Changes in EU VAT Laws

This came past my gaze yesterday (thanks, Dave!), and I thought that people here should know about it. There are changes to how VAT on electronic goods is handled in the EU next year. At the moment, the liability is in the country the seller is in, but from January 2015 it changes to be in the country of the buyer.

In essence - it’s likely that you will have to register for VAT in any country a buyer is likely to be in. For micro businesses like selling Actions, tutorials, or templates, it sounds like a nightmare, especially if you are not already VAT registered. It’s going to add a shed load of paperwork and record keeping onto the business of keeping paid for Actions going.

I have no idea how this will affect sellers outside of the EU - it’s not clear.


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Sounds like this could be a problem for places like ebay and amazon


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Oh yuk: "There are no VAT threshold or deminimis rules … so even low value sales must be declared and VAT paid.”

What a ridiculously stifling move. You should consider using a payment processor (like FastSpring) and let them manage the VAT. Sure you might have to pay a little per transaction but the amount of time saved would be well worth it.

Joe

On 16 Oct 2014, at 15:34, Paul email@hidden wrote:

This came past my gaze yesterday (thanks, Dave!), and I thought that people here should know about it. There are changes to how VAT on electronic goods is handled in the EU next year. At the moment, the liability is in the country the seller is in, but from January 2015 it changes to be in the country of the buyer.

In essence - it’s likely that you will have to register for VAT in any country a buyer is likely to be in. For micro businesses like selling Actions, tutorials, or templates, it sounds like a nightmare, especially if you are not already VAT registered. It’s going to add a shed load of paperwork and record keeping onto the business of keeping paid for Actions going.

I have no idea how this will affect sellers outside of the EU - it’s not clear.

http://rachelandrew.co.uk/archives/2014/10/13/the-horrible-implications-of-the-eu-vat-place-of-supply-change/


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Boston. Tea. Party. That’s all I’m saying.


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On 16 Oct 2014, 3:13 pm, Joe Billings wrote:

I think I’ll ask someone I know who has a bit more of a business head than I do tomorrow. I’ll also drop FastSpring a note asking them about how they’ll be handling these changes.

Oh yuk: “There are no VAT threshold or deminimis rules … so even low value sales must be declared and VAT paid.”

What a ridiculously stifling move. You should consider using a payment processor (like FastSpring) and let them manage the VAT. Sure you might have to pay a little per transaction but the amount of time saved would be well worth it.

Joe

On 16 Oct 2014, at 15:34, Paul wrote:

This came past my gaze yesterday (thanks, Dave!), and I thought that people here should know about it. There are changes to how VAT on electronic goods is handled in the EU next year. At the moment, the liability is in the country the seller is in, but from January 2015 it changes to be in the country of the buyer.

In essence - it’s likely that you will have to register for VAT in any country a buyer is likely to be in. For micro businesses like selling Actions, tutorials, or templates, it sounds like a nightmare, especially if you are not already VAT registered. It’s going to add a shed load of paperwork and record keeping onto the business of keeping paid for Actions going.

I have no idea how this will affect sellers outside of the EU - it’s not clear.

http://rachelandrew.co.uk/archives/2014/10/13/the-horrible-implications-of-the-eu-vat-place-of-supply-change/


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From what our accounts manager has provisionally indicated, she thinks this doesn’t effect B2B its only applicable to business to end consumers… but she’s going to have a proper review in the next few days

max


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I’ve written to my MP. A possible pointless task (given my previous communications with him), but he’s a career Tory, so should be on the side of business. I also copied in Vince Cable (Business Minister). My MP emailed back to say he’ll be contacting Mr Cable about this, so we’ll see how this goes. The one good thing about my MP is that he does reply promptly, and if there is a delay, he’ll write to explain why and how long it may take for him to get a response.

I know a few musicians who sell CDs - they may also be selling mp3s independently as well. So I’ve alerted one who I know will pass this little gem on.

I’m looking at FastSpring for my Actions, but this is a real PITA.


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HI,
to follow up on this, Vince Cable MP has responded to a change.org petition on this very subject. He says:

"The changes to VAT on digital products is not new or sudden - the change was agreed in 2008 and we’ve done a lot to communicate it to businesses. Regardless, the majority of UK micro-businesses will not be affected.

"Here’s a breakdown of how the changes affect micro-businesses:

"Micro-businesses that trade only in the UK - and never sell to the EU - won’t have to do anything. They won’t have to register for VAT in 2015.

"Micro-businesses that do sell to other countries in the EU but only do so through marketplaces like an app store also won’t have to register for VAT. It’s up to the operator of the marketplace to account for VAT charges.

"Micro-businesses that trade to the UK and to the EU will have to register for VAT. But if they can separate out their cross-border business from their domestic they will only have to register for VAT on their cross-border sales. UK sales will be unaffected.

"Hope that helps clear up the change.

Vince"

Well, apart from the obvious “what notification?” - HMRC send me letters every year reminding me to do a tax return - so there was opportunity to drop in a leaflet about that at that point, I think it misses the point that even if you DID separate out your EU activities from the rest, you still need to register for VAT just to sell to the EU. Some countries have a very low threshold for VAT registration (some require it for any transaction), so it’s a bit of a dumb point to make.

Anyway, I expect the reply from my MP will be pretty much this text. The good news is that if you use a “marketplace” to sell Actions, they can worry about the VAT. So I’m starting to move my operations to FastSpring.


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Exactly what notification. We used to get posted VAT notification not any more. They post on a website somewhere and expect the word to filter down somehow that’s not good enough.

Seems that Vince cleared things up alright it’s as bad as I thought.


David Owen

On 8 Dec 2014, at 15:17, Paul email@hidden wrote:

Well, apart from the obvious “what notification?”


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If you were registered for VAT you used to get posted a “VAT Notices”
quarterly with your paper return, but now it’s all gone electronic,
[probably saving millions of £ per year] you get them by email.

If you’re registered for VAT, you probably also have an accountant, who
should inform client businesses of any changes to HMRC Income Tax or VAT

If a UK VAT registered individual/business and sell to other Euro
business you are required to charge the local VAT Rate for that product
in that country. The rates vary widely for each country and different
rates for particular products/services/goods.

A few resources that might help to follow-up:

http://www.grant-thornton.co.uk/Documents/2015-vat-changes-briefing-paper.pdf

HTH Peter

David Owen wrote:

Exactly what notification. We used to get posted VAT notification not any more. They post on a website somewhere and expect the word to filter down somehow that’s not good enough.

Seems that Vince cleared things up alright it’s as bad as I thought.


David Owen

On 8 Dec 2014, at 15:17, Paulemail@hidden wrote:

Well, apart from the obvious “what notification?”


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Best wishes Peter

Peter Tucker • Oxford, UK • email@hidden


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Hi Paul,
When you originally started this thread I send a copy of the email to the support guys at Digital Goods Store (http://www.digitalgoodsstore.com). I currently use them for sales of Freeway templates on Freeway Style (http://www.freewaystyle.com) and pretty much love the simplicity of the service. Unlike my Actions which I distribute myself using some custom code I wrote many years ago in PHP that uses PayPal’s IPN system Digital Goods Store is a ‘set and forget’ delivery system.

Anyway they posted this blog post yesterday which outlines how they are changing their offering to fully comply with VATMOSS by, hopefully, Jan 1;
http://www.digitalgoodsstore.com/blog/how-digital-goods-store-is-going-to-combat-vatmoss

Assuming they do it in time and don’t hike their rates up too much I’ll be not only staying with them for templates but will migrate Actions sales over to them as well.
Regards,
Tim.
PS. My personal opinion is that the the UK government will have to ‘go easy’ on enforcement as it doesn’t seem to have done much (if anything) in regard to awareness of these new rules. I can also imagine that there are many thousands of sellers out there at the moment who have absolutely no idea that they’ll need to comply with these rules in less than a month.

FreewayActions.com - Freeware and commercial Actions for Freeway Express & Pro - http://www.freewayactions.com


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