Important information regarding future invoices from SWAPD

Since the beginning of this year, we’ve fully switched up our company classification to a financial institution, which was needed to run a real escrow service. Before this change, we had to get creative with invoicing which presented many problems. Now that we’re fully entitled to do what we do law-wise, we have to make significant changes to our Terms of Service and our Transaction Contract. Also, to comply with local and state laws, we have to make the following changes to the way we invoice buyers and how we conduct business.

Buyers/sellers - Invoices are officially your responsibility.

We, as a company, cannot any longer invoice buyers for the full amount of their payments. That gig is over. Whether you’re in the EU or anywhere else in the world, if you’re buying on SWAPD, you can only get invoiced for our services (which is our SWAPD fee).

Wait, what? I thought sellers pay the fees.

Yes, and that won’t change. However, since buyers are in fact the providers of the funds which we count as our fee, they’re the only legal entity in a checkout ticket who may receive a taxable invoice. The sellers will still receive what’s owed to them minus the fee. I know this may be confusing, so here is an example.

  1. Buyer/seller starts a checkout ticket for 1000 USD.
  2. The buyer pays SWAPD 1000 USD. But, the true cost of that transaction is 920 USD for the item purchased and 80 USD SWAPD fee.
  3. We send the seller 920 USD and invoice the buyer for 80 USD.

If the buyer wants to receive an invoice for the rest of the funds (920 USD), then he has to DIRECTLY ask the seller for one.

This is crazy? Why?

Because the law tells us to do it that way, that’s why. It prevents double taxation for the buyer (if he is an EU resident where VAT may apply) and it’s the way the big dogs do it (like Escrow.com, for example).

So sellers are responsible for fess but buyers pay them?

To be fair, buyers are the remitters of the payments so they ALWAYS paid the fee, it’s just a matter of how you look at it. We could separate the two and force sellers to pay us our fee while buyers paid for the item. But that would double our workload, increase wait time (waiting for two payments), and generally slow down transactions.

These changes will roll out in the upcoming days.

Please give us some time to work out the details and update our website. We have to rewrite many pages/etc so it will take a while. But prepare yourselves that next week, asking buyers/sellers about a possible invoice before a ticket starts would be a wise idea. Not everyone can issue invoices, nor not every buyer may want to receive one. It’s a problem we will have to tackle somehow.

UPDATE:

Step one: Taxes and invoices
Step two is to create generic B2B and personal invoices for members to download to those who may need them. We’re also in process of changing our Transaction Contract + Terms of Service.

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This post is reserved for updates.

Offshore account dont care :sunglasses:

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After reading this post I really got so confused that u cant imagine, but the post looks decent, so GOOD LUCK we agree :smiley: Terms and conditions :ballot_box_with_check: :sweat_smile:

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Sorry to say, but this is a major step back for this platform. How does this new policy prevent from double taxation? Precisely the contrary. It actually forces double taxation. So now any EU company buying a service from a nonEU seller will require that the seller provides a certificate of fiscal residency specific in relation to his country & buyer’s tax agreement (there is no generic), otherwise the buyer’s EU country will require a tax retention of 20-24% depending on the EU country, and another 20-25% if the seller can not provide ANY proof of company whatsoever (normally done to prevent tax evasion with fake offshore companies) adding up a total of around 50% over final price on EU taxes. Major slip for Swapd imho. This tax residence certificate is hard to get for most people, since 99% of them are operating under the radar anyway, so they’ll never get it.

Honestly I think you guys should rework this out, but nowhere does this prevent double taxation AT ALL.

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Oh my no invoices anymore :o makes it harder for EU customers tbh

The double taxation was regarding our fee. Before, when we invoiced the buyer full price, and for some reason, the seller wanted to issue an invoice, this created a double tax on the fee for the buyer. Not sure where you’re from, but what you’re referring to are EU regulations themselves. If you have a problem with that, call your legislators and file a complaint. We have to run this way, there is no other option. Unless I am wrong, then correct me. Our prior way of working (tax-wise) used a method in which WE became the owner for a split second, and then we resold the service/property. This taxed us bad and created problems when working with EU companies. And it was a huge gray area (loophole) of acting as escrow agents. Fast forward until now, we can legally hold X amount of money in our accounts (indefinitely), without any taxes or levies. But I understand your frustration, however, it’s just business. As stated in our original post, the invoice problem is now the user’s problem. Is it a blow to SWAPD? Probably, but on a small scale. Because less than 5% of our users want or even care about asking for invoices. We copied our model from Escrow.com one to one because the further we investigated the issue, it seemed that they have everything laid out correctly law-wise. The only difference is we don’t allow users to pick who pays the fee.

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This change was also prompted by a fact that some of our sellers filed our payments as income, and due to the creative invoicing we had to do, this added 23% VAT for us. @dorham, you may be angry at the change, but we were even angrier getting phone calls from our tax revenue service with “oh hi, you owe us XX,XXX VAT charges from the last two years” messages.

Please post a list of websites in our niche which produce valid tax invoices for the full amount. I will gladly see how they’re set up.

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Does this effect tickets currently open?

Yes.

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I’m glad this issue is now resolved. I think it is important to mention to all business sellers here that you should start listing prices Ex. VAT and determine VAT for each buyer prior to starting the ticket.

Also @Swapd I think it is important to have these questions answered:
-Is the fee calculated based on the Ex VAT amount?
-Is your comission Ex VAT?
-Will there be rules on non-disclosure between buyers and seller tonprotect their identities?

These are platforms who ‘buy’ and ‘resell’ every transaction instead of true escrow. I would consider taking this road too so that it keeps things the same as before (same provacy) with the exception of also VAT being applicable and also requiring every seller to make a sales note or VAT invoice (which should always be done anyway)

If you do this, you would still use your financial institution license because you hold the money for every ticket sometimes for weeks (because tickets can always fail). Only when the ticket is actually succesful, a buy-sell ‘transaction’ is registered. Everything before that transaction is financial institution stuff.

Don’t you think this is a better alternative for everyone?

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-Is the fee calculated based on the Ex VAT amount?

The calc doesn’t take any VAT into consideration.

-Is your comission Ex VAT?

As far as what I’ve been told by our tax firm, yes.

-Will there be rules on non-disclosure between buyers and seller to protect their identities?

That’s up to buyer/seller. We don’t plan to create such rules as of now. But may consider it if it becomes a problem.

I think it is important to mention to all business sellers here that you should start listing prices Ex. VAT and determine VAT for each buyer prior to starting the ticket.

We will include this information next week, our checkout bot will try to guide users.

These are platforms who ‘buy’ and ‘resell’ every transaction instead of true escrow. I would consider taking this road too so that it keeps things the same as before (same provacy) with the exception of also VAT being applicable and also requiring every seller to make a sales note or VAT invoice (which should always be done anyway)

That “exception of VAT” is the biggest problem for us, sometimes costing us huge fines and back-taxes. We must decline.

I may have misworded exception of vat. What I meant was that in comparison to SWAPD in 2020, VAT will apply when Swapd issues a full invoice to the seller. You will just have to get an invoice of every seller . That way privacy is kept and you are doing the VAT stuff the right way.

It’s simple buying and selling once a ticket completes. As long as ticket is running, you are holding money as financial institution.

I actually got off the phone with our accountant to clear a few things I’ve been discussing with other members.

  1. VAT does not apply as we’re VAT-free and we strictly invoice buyers. (For our fee only)
  2. Whether buyers/sellers comply with their local tax laws isn’t the liability of our company. However, we should notify everyone now to make sure everyone complies with their local revenue services.
  3. We should issue transaction summaries for buyers/sellers, if requested. This isn’t needed for us if not requested as a PDF version of the ticket is a sufficient summary.

@Hermes - We don’t issue invoices to sellers, just summaries if requested.

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Summaries work, great solution. This will help to file revenue from natural persons, thanks!

Also there’s a rule to how long they can hold on to money without issuing an invoice, which is typically 30 days. In fact, this very law (which applies to most EU countries) is what makes it tough for swapd to go this way.