Canadian Citizen charge HST

[Kim]

On my last ONE renewal, I was charged 13% HST. Never happened before, and I don't think other companies do it. Anyone else had a similar experience?

[TrustyJules]

One charges me destination country VAT in the last invoice - so apparently they do look into this. As of this year that should stop because of Brexit - no clue what the situation in Canada is but it seems One is careful.

[ixero@20]

Exactly the same thing - no HST last year and 13% HST charge on Jan 28th 2022.

[Kim]

2 minutes ago, TrustyJules said:

One charges me destination country VAT in the last invoice - so apparently they do look into this. As of this year that should stop because of Brexit - no clue what the situation in Canada is but it seems One is careful.

They say they are using a third party called Digital River. 

1 minute ago, ixero@20 said:

Exactly the same thing - no HST last year and 13% HST charge on Jan 28th 2022.

I'm curious what has changed, and why nobody else is charging it (I have several subscriptions).

[TrustyJules]

Digital River is a service provider to cash in on such things as subscriptions. As such they will be registered for sales taxes and value added tax and add these to any sales. Its a shame because the cost increase is directly for us the buyers.

[Kim]

1 minute ago, TrustyJules said:

Digital River is a service provider to cash in on such things as subscriptions. As such they will be registered for sales taxes and value added tax and add these to any sales. Its a shame because the cost increase is directly for us the buyers.

But why they didn't charge it before, and why others don't charge it?

[rasar]

I'm in the US, so no Canada experience. However, I know that I've always had to pay for my ONE subscription through Digital River, and have always had to pay the US sales tax (actually the state tax). The only choice I've had is between paying in GBP or USD, which affects the total price to a small degree.

[TrustyJules]

Just now, Kim said:

But why they didn't charge it before, and why others don't charge it?

One is based in the UK and in principle software is a service transaction. Service transactions do not generally lead to value added tax or sales liabilities unless the service is performed on site. Obviously this is somewhat questionable in the case of software but in reality the transactions are not really traceable for the most part unless their volume is very high. In Europe - not sure about North America - there are thresholds of gross sales that need to be exceeded before they force you to register for tax in the country in question. Over the past years and in 2021 in particular there has been a gradual tightening of the rules on this and application of taxes - unsurprisingly the tax man likes to tax whatever is forthcoming. There is also a reasonable argument that you as the buyer in Canada are consuming and using in Canada and therefore like Canadian software the transaction should be taxed.

The chances of the Ontario tax man catching One is small - this is NOT the case for catching the big payment fulfillment firms like Digital River which on top of that guarantee that tax elements are taken care of. The Ontario (and EU) tax men know 'where they live' and will demand their pound of flesh as they perceive this as Digital River selling software in Ontario (or in the EU) rather than a fee from One in the UK.

Technically One is relieving itself of a risk because many tax authorities believe their transactions are locally taxable and should not be exempted from VAT as normal service transactions. If you were to retain the services of my company in Belgium and I do something for you - our invoice would not have HST on it as a service transaction. Here is an excerpt of Canadian guidance on this:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p-150/tax-treatment-imported-computer-software.html

 

[ixero@20]

15 minutes ago, Kim said:

But why they didn't charge it before, and why others don't charge it?

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/digital-economy-gsthst/charge-collect/cross-border.html

It seems government made some changes in July 2021.

Based on these rules cross border sellers must collect HST if they sell digital products directly to Canadian consumers.

[TrustyJules]

Can confirm that this is a global crack down - so we are likely to experience it outside the bounds of bonny Canada.

[Kim]

The Global Reset.

By 2030, “You will own nothing, have zero privacy, eat bugs and be happy!”

[Ringandpinion]

I'm from the government, I'm here to help.  Bwaaahaahahahahahah

[Christof+]

My 2 ct. w/o being an expert:
I think you should be happy in case you haven't been charged VAT/HST before. As a seller of a digital product myself I had to learn that a digital product like a subscription is always fulfilled at the place of the customer, i.e. the service provider has the duty to collect the correct CUSTOMER's LOCAL tax and pay it to the customer's local revenue service. To facilitate that within European countries we have this thing called Mini One-Stop Shop, so might be before Brexit they just haven't bothered with tax of Non-European customers so far.

[ixero@20]

11 hours ago, Kim said:

The Global Reset.

By 2030, “You will own nothing, have zero privacy, eat bugs and be happy!”

2030 seems like very distant future now. First we have to get through the crisis and martial law we have in Canada now. Can't believe we got that much down that fast... If the right side of the history wins, may be The Global Reset is not really a thing...

P.S> Sorry for ranting about politics here but Canada really in uncharted waters right now