In regard to the forthcoming VAT registration of LiquidNet Ltd, we would like to present to your attention detailed information about the new VAT scheme that will become effective from the beginning of March 2008, and about all clauses in our future billing and invoicing policy. Hereby we shall differentiate the cases that will be affected by the VAT integration, and those (that is the bigger part) that will remain unchanged.
From 1 March 2008 LiquidNet is becoming officially VAT registered. We have already prepared the new system updates that will need to be made in terms of billing (pricing, order forms) and invoicing. It is our utmost desire to make the process of VAT integration easily acceptable and uncomplicated for you - our resellers. That is why, in searching for a simple and practical resolution, we did our best to stay close to the old scheme, while introducing only a few system updates for those of you who will fall into the category 'VAT applicable' after the registration officially comes into force.
To bring here clarity upon the VAT classification groups, all resellers are to be referred to as Businesses, whilst end-clients (all clients buying at retail price) can be either Businesses or Individuals. Thus:
Let's get acquainted now step by step with all details in our upcoming correspondingly modified billing policy. And most importantly, let's outline the cases that will, from 1 March 2008, reflect the VAT changes.
As we stated recently in our news column, upon receiving of the verified account owner details information of all existing end-clients (Businesses or Individuals buying at retail price), the service pricing in the Web Hosting Control Panels of those of them that have been defined (on residential basis) as VAT applicable, will be re-set (after the official confirmation of LiquidNet's VAT registration) to reflect the new VAT changes. Thus, UK VAT at 17.5 % will be applicable to all service prices in their future money-related actions, and they will be served by new VAT Order Forms, adequate to the new VAT financial relations. The same will automatically become valid (after the official confirmation of LiquidNet's VAT registration) for all new end-clients who, at Sign Up, present account owner information that categorizes them (on residential basis) as UK VAT at 17.5 % applicable (in accordance with item 1 of the above clarified VAT Classification).
The reseller commissions will remain unaffected by the new VAT changes. Also no difference will make the country your clients come from, and whether or not your clients are VAT applicable. That is, the amount of your reseller commission will still be calculated as the difference value between the wholesale price and the retail price (without the VAT added):
NET RETAIL - WHOLESALE = COMMISSION
(* where net retail is the retail price without VAT)
For example, if a client of yours buys a service for $100.00 USD retail price ($117.50 total value, if the client is VAT applicable; $60.00 wholesale price), your commission due will be $40.00 USD.
We would like to outline here one specific occasion. If you are an UK reseller/VAT registered (irrespective of whether your clients are VAT applicable or not), UK VAT at 17.5 % will be applicable to your reseller commission from the side of LiquidNet Ltd. Thus, if your reseller commission due is $40.00 USD, LiquidNet Ltd. will pay to you $40.00 USD + $7.00 USD (UK VAT at 17.5%) = $47.00 USD Total Commission Amount.
Upon each purchase the end-client will receive a type-a invoice. The new type-a invoices will reflect the VAT changes when the client is VAT applicable. The resellers will be sent a copy of each type-a invoice issued to their clients. Together with the copy of the type-a invoice, an Info Note type-c will be sent to the reseller, displaying the wholesale value of the services his/or her client has purchased. Each month, together with the commission payment, the reseller will receive a self-billing tax invoice, providing him/her with information on the calculation of his/her commission amount, as was explicated in the section above.
We tried to adapt our system to the new VAT clauses with a minimum of new introductions and updates. Hopefully, the integration will be fluent and easy for all parties. The official LiquidNet's VAT registration, and respectively the date from which the new VAT tax will be charged, has been scheduled for 1 March 2008. However, it will be our duty to confirm the date well in advance.
We may need to introduce some system updates earlier before that. Please, follow our news section for up-to-date information and should you have any questions, please, do not hesitate to contact us.