question Dan / afternic IRS trouble - who has to collect VAT ?

[davidc1]

Hello,

I sell domains through my french company and i'm in trouble for a few months discussing.
I think all companies which use marketplaces for selling domains within EU could have this problem.

I have an IRS accounts control and they request from me VAT for all domains sold through marketplaces I use (afternic, dan, sedo), in my case it's a large amount and could be $$$$$ / year

The IRS consider I'm the seller of domains and the buyer is buying domains from me, the role of marketplaces is a sale facilitor. They tell i'm selling rights for domains, new rights are for the buyer, not for the marketplace.
They consider, that the main part of the money is reversed to me, minus a commission, that prove that they take a commission to be an intermediary.

Afternic/dan : always tell me that they buy from me then sell to the buyer, but it's written nowhere, when i ask them for a prove somewhere, they tell me that have nothting !
I request from afternic invoices but for the moment nothing has been sent to me that show them as a buyer. (not sure thatif i have these invoices it'll change something for the IRS...)

On afternic I'm not able to know anything about buyers, even the country, VAT id, and if the transaction is made by a company or not is unknown, afternic refuse to give me any information whereas I need these information to be able to pay VAT correctly as the IRS consider me as seller to the buyer.

what I can show to IRS is near to nothing, the IRS tell me they cannot consider that :
- an old invoice when I bought a domain years ago from godaddy, I see that I paid VAT for it.
- On afternic/dan : I see added VAT on checkouts
- dan invoices that now show me as seller and dan as buyer (since 12 July 2023, as before it was like the IRS say)

The VAT on checkout is never sent back to me as marketplace considers them as seller to the buyer, and this is the problem !

Do you see something else to add helping me ?

@GoDaddy

thanks,
David.

 

[RyanEwen]

Hello,

I sell domains through my french company and i'm in trouble for a few months discussing.
I think all companies which use marketplaces for selling domains within EU could have this problem.

I have an IRS accounts control and they request from me VAT for all domains sold through marketplaces I use (afternic, dan, sedo), in my case it's a large amount and could be $$$$$ / year

The IRS consider I'm the seller of domains and the buyer is buying domains from me, the role of marketplaces is a sale facilitor. They tell i'm selling rights for domains, new rights are for the buyer, not for the marketplace.
They consider, that the main part of the money is reversed to me, minus a commission, that prove that they take a commission to be an intermediary.

Afternic/dan : always tell me that they buy from me then sell to the buyer, but it's written nowhere, when i ask them for a prove somewhere, they tell me that have nothting !
I request from afternic invoices but for the moment nothing has been sent to me that show them as a buyer. (not sure thatif i have these invoices it'll change something for the IRS...)

On afternic I'm not able to know anything about buyers, even the country, VAT id, and if the transaction is made by a company or not is unknown, afternic refuse to give me any information whereas I need these information to be able to pay VAT correctly as the IRS consider me as seller to the buyer.

what I can show to IRS is near to nothing, the IRS tell me they cannot consider that :
- an old invoice when I bought a domain years ago from godaddy, I see that I paid VAT for it.
- On afternic/dan : I see added VAT on checkouts
- dan invoices that now show me as seller and dan as buyer (since 12 July 2023, as before it was like the IRS say)

The VAT on checkout is never sent back to me as marketplace considers them as seller to the buyer, and this is the problem !

Do you see something else to add helping me ?

@GoDaddy

thanks,
David.

Yes i believe in EU that they are making marketplaces responsible for collecting sales taxes - it was announced earlier this year as they are consolidating sales tax across all EU member countries.

I am not sure it applies if you are not based in EU.

 

[zomainhacks]

Hello,

I sell domains through my french company and i'm in trouble for a few months discussing.
I think all companies which use marketplaces for selling domains within EU could have this problem.

I have an IRS accounts control and they request from me VAT for all domains sold through marketplaces I use (afternic, dan, sedo), in my case it's a large amount and could be $$$$$ / year

The IRS consider I'm the seller of domains and the buyer is buying domains from me, the role of marketplaces is a sale facilitor. They tell i'm selling rights for domains, new rights are for the buyer, not for the marketplace.
They consider, that the main part of the money is reversed to me, minus a commission, that prove that they take a commission to be an intermediary.

Afternic/dan : always tell me that they buy from me then sell to the buyer, but it's written nowhere, when i ask them for a prove somewhere, they tell me that have nothting !
I request from afternic invoices but for the moment nothing has been sent to me that show them as a buyer. (not sure thatif i have these invoices it'll change something for the IRS...)

On afternic I'm not able to know anything about buyers, even the country, VAT id, and if the transaction is made by a company or not is unknown, afternic refuse to give me any information whereas I need these information to be able to pay VAT correctly as the IRS consider me as seller to the buyer.

what I can show to IRS is near to nothing, the IRS tell me they cannot consider that :
- an old invoice when I bought a domain years ago from godaddy, I see that I paid VAT for it.
- On afternic/dan : I see added VAT on checkouts
- dan invoices that now show me as seller and dan as buyer (since 12 July 2023, as before it was like the IRS say)

The VAT on checkout is never sent back to me as marketplace considers them as seller to the buyer, and this is the problem !

Do you see something else to add helping me ?

@GoDaddy

thanks,
David.

There's a paragraph on the Afternic ToS that says that afternic can hold right of the domain even if their buyer backed off (provided Afternic gives to you your chosen payout). On top of that afternic network partners can change sales price at their will (granted they provide your choosen payout).

These are relevant points to enstablish who's the seller and it's clear that Afternic acts as a buyer and reseller.

Check also what EU VAT law says in this regards. I'm pretty sure that if you can't control the sale price you can't be considered the seller to the end user.

Hope this can be helpful

 

[davidc1]

Check also what EU VAT law says in this regards. I'm pretty sure that if you can't control the sale price you can't be considered the seller to the end user.

For sure I control the sale price.

There's a paragraph on the Afternic ToS that says that afternic can hold right of the domain even if their buyer backed off (provided Afternic gives to you your chosen payout). On top of that afternic network partners can change sales price at their will (granted they provide your choosen payout).

I cannot find it, could you find it for me ? maybe my english is too bad !

 

[zomainhacks]

For sure I control the sale price.


I cannot find it, could you find it for me ? maybe my english is too bad !

No, you can only decide your sale price to afternic, but how afternic network partners price your domain is not under your control.

Here's the paragraph I was referring to:

1. Notwithstanding anything to the contrary on this Site, a Listed Domain with a Completed Sale through any GoDaddy-owned check-out process will be guaranteed for payment by Afternic if the Buyer does not perform and if the Buyer is not an associated party of the Seller. In the event of a breach by the Buyer of its responsibilities related to payment under a Buy Now transaction, the Seller agrees to immediately transfer all of Seller's right to the respective Listed Domain to Afternic and Afternic agrees to pay Seller the final sales price less any agreed upon commission.
   For the purposes of this limited warranty, a "Completed Sale" means an accepted Buy Now transaction for a Listed Domain through a GoDaddy-owned Site, combined with receipt of payment by Afternic and transfer of the Listed Domain to Afternic's control.

 

[davidc1]

No, you can only decide your sale price to afternic, but how afternic network partners price your domain is not under your control.

Here's the paragraph I was referring to:

1. Notwithstanding anything to the contrary on this Site, a Listed Domain with a Completed Sale through any GoDaddy-owned check-out process will be guaranteed for payment by Afternic if the Buyer does not perform and if the Buyer is not an associated party of the Seller. In the event of a breach by the Buyer of its responsibilities related to payment under a Buy Now transaction, the Seller agrees to immediately transfer all of Seller's right to the respective Listed Domain to Afternic and Afternic agrees to pay Seller the final sales price less any agreed upon commission.
   For the purposes of this limited warranty, a "Completed Sale" means an accepted Buy Now transaction for a Listed Domain through a GoDaddy-owned Site, combined with receipt of payment by Afternic and transfer of the Listed Domain to Afternic's control.

thanks you.
I understand, that this paragraph is not for all sales but only in case of problem.

 

[EmilyWix]

The intermediary should take care of all this. Do you have access to the documentation? After all, sometimes corrections, reports, and refunds are needed.

 

[davidc1]

The intermediary should take care of all this. Do you have access to the documentation? After all, sometimes corrections, reports, and refunds are needed.

what do you mean by "documentation"" ? On afternic I only have one CSV for sales, that's near to nothing for IRS.

 

[pb]

I am convinced that buyers get an invoice from afternic, godaddy or one of the FT network participants and if that's the case, then clearly you are not the seller.

 

[davidc1]

I am convinced that buyers get an invoice from afternic, godaddy or one of the FT network participants and if that's the case, then clearly you are not the seller.

Yes I agree with you, but the IRS tell me that an invoice is not all things to consider.
Another problem is that I cannot show these invoices, even invoices between me and afternic, godaddy doesnt provide me any thing showing i'm the seller and they are the buyer.
Even with dan and inoices between parts, that doesnt change the min of the IRS. Before July 2023 dans considered the transaction is between the buyer and me, and after, it's different, but nothing change anywhere in TOS, except in invoices.
Afternic/godaddy consider they are the buyer of the domain, but nothing is written anywhere, and even if it was written, the IRS considers domains rights, which goes from me to the buyer.

 

[pb]

One question, are you a resident of the EU or US? What does IRS even want with you?

 

[davidc1]

One question, are you a resident of the EU or US? What does IRS even want with you?

I'm french, french company, french IRS.

 

[pb]

I'm french, french company, french IRS.

Ahh, ok, I thought US IRS got you. Well, can't really assist you with French taxes, sorry. You should probably consult a tax advisor. Maybe you marked the invoices wrong, maybe you didn't register for VAT-EU and can't export services etc. - it can be a lot of things. I'm in the EU and didn't have such problems but it's crucial to setup everything correctly.

 

[zomainhacks]

thanks you.
I understand, that this paragraph is not for all sales but only in case of problem.

The point is that if AN behaves this way you are actually selling to them and not to the end user.

If you add this from their tos it's crystal clear you are selling to AN:

"You understand that certain reseller distribution partners may, upon approval by the Company and at Company's sole discretion, add a markup to the sale price of your domain name and that the reseller distribution partner may keep this markup in its entirety, and that you will receive no payment for the portion of the sales price that is marked up"

Maybe an official translation in french of the ToS and a lawyer explaining the matter to the IRS can solve the issue.

 

[DNabc]

I wrote many posts about that last year, not even support understood the VAT changes. For EU individual sellers that aren't VAT registered, selling at DAN means losing half your money (25% commission not using their parking + full VAT). They even wanted to withhold me VAT on a $25000 sale and I was VAT registered... a complete mess.
https://www.namepros.com/threads/da...-as-seller-to-your-buyer.1306363/post-8982949

 

[zomainhacks]

I wrote many posts about that last year, not even support understood the VAT changes. For EU individual sellers that aren't VAT registered, selling at DAN means losing half your money (25% commission not using their parking + full VAT). They even wanted to withhold me VAT on a $25000 sale and I was VAT registered... a complete mess.
https://www.namepros.com/threads/da...-as-seller-to-your-buyer.1306363/post-8982949

I dont use DAN but supposing it's like AN you simply sell to them wich is VAT exempted either because AN is an american entity or because DAN is an EU business (reverse charge mechanism should be applied in this case if I'm not wrong) and then they will charge VAT when they sell the domain to the end user. So actually using AN means less paperworks.

 

[coolhands]

I have sold a domain in Dan about 2 year ago, and as a Seller they have issue me an invoice which shows the buyer billing information and VAT number. And I don't know if they stopped issuing invoices as you said or not!

the only one who don't issue invoices was afternic, Even when I asked for it multiple times, they issued me an invoice with their billing address instead of the buyer's address, and without any tax number. They also issued me a GoDaddy Affiliate receipt, which, if you read it, makes it seem like I earned a commission from them rather than having sold a domain. I find this strange.

but at the end of day this invoices is accepted by Tax Authority.