VATMOSS: maximum data sharing, minimum accountability

Important VATMOSS update
On 1 December 2016 the European Commission announced a package of proposed reforms to the VATMOSS scheme. Please read this post for the latest updates, as some of the proposed changes may affect the situation described in the post below.

After the dust had settled from the chaos caused by the Irish Revenue sending out 2,000 erroneous VATMOSS invoices, one question seemed to be on everyone’s mind:

It’s a perfectly valid assumption to make. After all, wasn’t that the whole point of the MOSS system? Surely by using your own country’s tax authority to pay your European VATMOSS taxes, that should keep all your information safely compartmentalised between your laptop and your MOSS account, right?

Wrong. Even if you only use your country’s MOSS system and never enter into a dialogue with any other European country’s tax authority, your data can and will be shared across the countries you have made sales in. There are obvious and legitimate reasons for that, like fraud prevention and auditing. But given the data protection obligations that the VATMOSS reform placed on sellers, finding out that their own data can be sent anywhere in Europe has been a particularly rich irony.

Of course, it’s the way we found out about this which is the real kick in the teeth. We only learned about this international data sharing scheme when sellers began receiving legitimate but erroneous demands from another country for up to two million Euros in VATMOSS taxes.

Now here’s where it becomes really uncomfortable. One of the people who received these letters, Christopher Marquardt, wanted to know how his personal data had been transferred to a place where it was so blatantly misused. As he posted in his blog, he wrote to his tax authority in Germany asking these four questions:

  • How could this mistake happen?
  • Has the Federal Central Tax Office reported wrong numbers to Ireland?
  • What official assurances do I have that this will not result in any disadvantages to me?
  • Is it possible for me to complain to Ireland through the German Federal Central Tax Office?

The German tax authority’s response to him was this:

This has no connection with our agency. For clarification, you should contact the Irish agency.

So there we have it: under the VATMOSS system, your tax authority reserves the right to send your data to other countries, and if the recipient tax authority subsequently misuses your data and sends the results to your house on a Saturday, your own tax authority will wash its hands of the matter.

I’m sure that we’ll be told once again that this is supposed to be about creating a “level playing field.” For me, though, the promises we’ve been given about VATMOSS bring to mind Lucy promising good old Charlie Brown that she would hold the football still for him so that he could have a fair opportunity to kick it. And every single time, she yanked the football away at the last moment, and blamed it on him for not knowing any better.

giphy

About the author
Heather Burns is a digital law specialist in Glasgow, Scotland. She researches, writes, publishes, consults, and speaks extensively on internet laws and policies which affect the crafts of web design and development. She has been designing and developing web sites since 1997 and has been a professional web site designer since 2007. She holds a postgraduate certification in internet law and policy from the University of Strathclyde. Learn about hiring Heather to write, speak, or consult.