If the constant slagging off of Europe, China and all other countries could end as well, please!
We have no Chinese posters here, and on the detail I speak from personal experience over 20+ years.
Slagging off of European countries? Nothing on the sarcastic level of your last post. The UK gets by far the most of it, anyway (but Brits don’t generally care).
I think we’d all like to pay no taxes. But it is one of the certain thing in life. Birth, death and taxes.
But if Graham and Silvaire are referring to my post on VAT.
It goes like this. You buy a house for €50,000 either as a holiday home or an investment. Two years later after renovating the house you sell it for €100,000. The renovation has cost you €25,000. Ahh a nice profit of €25000 you think.
You expect to pay capital gains tax only on the profit. But you have no proper receipts for the work, you paid cash in hand, so you have no proof you paid. What you might have are receipts for the materials and bathroom appliances, or radiators. You can claim this against the capital gain, but not the VAT as you are not VAT registered. So your €25000 profit has dwindled fast.
This is just a brief description without going into the fact that you have aided the commission of a crime ie tax evasion, possibly money laundering.
However, on the other side the authorities might allow you some relief for the work you personally have put in.
If you fiddle they come down hard on you of you are straight there can be hiďden advantages.
I don’t think the USA is much different the tax authorities can be strict there also.
Silvaire wrote:
VAT is completely stupid mainly because the bureaucracy imposed on labor charges, and the associated barrier to starting a business, suppresses initiative and individual entrepreneurship
It’s actually one of the most fair and adequate tax based on economic capability.
Bureaucracy is mainly imposed due to exceptions rather than by the tax itself (what could be simpler than just deducting x% of tax from every payment you receive?). Most countries have exceptions for very small and/or starting businesses.
I’ve never met anybody saying: “I would become rich by starting my business but as VAT is too much complexity I prefer to not become rich”.
Paying cash does not necessarily imply having no receipt, and regardless nothing is wrong with either. I generally pay cash when somebody works on my plane and I rarely receive any receipt. No problem. The maintenance logbook entry is all I need.
Capital gains in the US are declared by the tax payer, no proof of the transactions is submitted, or required to be unless you were audited, which is unlikely. Even then if you were to explain the circumstance with the vendors (no receipt given by individual doing the work) and e.g. provide photographic evidence of the work done in comparison to the cost claimed that would likely be enough.
gallois wrote:
It goes like this. You buy a house for €50,000 either as a holiday home or an investment. Two years later after renovating the house you sell it for €100,000. The renovation has cost you €25,000. Ahh a nice profit of €25000 you think.
You expect to pay capital gains tax only on the profit. But you have no proper receipts for the work, you paid cash in hand, so you have no proof you paid.
On the first sight, the profit is 50.000. If you want to pay the tax on less gain, you have to prove that it has actually been less. Without that, everybody would claim that the renovation actually had cost 50.000 and therefore there is no profit at all. I can’t see a different system that would work.
gallois wrote:
What you might have are receipts for the materials and bathroom appliances, or radiators. You can claim this against the capital gain, but not the VAT as you are not VAT registered.
That is actually different in Germany: If you have bought the appliances, etc. with tax (i.e. you have paid the VAT when you bought it), you can deduct the full amount of the invoices including the VAT from the profit.
The only difference of being tax registered would be that you would not have to pay the VAT to your supplier in the first place.
gallois wrote:
You expect to pay capital gains tax only on the profit. But you have no proper receipts for the work, you paid cash in hand, so you have no proof you paid. What you might have are receipts for the materials and bathroom appliances, or radiators. You can claim this against the capital gain, but not the VAT as you are not VAT registered.
Yes, depending on the system applicable locally you can end up disadvantaged if you don’t have proper records documenting the activity.
The French fishermen have just found this out. Unsurprisingly, Macron has gone totally silent on the matter. One can imagine the meeting where he was told the detail of why they were unable to supply the information necessary for Channel Islands permits and the response of “yeah sorry guys, can’t help you with this one anymore.”
Quite obviously if you intend to claim tax relief based on expenditure you obtain proof of that expenditure. The person in your example has no idea how the tax system works. This is why the question “do you need a receipt?” sees a great deal of use.
Silvaire wrote:
Even then if you were to explain the circumstance with the vendors
What does the IRS do, if the customer claims to have paid the amount of x to a vendor (and hence wants to deduct that amount from some tax) while the vendor claims that he never has received any money (and hence does not want to pay taxes)?
The vendor would not even speak to the IRS, unless the vendor and client are both being audited simultaneously. We are not talking about an organized crime investigation, and it’s a free country. My responsibility does not extend to ensuring the veracity of vendors.
Most of the vendors I use on property are groups of one or two people, often friends, with varying levels of established business. In some cases I don’t even know some of their last names. If I pay by check (which would BTW provide me with proof of payment) some of them typically cash it at the bank.
The black economy.is all about cash payments and no proper receipts.
Capital Gains in France is also declared by the tax payer. The question is whether or not the revenue accept your declaration.
And its the same in the States.
Taxes might be called something different whatever country you do business in, but they are still taxes.
But the black economy is all about evading taxes and that goes down as badly with the authorities in the USA as it does in the UK or France. The difference between France and the USA versus the UK is that in both France and the USA you declare worldwide earnings whereas the UK are only.interested if the money comes back to the UK.
The difference between France and the USA is that economist describe both as capitalist economies but France is capitalism with a social conscience.
By the way I have run a business in the USA and one of my neighbours is an American and I receive his tax forms each year from the US internal revenue service.
You can think what you like, VAT plus income tax both applied to every low level labor transaction is nuts.
