DAN changes invoice/transaction/VAT process! [They act now as seller to your buyer]

[Domainication]

I noticed today that all my DAN landers are showing VAT informations like for example:

I was a bit confued because of the VAT law of my country i'm not allowed to charge any VAT.
So i checked the settings in my account which are still set the correct way:

And after that i requested their support about that and they told me something interesting:

[..]Dan is now listed as the Seller on any transaction. Since we are a Dutch company and VAT registered, we charge VAT to relevant EU buyers.

They changed the way they handle sales like afternic do for severel years now.
DAN acts now as the seller. And when you sell a name you sell it to DAN (and they sell it in their name to the buyer).
So it is not about if YOU are in need to charge VAT to a customer anymore. Its about them now and they are a EU company.

I mean, at one view it's okay for me. Now i only have to use one creditor to send invoices to.
The bad thing is that EU customers will now charged with VAT which they were not before (based on your own situation). Hmm..

Did you knew about that? I haven't read anything about it in their last Newsletters.

 

[Domainication]

Domaingang found it out earlier.
I missed that Blog post:

Dan.com changes fly under the radar all while GoDaddy promotes Afternic

For starters, say goodbye to sharing information about your domain buyers, as sellers and buyers will transact directly with Undeveloped BV, the Dutch company that operates Dan.com. Invoices will therefore contain minimal information and perhaps neither party will be able to know any information about the other.

Dan.com calls this “simplification” and we call it one big fat stupid change. Additionally, this leads to the charging of the European VAT for all domain sales of European sellers, regardless of the buyer’s locale, as Undeveloped BV will be the engaging party. That’s 21% tax on average, depending on the seller’s country.

Full article:
https://domaingang.com/domain-news/...he-radar-all-while-godaddy-promotes-afternic/

 

[decades80]

They now charge VAT also on Namesilo for EU residents on registration and renewals.

 

[anantj]

They now charge VAT also on Namesilo for EU residents on registration and renewals.

Not the same as the OP. In Ops case, they are the original seller. They, presumably, aren't based out of the Eu so VAT wasn't applied to their domain sales previously. Now, due to this rejig, undeveloped becomes the seller so EU buyers will always be charged a VAT.

In your example, Namesilo is directly selling the service and hence them charging the VAT because they have a presence in the EU is expected and required by Law

Edit: It's worse as per the linked article - If the seller is based out of EU, any buyer outside of EU is charged the VAT which they have no way to offset except by reselling it at a significantly higher price. This is terrible

 

[tonyk2000]

Well, if it is what EU taxation authorities want - then there is nothing wrong with this scheme. Open question - the VAT table does not include the following: Business in the EU buying from a seller located outside EU. This is what happens with all non-EU DAN sellers, as they now sell domains to DAN. What about VAT in this particular case?

 

[tonyk2000]

Also, what if NL-based seller (business) is selling to non-EU buyer? Previously, there was no VAT. Now, this seller will sell the domain to DAN first. Business in EU buying from a business in the same country - Netherlands. VAT appears. Would it mean increased final price for a non-EU buyer of DAN, or am I missing anything here?

Unsure how many NL businesses are DAN sellers, but still an interesting case.

 

[anantj]

Well, if it is what EU taxation authorities want - then there is nothing wrong with this scheme. Open question - the VAT table does not include the following: Business in the EU buying from a seller located outside EU. This is what happens with all non-EU DAN sellers, as they now sell domains to DAN. What about VAT in this particular case?

This change does not really have anything to with the EU taxation authorities per se. In this case, the seller and buyer have an intermediary buyer and seller respectively (Dan.com). Since Dan.com is a EU registered entity, VAT comes into effect. Consider the following:

Seller A - Based outside of EU
Seller B - Based in EU
Buyer C - Based outside of EU
Buyer D - Based in EU

If A sells to C, before 14/07/2023, there was no VAT charged.
If A sells to D, before 14/07/2023, there was no VAT charged.
If B sells to C, before 14/07/2023, there was no VAT charged.
If B sells to D, before 14/07/2023, there was a VAT charge.

Now,

If A sells to C, after 14/07/2023, A is selling to Dan and C is buying from Dan. So there will be a VAT charged.
If A sells to D, after 14/07/2023, A is selling to Dan and D is buying from Dan. So there will be a VAT charged.
If B sells to C, after 14/07/2023, B is selling to Dan and C is buying from Dan. So there will be a VAT charged.
If B sells to D, after 14/07/2023, B is selling to Dan and D is buying from Dan. So there will be a VAT charged.

This is my understanding. I've asked DAN for more clarification as a seller/buyer outside EU so I might come back and update/edit the above based on more clarity received from Dan.

 

[Domainication]

I guess it is that way:

First step of transaction. Seller (we) sell to DAN:

-it's about the VAT law you are commited to, when you sell into the netherlands-

So it is induviduall about your own situation.

Seller A - Business based outside of EU = no VAT charged
Seller B - Business based inside of EU = no VAT charge ? / MOSS process ?
Seller C - Business based in NL = VAT charge
Seller D - Privat person based in EU = VAT charge
Seller E - Privat person based outside EU = no VAT charge

Second step of transaction. Buyer buys from DAN:

Buyer A - Consumer (no business) outside of EU = no VAT charge
Source DAN:

Buyer B - Consumer (no business) inside of EU = VAT charge
Source:

Buyer C - Business Based outside of EU = no VAT charge
Source DAN:

Buyer D - Business Based in EU =
no VAT charge (if customer has valid EU VAT Nr.) / otherwise VAT is charged
Source DAN:

Buyer C - Business baded in Seller country, DAN is NL = VAT charge
Source DAN:

Just my thoughts. No financial advice.

 

[Domainication]

Also, what if NL-based seller (business) is selling to non-EU buyer? Previously, there was no VAT. Now, this seller will sell the domain to DAN first. Business in EU buying from a business in the same country - Netherlands. VAT appears. Would it mean increased final price for a non-EU buyer of DAN, or am I missing anything here?

Unsure how many NL businesses are DAN sellers, but still an interesting case.

That's an interesting scenario for sure.

Let me try. (Just my thoughts. No financial advice)

First step of transaction:
NL seller sells to DAN = VAT charged

Example:
Sale amount: $1,000
- Commision: 15% = $150
+ VAT on commission = 21% = $31.50
- so full commission is = $181.50

+ VAT on sale price ($818.50 ?) = 21% = $171,86
Payment to seller = $990.36

Second step of transaction:
DAN sells to non EU buyer = no VAT charged
DAN receive sale price / buyer pays = $1,000

Am i missing something? Is VAT on the sales price charged before or after the commision?

Damn... a bit confusing to me :D

This is my understanding. I've asked DAN for more clarification as a seller/buyer outside EU so I might come back and update/edit the above based on more clarity received from Dan.

Thanks man. I'm excited what they'll share how it will be handled.

 

[Domainication]

Well, if it is what EU taxation authorities want - then there is nothing wrong with this scheme. Open question - the VAT table does not include the following: Business in the EU buying from a seller located outside EU. This is what happens with all non-EU DAN sellers, as they now sell domains to DAN. What about VAT in this particular case?

If i understand it correct it should be this way:

Seller located outside EU sells to DAN (business inside EU) = no VAT charged
Buyer inside EU buys from DAN = no VAT charge (if buyer has valid EU VAT Nr.) / otherwise VAT will be charged

Just my thoughts. No financial advice.

 

[HK123]

I also noticed today that domain registration fees have gone up due to VAT. (Im in the EU) What a rip off :D

 

[anantj]

So DAN came back to me and had the most frustrating response. I'm pasting screenshots below and make what you can from it. Apologies for the shortness of my tone from the 2nd message onwards but I absolutely despise folks playing dumb or stonewalling information that should absolutely be available to customers.

 

[tonyk2000]

So DAN came back to me and had the most frustrating response.

Looks like a chatbot. Maybe they have a keyword or something which would switch the operator to a human?

 

[Traderas]

A good thing is that for UK companies nothing changes.

What I still can't understand, is why SEDO that is also located in Europe, charges me for VAT.
I have spoken with them many times, and they are trying to persuade me that they are obliged to do so...

 

[anantj]

Update to the last set of messages

It appears that there is a misunderstanding.

It does not matter to whom the seller sells the domain, as we are the counterparty to the transaction.

This means that in general, if you (seller) are based in the EU or other countries with applicable VAT, then VAT will be applied to your invoice.

The same goes for buyers.

However, there are exceptions, depending on different regulations based on your specific country, if you are registered as a company etc.

The exact application of VAT can only be determined by our finance team when we have your billing details (regardless if you are a seller or a buyer)

If you want me to confirm 100% if VAT will be applied to your transactions as a seller and as a buyer, then you can give me your exact billing details, including name of the company if you use one, and I can ask my colleagues from Finance to confirm if VAT will be applied.

I hope to have clarified this.

 

[Innoverge]

From seller's perspective this basically means all buyer prospects out of EU union will be stuck with a VAT burden of additional 21%, since they're transacting with Dan.com.
Especially for domains priced at 5 figures+ with LTO ,the Dan processing fees of 30% and an added tax burden of 21%, comes upto a boggling 51% over the asking price.

Can't help but wonder, how many of the motivated buyers would make a run for the hills.

It's ironic how a platform that marketed itself for making high priced domains more affordable with its LTO and increasing the sell-through rate, could now very well be a huge deterrent to prospective buyers.

Curious to see how the sellers will respond.

 

[zomainhacks]

From seller's perspective this basically means all buyer prospects out of EU union will be stuck with a VAT burden of additional 21%, since they're transacting with Dan.com.
Especially for domains priced at 5 figures+ with LTO ,the Dan processing fees of 30% and an added tax burden of 21%, comes upto a boggling 51% over the asking price.

Can't help but wonder, how many of the motivated buyers would make a run for the hills.

It's ironic how a platform that marketed itself for making high priced domains more affordable with its LTO and increasing the sell-through rate, could now very well be a huge deterrent to prospective buyers.

Curious to see how the sellers will respond.

Buyers outside the EU don't have to pay VAT, these are VAT exempted transactions.

Serious X,XXX EU buyers are most likely companies which don't have to pay VAT most of the times. GoDaddy also charges VAT for relevant buyers, these are the EU rules.


If digital goods are considered as sevices these are the EU VAT rules:

https://taxation-customs.ec.europa.eu/telecommunications-broadcasting-electronic-services_en

 

[Innoverge]

Buyers outside the EU don't have to pay VAT, these are VAT exempted transactions.

Serious X,XXX EU buyers are most likely companies which don't have to pay VAT most of the times. GoDaddy also charges VAT for relevant buyers, these are the EU rules.


If digital goods are considered as sevices these are the EU VAT rules:

https://taxation-customs.ec.europa.eu/telecommunications-broadcasting-electronic-services_en

I said buyers 'out of' EU union(not outside of)have to pay VAT.. you misunderstood.

 

[zomainhacks]

I said buyers 'out of' EU union(not outside of)have to pay VAT.. you misunderstood.

Still don't get your point then

 

[Domain boy]

Being a seller based in the EU, I was already paying vat when i imported lead at dan.com.. I think it was 22% on import lead amount. Was it for everyone the same?

 

[dr manos]

Being a seller based in the EU, I was already paying vat when i imported lead at dan.com.. I think it was 22% on import lead amount. Was it for everyone the same?

i use company in EU as well, when selling at dan, if buyer is from my country or is private person in eu, final price incudes the vat.
Third countries 0% vat,
Was clear enough but previously had to invoice buyer with whole amount, give vat to respective country etc.
Now seems beter to me, if i understood well Dan will handle the vat so for all sales we will invoice dan right?

 

[Domainication]

Being a seller based in the EU, I was already paying vat when i imported lead at dan.com.. I think it was 22% on import lead amount. Was it for everyone the same?

No. I paid VAT only for the DAN commission (21% which is clear because its a service they sold to me and they are NL VAT commited) at imported leads and at normal sales per landingpage for sure.

 

[Domain boy]

No. I paid VAT only for the DAN commission but not for the sale itself.

Yeah same

 

[dr manos]

A good thing is that for UK companies nothing changes.

What I still can't understand, is why SEDO that is also located in Europe, charges me for VAT.
I have spoken with them many times, and they are trying to persuade me that they are obliged to do so...


Show attachment 242744

From 1/1/2023 UK assumed outside VIES and third country so is like USA, Asia etc with 0% for services when a deal with EU Companies.

 

[dr manos]

Domaingang found it out earlier.
I missed that Blog post:

Dan.com changes fly under the radar all while GoDaddy promotes Afternic

For starters, say goodbye to sharing information about your domain buyers, as sellers and buyers will transact directly with Undeveloped BV, the Dutch company that operates Dan.com. Invoices will therefore contain minimal information and perhaps neither party will be able to know any information about the other.

Dan.com calls this “simplification” and we call it one big fat stupid change. Additionally, this leads to the charging of the European VAT for all domain sales of European sellers, regardless of the buyer’s locale, as Undeveloped BV will be the engaging party. That’s 21% tax on average, depending on the seller’s country.

Full article:
https://domaingang.com/domain-news/...he-radar-all-while-godaddy-promotes-afternic/

Imo is much better now for EU companies.
Previously had to create invoices for any buyer, handle the respective VAT etc, as DAN was the intermediate.
Now Dan will handle the VAT, so as sellers will invoice all times DAN only with 0% as is company in EU with EU Business number.