Originally Posted by
DevTeam
Lets keep going, if you dont get it, its likely others dont.
So its been broken down to me like this:
For the purposes of VAT (which is sometimes different to contractually) there are 2 supplies taking place:
1, The platform is selling subscriptions to the fan
2, The platform at the very same moment is buying a subscription from the escort
in example 1, the platform is a business and the fan is a consumer. The EU VAT rules state that the platform must charge VAT to the fan (if the fan is in the EU). The place if supply is where the fan is located. Depending upon which country the FAN is purchasing from will determine the rate of VAT. The platform will charge the VAT and then pass all of the VAT to the tax authority in the different countries via VAT MOSS.
in example 2, the platform is a business and the escort is a business (irrelevant if you are registered as a business, a company etc.. you are carrying out business activity so for the purpoes of VAT, your a business). The EU VAT rules state that in a business to business transaction the place of supply is where the platform is located, therefore if they are in different countries, VAT is applicable to the platform and not to the escort. Therefore for the transaction the escort doesnt pay any vat.
example 2 would be different if the escort and the platform were in the same location, but irrelevant for our purposes.
Monetary example:
cost of subscrption €10
fan based in uk - vat rate 20%
escort based in ireland - vat rate 23%
fan buys a subscription from the platform €10 + 23% vat = €12.30
the platform pays the €2.30 to the irish vat man via VAT MOSS
€10 is left
the platform buys the subscription from the escort for 80% of the value so €8 (vat is reverse charged on this transaction so the escort keeps the full €8)
the platform keeps its commision of €2 and deals with the vat on this transaction.
so from the €12.30
€2.00 - platform
€2.30 - irish tax man
€8.00 - escort
*20% is example rate for platform commision
the most important thing about VAT is... we cant avoid it, its only paid by the fan, its applicable and neither of us (the platform or the escort) get to keep it. Its something we charge and then give to someone else. Its no gain for anyone.
In fact VAT makes things more expensive for the platform, we have to deal with the VAT MOSS, compliance etc but we also pay for the payment processing charge on the €2.30, to the tax man gets his money processed for free.
does that explain any better?
There are not huge amounts of money to be made for the platform in this business model. It works on huge volume.
For the €2 that the platform gets, it has to pay for the payment processing on the full €12.30 - which, depending upon the payment method used, is between 8-15% (10% average) due to the high risk nature of the transactions (think onlyfans as high risk then add the word escort into the equation). The normal business operating costs, development costs, hosting, media processing etc etc - i mean dont feel sorry for us but don't think the 20% is profit.