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.

 

[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?

 

[Future Sensors]

agreement (one we didn't confirm) that can literally take around 50% of your money

How did you calculate this 50%, if I may ask?

 

[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.

 

[DNabc]

@Keith Who are you to tell me what to do? I do sell via my own outlet, I only sold a single domain at DAN via a lead I uploaded and brought there. I never needed them, and was a mistake I ever set any BINs there in the past and forgot to remove because they never had any relevance for my business, that was solved this week.

We are talking about changes that were made last month and fees that were and are still not clear for some sellers (as my conversation with their support showed). If you have nothing to contribute, don't bother others. If you think we should be screwed (your words) because we signed up at a marketplace, I have nothing else to add.
Several people thanked me for alerting to this issue, here and by DM, so any low content negative remarks are meaningless.

 

[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/

 

[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

 

[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?

 

[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.

 

[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.

 

[Lox]

It's time to rethink what we mean when we talk about “GD / Dan aftermarket.”

 

[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

 

[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...

 

[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.

 

[decades80]

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

 

[Jannes]

However think if you are a personal European seller, you better remove all domains from DAN ASAP

Thank you. Removing is not an option, because then some a**hole will relist some of them without me knowing. I'll just remove all BINs and make minimum offers $1,000,000. I also use brandable sale page templates (but not landers anymore) with descriptions, where I can tell the potential buyers who are using Dan's marketplace to visit the landing page (Afternic or Sedo). Dan won't like the latter but I don't care what they like.

 

[DNabc]

That is the scenario where they push VAT on private buyer from EU as well, if you go to scenario where it's EU private seller to US buyer (most common for me), only EU private seller will pay (get deducted) for a vat tax that doesn't exist on other marketplaces.
The TLDR is that private persons should never deal with DAN (as buyers or sellers), just go to Afternic if you want to use Godaddy (for now).

PS. on my ticket they were blaming the support employee for being new (poor person was now the scapegoat) and giving me wrong info (telling me that even as a registered VAT company I would have that deducted from my receivables).
I said: "Do not blame X, the issue is with DAN that did not give clear instructions to the support team after these changes".

 

[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.

 

[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

 

[twiki]

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.

It is indeed better for EU companies (I run my sales through a company).

Cases when an EU buyer is a firm and doesn't have VAT are rare. Most buyers from EU have a company (actually we are selling a lot to known hosting firms who buy on behalf of their customers).

This takes a lot of paperwork out and also the need to distribute VAT to countries as per the MOSS regulation.

 

[laur77]

Thanks for the post. I didn't notice this change.
What a mess is now this platform.

 

[DNabc]

As we all expected when Godaddy bought them, they went from a really domainer friendly platform to the absolute worst for EU sellers that aren't VAT registered... by far.
Even to me they wanted to keep half my money despite me saying multiple times I was VAT registered (buyer is from US) so it was 0%, only after I stopped the domain transfer and said I hereby cancel this transaction they said I was right after all... now a week later they still try to strong-arm me.
I was told that by Monday they would cancel it but today got an invoice with full amount I "owe them" (many thousands) as if buyer had paid full amount (buyer only sent first instalment out of 10). I removed all my domains from there, in 25 years I never saw so much confusion.
So many times we read we must have "buy now" pricing, how good it is, well... that's like giving a blank check to these marketplaces, they can change their commissions or to whom you sell your assets and you are supposed to accept anything they are willing to pay you, even if it's little more than 50% ... many will learn that the hard way.
If this doesn't affect you, good for you, but it does affect many people. Wasted so many hours for the past week but facts are facts, even if Godaddy / Dan employees / fanboys aren't happy about exposing this.

 

[DNabc]

I explained above. Let's say price is 1000 and you are EU seller without VAT registered company, they will deduct (in my country) 23% tax.

Support: "The NET receivables will be with VAT applied. To make it simple, for each sale the sum that you will receive will be with the VAT deducted from it."

Adding to that there is their commission, 25% if you don't point to their DNS because you have a website, you don't want to use their landers that are blocked on many networks, etc.

When you put together the 23% and the 25% you get "around 50% of your money", you would get little more than 500 from the 1000 sale. Hope this was clear.

PS. Some countries have 25% and even 27% VAT taxes , all that will be deducted from your receivables if you are an individual seller or company that didn't reach high enough threshold to collect VAT. And will private sellers be deducted that or Netherlands VAT rate?

PS2. Let's not forget they converted all listings to USD at the "current market exchange rates", that will be another extra cost (on their exchange rate plus when receiving money at their bank) for many EU sellers that were selling in Euros. A Netherlands company, the only marketplace that charges European VAT but forced people into USD transactions. Funny.

From what we have seen these past weeks, even support is confused, and seems we sellers need to just accept anything they decide and be happy? They make a new contract that few seem to know how it's actually working and for sure I didn't accept.

 

[dr manos]

Correct. When you sell to European person, yes, that person will pay extra. But US individuals or companies cannot be charged VAT when buying, so Dan told me that would be deducted from my earnings (and was a lot...).
Paying VAT on commission was already there before July, problem is now paying VAT on full amount (even when private EU sells to US citizen, where there was never VAT involved because VAT is for EU consumers).

Yea true, there is no vat deduction at other marketplaces for private sellers.