country if he is a business and it's for business use.
7. The VAT for all the countries is declared on the single form, broken down by country. e.g. $25000 at 16% MwST Germany, $30000 at 17.5% UK, ...
8. Countries cooperate on sending each other the vat payments, and periodic random checking that the sellers and buyers invoices match up.