End up paying more VAT than I should.
End up overpaying VAT. So B2B transactions on Amazon in Italy that Amazon has charged no VAT for, SimplyVAT tell me some of the customer VAT IDs are invalid and I must pay VAT. On further investigation, I find out SimplyVAT only checks valid VAT IDs against VIES - so if the Italian business has never registered in VIES and it is a domestic B2B sale in Italy then SimpyVAT is incorrectly flagging up invalid VAT IDs. On reporting this to them, they confirm that is the case - but if I want them to check the valid VAT IDs against the Italian domestic database then I will have to pay extra, or I can just carry on paying VAT on transactions the customer hasn't been charged VAT (and therefore sell at a lose).
So SimplyVAT have 1. Poor systems that can't correctly calculate the VAT. 2. Poor customer service after reporting the issue, that they want to charge you more, rather than fixing their systems.
So maybe their T&Cs should say we will do our best to roughly calculate your VAT, but you may actually be overpaying! I hate to think how much extra the Italian government has got from SimplyVAT customers who do not realise they are paying too much.
Considering the premium prices you pay for this service, it was disappointing.
Reply from SimplyVAT
As CEO of SimplyVAT.com, I thought it important to reach out to you in relation to your comments. Your feedback is greatly appreciated and allows us to reflect on our systems and customer experience. As your comments relate to our technical expertise, I feel it important to give transparency on our internal processes and therefore have the following comments to make:
The only transactions affected by the question of whether an IT VAT ID number is valid or invalid in the VIES database are those supplied from IT by non-established suppliers to IT-established and VAT-registered customers, as only those supplies would potentially fall under the Domestic Reverse Charge rule in Italy; supplies from other EU Member States would require an IT VAT ID Number registered in the VIES database, as per the 2020 EU Quick Fixes.
You are correct that we check IT VAT ID numbers against the VIES database, which allows us to see both whether the IT VAT ID number is registered for the purposes of exempting an intracommunity supply of goods, but also confirms the place of establishment of the holder of that IT VAT ID Number. Unfortunately, the local Italian database only verifies whether the IT IVA number is valid, not the place of establishment of the holder of that IT IVA number. Without that crucial piece of information, we would be unable to verify that the application of the Domestic Reverse Charge rule in Italy on such transactions is accurate. When we are unable to verify the applicability of a particular provision, we default to the most compliant alternative. In this case, that would mean treating the transaction as taxable by the supplier. We do this in order to be completely certain that our clients will not face penalties or fines from the revenue authority resulting from an improper assumption about a specific transaction.
Because we recognize that this might potentially also lead to a client paying more VAT than is actually owed, we provide each client with an “Attention Required” report highlighting these transactions whenever they occur. This report gives the client the opportunity to investigate these transactions in a timely manner, thus fully negating any potential negative outcome. We are happy to treat these transactions as falling under the Domestic Reverse Charge rule upon affirmative request by the client, but we cannot make this decision unilaterally. It is the client’s responsibility to verify whether the IT IVA numbers are valid and are held by firms established in Italy. As you indicated, we can take the extra step of checking this information, but as I trust you understand, this is necessarily a manual process that involves investigating each individual firm and verifying where that firm is legally established, in addition to checking the validity of the IT IVA number in the local database. Because this process is very time consuming, we must charge for that time as the rates indicated in our rate card.
We are very keen to collaborate with you to rectify any overpayments made, with this in mind, I will reach out to you separately to see how we can resolve this to your satisfaction.
Kind regards,
Claire Taylor