Tax on Google 2021: Google Ads will now be subject to VAT in Ukraine

Google tax in 2021 Contextual advertising

Hello. My name is Yana Lyashenko – Google Logistician. In today’s video, we’ll talk about a sore point – about VAT in Ukraine. RF – little concern, they have long been paying VAT on advertising costs. In Ukraine, it’s a punch in the gut for entrepreneurs who have never done official business with Google.

20 percent VAT is charged on Facebook, Apple and Google services

In today’s video, we will look at: who paid VAT before, what are the current changes, what exactly has changed, who will pay VAT, what affects globally and whether there are options for bypassing the situation, I will consider in the last paragraph. Guys, timestamps are below. You can see everything, I recommend it – from start to finish.

Who paid VAT before?

Let’s start with who paid VAT before. VAT on the territory of Ukraine has always been paid by those advertisers who wanted to have official interaction, in terms of Ukrainian legislation, work with Google. These are legal entities that drove themselves into the settings as a legal entity and, accordingly, they drove in TINs, USRPO, details, etc. Naturally, always paid VAT. Legal entities, almost all of them are VAT-nicknames, officially conducting documentation through Google advertising, formalizing contractual relations with Google, they transferred VAT to their tax credit, and so on. In short, accounting knows. Interested in the appearance of excess VAT.

VAT was paid by all individual entrepreneurs. In Ukrainian FOPs, FOPs of any form of taxation. Simplified, not simplified, 1, 2, 3 no matter who. If they also wanted to officially conduct a relationship with Google, show expenses for Google, they drove themselves in as a person – an individual entrepreneur, pulled up the TIN, etc. They paid 20 percent VAT, because Google is a VAT taxpayer and therefore billed VAT.

If a sole proprietor, conditionally 3 forms and not a VAT payer, then VAT could not have been used in any way. They sewed it into their expenses and that’s it.

Who hasn’t paid VAT before?

Who did not pay VAT? VAT was not paid by guys who did not officially carry out activities at Google. Vasily Pupkin, take it from the street, or Yana Lyashenko. I attached a personal card there or paid some bills through a bank, a certain bank. She did not shine as a certain taxpayer in the direction of entrepreneurship. An ordinary physical person, an ordinary mere mortal. I replenished the advertising account, from this I had some sales, so it existed. In this case, I did not pay VAT. Everyone knows it when you start watching a video.

What has changed now? Now nothing much has changed for legal entities, legal entities and sole proprietors. As they paid 20 percent, they continue to pay VAT. For mortals who wanted to somehow pay with a card, I figuratively apply the role to myself. Guys, figuratively I use the role of an individual. We will be Vasily Pupkin, otherwise they will find fault with it. Vasily Pupkin was walking from the street, he wanted to sell, conditionally some Christmas trees, he replenished an advertising account, filed a website selling Christmas trees, without legally conducting this story in any way, from the point of view of legislation or fixing income somewhere, conditionally, elsewhere , but without formalizing the relationship with Google, as an individual entrepreneur.

Who will pay VAT?

Now these guys will pay VAT. All without exception. It does not matter what form the taxpayer, legal or natural person, but a simple citizen of Ukraine, etc., will pay VAT.

Who will pay VAT on advertising now?

Don’t be afraid. This is how we go to the store, buy, conditionally, sausage, milk, bread, and in the check we see the total amount, about 300 hryvnias and at the top of the line is VAT – 20 percent. It is the same. Right now it’s on Google. Why is Google now filming this? The government said it would take 20 percent off Google. Google, like any classic business, passes these costs on to the end consumer. The end users of the Google advertising service – this is the B2B niche – directly advertisers. Everyone, Vasily Pupkin, who wants to advertise through the Google advertising service. The concept is clear. He passes the costs directly on to us. Well, almost everywhere. So, changes.

What effect does the introduction of VAT on Google Ads have?

What does this globally affect? Affects a very significant thing, guys. Not just a 20 percent increase in spending. Firstly, in niches where the margin is not particularly high, 20 percent is like a significant percentage, you see. 20 percent is not 5, not 7 to give. She, if you do not want to shift these costs to the end consumer, already your own buyer, this will also lead to an increase in the cost of products, respectively. Right? For many businesses, suppliers have already raised product prices. Bubuhatsya, VAT immediately slams and you need to raise prices to keep the margin at the same level as it was.

Of course, you can partially leave this margin. Don’t raise checks. 20 percent – lay your own expenses. This reduces the already small margin of production. Do you agree? You will also need to try to keep a competitive price. In short, at a minimum, a conflict of interest of gain arises.

The most global, the most terrible thing is that in fact the price of one sale or the price of one lead of Google advertising will increase not just by 20 percent, VAT will be added, but by 30, 40 percent, at least, or on average. Why will this happen? Many niches are overheated. As far as I remember, there is an economic crisis outside the window.

If you start to analyze the statistics of auctions in Google advertising, then pay attention to how much the volume of advertisers differs from the volume of advertisers in the statistics of auctions. The last, extreme audit in the niche of accessories for appliances looked, looked through what the guys were doing screenshots. Look, conditionally, September – 65 competitors, October – 72. You feel, not one little thing has grown. November again – 62. This says that someone entered in October and very actively exited at the end, in October or November, of the auction. Did not take it. There’s a bloodbath going on right now, folks. I answer seriously. Some niches are not at all adequate in terms of cost per click, in terms of advertising costs. In many niches, some big advertisers aggressively break in, ready to eat away at a loss in sales.

I’ll tell you, it’s not so sweet. So for many, the price per sale has now begun to rise. Purchasing power – it did not increase much in Ukraine. Prices are rising, but salaries, as it were, are not very much, and the incomes of many guys do not grow proportionally as much as prices. That’s another question.

Conversion drops for many online stores. Affects the increase in price per sale. Conditionally, there were 70 hryvnias, imagine, it increases by 30-40 percent. Eats margin. Becomes unprofitable. The global problem is that for many, the cost per conversion will increase by 30-40 percent. I am talking now about those guys who did not pay VAT before.

Those who paid VAT – practically the situation will not change for them. They will become only under the influence of the external market. Many advertisers are now very actively moving out of the auction. They will not be able to give out a competitive price, as lawyers do, who have already lowered the margin to a minimum. And so they pay VAT.

Guys, in short, there will be no good with a similar situation in the near future. Such conditions, unfortunately. Unfortunately, the state will not help any of the entrepreneurs. This is a different story. Thanks to Google for giving at least some of the advertisers some bonus money in the form of promotional codes during the quarantine. Thanks Google for this. In such conditions, as most Ukrainian billionaires say, the crisis is just a new reality and you just need to put up with it. You think that I speak lightly about this, which personally does not concern. No – the same active advertiser in Google Ads. The situation is not particularly encouraging globally.

Two ways out of the situation with VAT payment

Let’s go to the last point, so as not to stretch the video for a bunch of hours. Is it possible to find workarounds for saving 20 percent? I see how many questions are asked in chats, write in a personal, ask questions about how to get around, is it possible to exclude 20 percent, etc.

I will name two options for getting out of the situation. The first one is the most adequate, the most understandable and the safest. The most important thing is safe, which carries fewer risks than the second option. This option is that you have to come to terms with VAT and exist, as they have existed in the Russian Federation for a long time, they pay VAT directly.

The second option. You can, of course, pull yourself together and take a little risk with a domain name. The second option is absolutely not suitable for guys who value their domain name. If the trademark is attached to it or something else – do not take risks. If they promise the incredible, with a 100% guarantee, don’t risk it. The second option is too risky. In what way?

Bypass System

Risky, which Google might block directly. In Google Ads services, the account blocking status is usually referred to as “Bypassing the system”. Unblocking it on the territory of the CIS is quite difficult. Right, hard. Now someone will write in the comments, wrote a couple of times – they unblocked it. Guys, it means God kissed you in the ass. I know dozens of projects where there are sheets of appeals, sheets of documentation of various official documents, etc. Collected blotters from the car, attached to the file. Twenty or thirty letters were written. All ends with only one feedback: “guys, looked at the account, but still does not meet the requirements, the block is not removed, the domain is banned, any advertising accounts created will be automatically blocked and the credit card, respectively, with which they paid or the payment mechanics that they used , is subject to a ban on any newly created ad account.” Interesting story. Now I’ll tell you, I’ll go to the bypass mechanics. I talk about the risks that may arise.

If the domain name is valuable, the trademark hangs there, something is connected with it, just got attached to the soul – make a duplicate on another subdomain and advertise on it. Please twist this scheme as you wish. Do not take risks if you know that it will become very bad later.

Encountered on several projects with the status “Bypass the system” – a savory story. In the US market, the status “Bypassing the System” is very actively viewed by the moderator. Why moderators are very inactive in considering appeals in the CIS is a mystery. Due to the fact that manual moderators do not understand what requirements an advertiser must fulfill in order to be unbanned. Do not know. I can just guess. Manual moderation is like Batman in a mask. It is not clear who this person is.

VAT bypass scheme

Let’s move on. What is the bypass scheme? The bypass scheme is that you register a physical advertising account in another country where VAT is not paid. USA, Australia, Moldova, by the way. As far as I know, there is no VAT in Moldova, it may be introduced, but not now. In short, even Moldova can become a kind of offshore zone. It is important that under IP addresses, etc., there should be registration in Moldova or in Australia, USA. Select another country where there is no VAT. Germany, France, Italy – there is VAT. Particularly not suitable. Learn where there is and where there is no VAT.

An important point. In addition to physical registration, it is desirable that a card or payment method of the same country be attached. If this is America, then it is desirable that the American card be attached first. Australia – maybe America. Easy America. America, by the way, fits all countries. An American card for all countries runs and instantly fits. Not native. RF card – Tinkov, Sberbank or virtual, all the more impossible to cling. Ukrainian – Privat, Mono cannot be hooked. It must be that card. In parallel, you can connect another card.

Attention. I recommend that the card be super separate, clean. Why is it important that the map is clean? Go, get confused, open this new bank card that you used before or another. It is desirable that the card has not been used anywhere before.

Why focus attention? Many have already made a similar mistake – they tied old cards that were already in use. They especially bind cards that have a debt on Facebook. I don’t understand how Google compares them to Facebook. There is some kind of unified database of debtors, etc. In any case, they use the base – it just doesn’t happen. The likelihood that it’s from Facebook is really low. There was a similar situation with a client who came to unblock the Merchant Center, which was unscrewed to the US market, attached a card that had a debt on Facebook. We began to study what problems could arise.

Look, the combination should be something like this. We create an advertising account under IP addresses. Buy a good VPN please. Buy a good one. Pay per month. Buy some cool VPN, not free, not Opera. Not Opera VPN. It is important. Why a good VPN? They, directly, qualitatively replace all geolocation data. With a VPN, you can create an advertising account in the respective country. Connect an advertising card. Preferably, of course, a card from the bank of the country in which you want to advertise without VAT.

There are guys who manage to connect Privat, Monobank, and other cards to advertising accounts. Everything works out great. I do not argue. My task is to give recommendations that are less likely to lead to blocking. You must understand that you take all the risks. I can only describe personal experience. It may be 100% justified, it may not be justified. It doesn’t do something. Google is changing a lot. Moreover, the changes that roll out, we often recognize them after. The agency should know instantly. There is a flow, different clients, different types, from different countries, etc. It happens that we learn about some changes after.

I give an instruction that has less chance of blocking. I know based on what? Based on customers who came to this service. Based on the fact that customers came from different countries, what they wanted, for example, to the Merchant Center unblocking service. They were unblocked, Google Ads was banned for them, some other nuances, moments.

There will be guys who will say that they created an account in Ukraine with US settings, tied a Privatbank card and everything is fine. Fine. Super. Great if everything is great. Someone is not lucky. In the video, I simply describe the experience of other advertisers. There was a completely different experience – no need to discount their experience. This instruction is not read somewhere, in Google help, or somehow invented. Everything is based on the experience of other advertisers.

Going out to the market is another nuance. Already tell how to get out on the US market with the current Ukrainian cards. It has little to do with VAT. VAT will still apply. There is no point in talking about this in the video. To summarize.

Block risk warning

Look, I’m not giving out-of-the-box instructions for successfully traversing history. Still risks. You are responsible for all decisions. You bear the risk of using these things. I will not take risks. Tentatively told. Whether you want to do it or not. Ask if I would recommend this technology to my personal clients to get away from the 20% tax?

I’ll say no. I do not want to impose on any of my clients the idea or risks that it is possible to approximately create an advertising account in another country and try to save on VAT. No. I’d rather spend time reducing the cost per lead that I have in my current ad accounts. I will not focus on VAT. These are completely unreasonable risks. Many online stores are quite dependent on domains, which is. Let’s take the topic of SEO promotion – the concept of domain trust. In short, different, there are moments. Especially, it concerns the guys that sit on trademarks. If the domain is a trademark. Dot.yua, dot.ru and dot – went further. It’s better not to risk it. If you want to take risks, then take risks on other domains completely. Don’t risk these. There is a risk of losing the domain for a long time. For SEO promotion – it does not make much sense. You will lose it in Google Ads. For most advertisers, Google ads are the main lead generator. They can’t take much risk.

It does not affect SEO. Doesn’t affect Facebook. Depending on the degree, the level of comfort and safety within the existing. I could write what options exist.

I know – the Internet is now hyped for articles on how to avoid VAT, etc. It’s just that many will get bumps. Many will block domains by bypassing the system, etc. Nothing good will come of it. Everyone will come to the fact that they will pay VAT, like the rest of the countries in Europe. If you think that Germany, France do not pay VAT, then they all pay VAT. Russia has been paying VAT for a long time. We will come to the point that we will have to pay taxes on advertising accounts. Google is subject to current legal conditions.

About local moderation

About changes, about moderation of advertising settings, it is very important to take into account one important point – all payment settings are moderated according to local requirements. Clearly local. If this is allowed in Ukraine, you physically create an advertising account in Ukraine. It doesn’t matter which country you set in the settings. Anyway, payment settings are moderated based on local requirements.

Guys who want to create an ad account and immediately launch in the US often face a ban for bypassing the system. This is common. There was no such thing – congratulations. There have been many such bans over the past year. With this ban, the client has a completely different story.

How is local moderation done?

In the telegram channel, the situation is described, it’s straightforward why the client was put “System Bypass” on an advertising account that they wanted to launch the second marathon for free, but only to the US market. We wanted to show and demonstrate how everything is done. Google got in the way. It was a completely different story there. The client attached completely different cards, did not do it as it should according to the instructions. Interesting – enter the telegram channel. Link below the description. Scroll through. The story of how the second marathon did not start.

You know the rules of the game, of course you don’t know them perfectly. I don’t fully understand what criteria are taken into account when moderating payment settings. They moderate not by the country that you specify, but specifically by IP, DNS, other indicators, values for Google.

For markets, setting up an ad account in the US is a completely different story. An advertising account in Ukraine in the USA is a completely different story in terms of payment settings. It seems that many are blocked by the “Bypassing the System” status due to the imperfection of the moderation procedure, unfortunately. There is a glitch, a failure, I mean a glitch and a glitch – a fine person comes in. Put “Bypass system”. This is the biggest problem of the current ad launch period. Almost no one from Googlers in the CIS can help in the process.

If you are lucky and unblocked in the CIS, I repeat – God kissed you in one place. A fairly large percentage of guys who wrote sheets, hundreds of letters, filed appeals, filed documentation, before having documents for a dog, and still the result is the same – “We considered the application, you still do not meet the requirements, please do not create other advertising accounts”, etc. How the guys got out – wrote in the telegram channel. Briefly – a new domain was launched and new payment data. What she said in the video. All.

If the video is helpful – I’m waiting for a thumbs up. Costs less than a minute – I’m pleased for the work, knowledge. See you in the next editions.

Яна Ляшенко
Яна Ляшенко
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