These forums are read-only!
Rackspace and VAT
  • moskit
    I am from Europe and I have just received a message from Rackspace:
    ---
    As an existing Rackspace Cloud customer, you will need to enter your VAT registration number in your control panel prior to January 1, 2010 to avoid being charged the 17.5% tax for VAT. If you do not have a VAT ID number, or choose not to supply one, The Rackspace Cloud will begin charging you the 17.5% VAT tax on all invoices after January 1, 2010.
    ---

    It's ridiculous. Looks like guys don't understand clearly what VAT is. The final price for customers cannot depend on if they are VAT payers or not!
    Well, more probable is that they understand, but for some reason want only companies to be their european clients..
    I personally operate as a sole proprietorship, but I am not registered for VAT, I just don't need it. And I am not going to register for VAT only because of Rackspace weirdness.

    So the question is: is Slicehost going to do same trick given that it is Rackspace owned? If not, I will simply move my servers from Rackspace to you. I already have two here and absolutely happy, so no problems.
  • PickledOnion
    Hi moskit,

    I can't answer for the email you received from Rackspace Cloud. You would need to contact them on that issue.

    I also can't give an answer as to the intricate details of international law and international tax. We have been looking at this for some times now and have lawyers, finance experts and many, very experienced and qualified people looking into similar issues.

    I do not pretend to be an expert in international law and the tax system so I don't want to give an answer that may be incorrect or misleading in any way. That may sound like I am brushing the question off but, as I say, I can't comment on something that I have no experience in.

    If there is a change to be made to Slicehost customers, we will of course, let you know and explain exactly what is happening and why.

    Being British I do know that if you have a registered UK company you do get certain tax concessions. Individual UK citizens do not get the same concessions.

    Paul
  • moskit
    Hi Paul,

    thank you for the answer.

    I want to take back my words about Rackspace billing guys, they do know what VAT is of course. I was a bit too frustrated.
    I have also half mistaken: I didn't take a look at new VAT regulations regarding B2C, they will have to pay VAT in regards of private individuals. But still two questions left:

    1. I am not a private individual but I don't have a VAT number. From hmrc.gov.uk website:

    "VAT registration numbers are the best evidence that the supply is not received for a wholly private purpose and should be requested. If your customer is unable to provide a VAT number, you can accept alternative evidence."

    2. Why VAT should be added? From mere common sense, it should be deducted from business customers invoices, and price for private persons should remain the same. Nobody adds corporate tax to the price for USA customers, and VAT plays the same role (don't ask me why UK has both - why not to choose another country and after all total burden is roughly the same in both US and UK)

    Sorry, it's not about Slicehost, but I couldn't find any forum on Rackspace. Only wiki where I could find something like "VAT is a european tax so we have to' pay it too"

    It's not about price either. It's still attractive. I only feel like I am fooled. VAT isn't just invented. I didn't pay it (I paid other taxes instead) and now I have to pay both kinds of taxes. It's just wrong.

    Igor
  • kwilsonkwilson
    Posted By: moskitI am not a private individual but I don't have a VAT number.

    Why not get one? (Assuming you can - I'm not familiar with UK business regulations.) Based on what Paul says, there may be tax benefits to doing so as well as helping you avoid stuff like this.
  • moskit
    I am not in the UK, Rackspace is. I am in the Czech Republic. But this doesn't matter much since we both are in EC.
    I didn't need VAT number because I received most of services I pay for from the US (no VAT) and supplied my services to the US again (no VAT again).
    It's OK so far, not much expenses compared to total, but this may change if other hosting providers will do the same. That's why I asked if Slicehost is planning something similar :)
    Yes, maybe I will apply for VAT number.. many things will need to be recalculated then.. (sigh)
Add a Comment