Trouble at the Krita Foundation
Even while we’re working on a new beta for Krita 3.2 and a new development build for 4.0 (with Python, on Windows!), we have to release some bad news as well. The Krita Foundation is having trouble with the Dutch tax authorities."
Posted Aug 1, 2017 14:34 UTC (Tue)
by jfebrer (guest, #82539)
[Link] (8 responses)
Posted Aug 1, 2017 14:56 UTC (Tue)
by falm (subscriber, #69545)
[Link] (7 responses)
Posted Aug 1, 2017 15:31 UTC (Tue)
by halla (subscriber, #14185)
[Link] (2 responses)
Posted Aug 2, 2017 6:55 UTC (Wed)
by richard77 (guest, #117898)
[Link] (1 responses)
Posted Aug 2, 2017 7:06 UTC (Wed)
by halla (subscriber, #14185)
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Posted Aug 1, 2017 16:46 UTC (Tue)
by pyellman (guest, #4997)
[Link] (1 responses)
Posted Aug 1, 2017 19:14 UTC (Tue)
by adam820 (subscriber, #101353)
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Posted Aug 2, 2017 0:07 UTC (Wed)
by dgm (subscriber, #49227)
[Link] (1 responses)
Keep calm, and continue coding.
Posted Aug 2, 2017 9:26 UTC (Wed)
by burki99 (subscriber, #17149)
[Link]
Posted Aug 1, 2017 16:00 UTC (Tue)
by danielpf (guest, #4723)
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Posted Aug 1, 2017 16:24 UTC (Tue)
by Wol (subscriber, #4433)
[Link] (9 responses)
Probably too late to do anything about it, but how can they get away with applying two different, incompatible!, sets of rules to the same transaction? Here in the UK I'd be raising hell with my MP, don't know how the system works for you ...
Cheers,
Posted Aug 1, 2017 17:13 UTC (Tue)
by DOT (subscriber, #58786)
[Link] (4 responses)
Posted Aug 3, 2017 17:18 UTC (Thu)
by unilynx (guest, #114305)
[Link] (3 responses)
The basic rule is that everyone (i.e., every end node) has to pay VAT. Companies/organisations get to reclaim VAT if they pass VAT down. Some organisations such as non profits, home rental and education get to offer their services without having to charge VAT, but in exchange they don't get to reclaim VAT.
From some points of view, it makes sense, as it allows these (semi)non profits to 'add value' without having to charge tax for it. I won't speak of the other points of view :-)
Posted Aug 3, 2017 19:45 UTC (Thu)
by anselm (subscriber, #2796)
[Link]
It's not quite correct to claim that “VAT rules are passed down from the EU”. The EU has a few things to say about VAT, but these are very general and it is left to the individual member states to come up with specific rules as to exactly who gets to impose VAT on their customers or reclaim it and who doesn't, exactly how much VAT is charged for what sort of goods or services, etc. These tend to be very complicated indeed, differ from country to country (sometimes in quite significant ways), and keep changing all the time. It is virtually impossible to generalise. There is a document that you can get from the EU commission that tries to explain how much VAT each member state charges for what and under which circumstances. It's 50 pages or so and does not make for light bedtime reading.
So, in fact it would be great if the EU actually were to put its foot down to a greater degree in the interest of simplifying the VAT system across all member states. That, however, would be tantamount to a minor miracle so I wouldn't hold my breath waiting for it to happen. In the meantime the existing system provides tax accountants and lawyers with a very comfortable living.
Posted Aug 4, 2017 13:13 UTC (Fri)
by Wol (subscriber, #4433)
[Link] (1 responses)
That is, I think, the rule. It sounds to me like Krita registered for VAT, then sold stuff without charging VAT on the sale price. Just because Krita doesn't pay VAT, it doesn't let their customers off paying.
The two ways "round" paying VAT are, I think, either (a) not to be registered when as you say you can't get the VAT back either, or (b) as a customer to have a special VAT exemption like being disabled. We can give a special certificate or something to our suppliers, which then allows them to sell us goods "zero rated". It can be nasty because they then have to prove to the authorities that we aren't liable for tax, so if we're not legit they get stung!
As someone just about old enough to remember Sales Tax in the UK, business-to-business sales didn't pay tax. So consumers used to get hold of membership cards to go to wholesalers who didn't charge tax. That's what's behind a lot of these "membership only" warehouse shops like Makro, Bookers, CostCo, etc - in the old days you HAD to be a member and you HAD to be a business. So VAT was brought in to clean up the mess - EVERYONE in the chain had to charge VAT, and NOBODY could dodge the tax.
So it sounds like Krita's advisor either didn't realise they would be selling to the general public (EVERYBODY is required to register and charge the tax if they do, unless they're "too small to make it worthwhile") or didn't understand the rationale behind how VAT works.
I guess, as was suggested, the Dutch authorities said "you took advice and the advice was wrong, so if you pay the tax you should have paid then we'll say no more about it", but like I said above - if the consumer wrongly avoids paying the tax the supplier is liable, and here Krita was the supplier ... the tax authorities don't care who's fault it was unless deliberate fraud was involved (not the case here).
Cheers,
Posted Aug 4, 2017 14:13 UTC (Fri)
by halla (subscriber, #14185)
[Link]
No, that wasn't the case. It's a conclusion a surprising number of people have jumped to, but no... Of course we paid VAT over stuff we sold. (These days, we mostly sell stuff through gumroad, steam and the windows store; these stores handle VAT for the seller.)
What happened was this:
* Part of our income came from sales, and part from donations
** Now, if 100% of our income had been from sales, we would have been able to reclaim 100% of the VAT we had to pay in the Netherlands over Dmitry's work, effectively paying nothing.
And that part still doesn't make sense to me.
Now we've got a 100% donation funded foundation and a 100% sales funded company; we're doing some work for Intel on Krita, and the work that Dmitry does for that project is invoiced to the company, the work he does apart from that is invoiced to the foundation. The foundation doesn't get the reversed VAT and the company can reclaim the reverse VAT.
Even weirder is that work like Dmitry's doesn't even have VAT in the Russian Federation.
Posted Aug 1, 2017 20:58 UTC (Tue)
by halla (subscriber, #14185)
[Link] (3 responses)
Posted Aug 2, 2017 7:28 UTC (Wed)
by MarkVandenBorre (subscriber, #26071)
[Link] (2 responses)
This could strengthen you, especially in the US. It could enable you to take tax deductible gifts there for example.
Posted Aug 2, 2017 10:13 UTC (Wed)
by halla (subscriber, #14185)
[Link] (1 responses)
Posted Aug 2, 2017 15:33 UTC (Wed)
by josh (subscriber, #17465)
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Posted Aug 2, 2017 16:24 UTC (Wed)
by halla (subscriber, #14185)
[Link]
Trouble at the Krita Foundation
Krita is really important software for the free/libre community.
Trouble at the Krita Foundation
Trouble at the Krita Foundation
Trouble at the Krita Foundation
It would be nice to have a counter for donations
Trouble at the Krita Foundation
Trouble at the Krita Foundation
Trouble at the Krita Foundation
Trouble at the Krita Foundation
Trouble at the Krita Foundation
Trouble at the Krita Foundation
That's worse than Monty Python ... !
Wol
That's worse than Monty Python ... !
That's worse than Monty Python ... !
That's worse than Monty Python ... !
That's worse than Monty Python ... !
Wol
That's worse than Monty Python ... !
* That meant that we could only reclaim VAT on stuff we bought (like my work on Krita) to the percentage that our income came from sales. We reclaimed all of it, and that was wrong.
* But, worse, and nobody had seen this coming: we also had reverse VAT over Dmitry's work since he is in Moscow. We didn't expect that, and the consultant who helped us setup everything didn't know that either. But... Follow closely, this is going to sound weird.
** But since only about 15% of our income was from sales, we could reclaim only 15% of the VAT that was reversed.
** Only, if we'd been 100% donation-funded, the VAT would not have been reversed at all.
** But that doesn't mean that the since we're 85% donation-funded, only 15% of the VAT should be reversed, no: it would still be 100%.
That's worse than Monty Python ... !
That's worse than Monty Python ... !
That's worse than Monty Python ... !
That's worse than Monty Python ... !
Trouble at the Krita Foundation