Invoices with VAT number

[baybars]

Hi I was wondering if meet coop can provide invoices with a VAT number, I could not find a way to do it with the invoices provided by the opencollective platform.

In fact, I have sent various mails and it has been more than two weeks we are waiting for an answer from the team. I am worried since I discovered this info in the forum and it seems like it won’t be possible, but please let us know because the fiscal year is closing.

Having said that, for accounting purposes, fiscal registry or a tax identification number would also work. We just want to introduce the invoices to our accounting and without this information we cannot do it.

[benhylau]

@Graham can you give info on this pls?

[Graham]

Hi @baybars
As you’ve seen from the post you link to, the project is not currently in a position to account for or charge VAT. The fiscal hosting for the project, which is being developed by a coalition of cooperatives and has no central legal entity, is being handled by Platform 6 Development Cooperative Limited, a UK based organisation, which is not registered for VAT. In the UK an organisation does not need to register until it’s revenues exceed a threshold level. Consequently Platform 6 Development Cooperative is unable to charge or show VAT on invoices. The meet.coop project itself is essentially an international unincorporated association, and unregistered with any tax authority. Your payment is a contribution to that project.

As we develop the project further we aim to clarify the position of the project as regards taxation.

At this point I’m not sure what more I can suggest.

I hope this is helpful.

[baybars]

Hi Graham thanks for the clarification. One only quick followup question that I have is, isn’t Platform 6 registered with the tax authorities. If so, having that information, smt like the tax identification number on the invoice (also with the invoice number) in principle would solve our problems.

In any case I am really surprised, and would like to understand how do the other contributors/members put these expenses in their accounting.

p.s. For example, it is possible that having the company registration number of Platform 6 in the invoice might be sufficient.

[Graham]

This is a tricky situation. We’ve taken some advice on this type of issue, and probably need to get more, but the concern here is that if it looks like we are issuing invoices then the money may be viewed as our revenue, which is not the case. If the authorities do consider it as Platform 6 revenue, then they’ll expect us to treat it as such and it will become taxable as such. In truth it is more like grant income, in that if it isn’t spent on meet.coop expenses, it’s still not income that Platform 6 can use and is therefore not taxable income. So the best approach from your organisation’s perspective may well also be to treat the payment as a donation to the meet.coop project. Don’t know if that’s any help?

[dvdjaco]

Thanks for the clarification @Graham. I think that this issue will keep popping up, since many users will need/want to account their meet.coop contributions as expenses, e.g. so that they can be paid by grants or projects that require reporting/justification.

Also, there will be internal money exchanges that will require accounting: for example, some operational members reselling meet.coop services to their members, and then paying meet.coop part of that income. It won’t be large amounts of money so far, so I don’t think it will create accounting problems, but at some point we’ll also need to issue valid invoices for these cases.

[benhylau]

Not related to this specific instance, but I am adding some resources from when communicating with OC while setting up my own co-operative as a fiscal host in Canada. We also do not issue receipts and treat all payments to Collectives as “unconditional donations”.

Whether Host needs to charge taxes

I can’t comment on Canada’s laws but I wouldn’t be surprised if they were quite similar to NZ. For OCNZ (a regular limited company), its legal terms (which you can feel free to copy from if it’s helpful) say that no Collective funds can be company profit, and if Collective funds are not spent by the project for any reason, we will donate them to charity. This enables us to not charge GST on unconditional donations to Collectives. But we still need to charge GST on conditional payments, i.e. when anything specific is being given in return, including event tickets. In which case, we have a feature in Open Collective where you can create contribution tiers that charge GST (e.g. selling a t-shirt, consulting services, etc). We also have that feature for EU VAT, and we can probably create it for CA VAT.

–More info available on this thread.

Based on this message, it is possible to use OC for “conditional payments” with VAT charges, but I understand that is not the current relationship between Platform 6 and Meetcoop, and as @Graham pointed out that P6 itself is not VAT registered, and it certainty does not treat payments to Meetcoop as its own revenue.

For organizations with strict record keeping needs, I think one short-path forward is to develop the reseller model. For example:

1. @baybars will buy from femProcomuns (acting as Meetcoop reseller)
2. femProcomuns will issue a receipt with $x + VAT charges to @baybars
3. femProcomuns will pay $y to Meetcoop as an unconditional donation

Note that femProcomuns will not be able to claim back the VAT portion associated with their expense of $y as input tax credit, as with a typical vendor relationship, but I think we can design a suitable $y to make this work.

Putting this into an example. If Meetcoop suggested contribution for a tier is $10:

• femProcomuns issues a $10 + $2 VAT invoice
• @baybars pays $12 on the invoice
• under a 50/50 split, femProcomuns pays $5 to Meetcoop via OC as an unconditional donation to keep the infrastructure running
• on VAT side, femProcomuns remits $2 to tax authorities and claims no input tax credit
• on income tax side, femProcomuns is liable for income tax associated with a $10 revenue with no input expense, and I am not sure if it can claim a $5 donation that does not have a receipt

But either way, I think we can work out a revenue split that allow resellers to absorb the tax burden. To be clear, femProcomuns does not take on any additional VAT burden, but potentially an income tax burden.

[wouter]

@dvdjaco

Thanks for the clarification @Graham. I think that this issue will keep popping up, since many users will need/want to account their meet.coop contributions as expenses, e.g. so that they can be paid by grants or projects that require reporting/justification.

indeed, and even when we explain through the contact@ desk to our members that P6 is VAT exempt, sometimes they don’t give up that easily: they need some kind of fiscal or legal identity number. Maybe the registration at the chamber of commerce or the register of cooperatives in your country would be useful, @Graham?

And the other issue is that the Bills come unnumbered. Many accounting practices require a unique reference number, an invoice number or something of the likes.

Here’s the latest example: the Universidad Complutense de Madrid do need these two numbers in order to be able to internally claim the meet.coop contribution as an expense.

¿Cual es el VAT number?
¿Cuál es el billing number #?

As Baybars suggested above, maybe adding the company registration number for P6 in the invoice would suffice, so that they can hopefully manage internally. What do you think?