Some of you may have heard that there are new tax laws coming into force in the new year, which will require all non-EU businesses to charge VAT in each country’s local tax rate on all digital products sold in the EU. In order to do so, UK businesses are basically being forced into registering, charging and paying VAT on all digital and physical products and services regardless of whether their income reaches the threshold for VAT (mine currently does not come close). Naturally small businesses like mine are rather worried about this and many are just giving up and removing their digital products.
While I really don’t want the hassle of registering for VAT, I don’t want to stop selling digital books, zines and patterns either. I’ve been doing some reading and have found there are a few ways to legally avoid this headache.
The easiest will be to no longer sell to customers with EU addresses. That’s pretty unfair for those customers, but will likely be the only way to keep your files on sale in online marketplaces and on your own blog/shop. Many sites are coming up with ways to help you refuse orders by address so check with the sites you use.
The other option is to sell via a reseller. My ebooks on Amazon, Apple’s iBookstore and Lulu are sold to the customer by those companies, who then pay the appropriate taxes, including the new ones, take their commission and pay me the rest.
I will likely be doing a mix of both. Prices will likely have to rise so I would advise you buy any of my zines and sewing patterns that you’ve had an eye on before the end of the year.
Even if you don’t live in the EU, or don’t buy or sell digital products, please spread the word and make people aware of how unfair this is to tiny businesses. The hashtag is #VATMOSS. There’s a reasonable chance they will add a threshold if enough fuss is made, and a very big chance that they will extend this tax law in future to cover physical products too. That will affect you as many companies will have to start charging VAT on everything they sell.
Here’s a few links that I’ve found helpful.
– This page by Rachel Andrew is collecting useful info and resources.
– She also has a good overview on her own site.
– Tips for continuing to sell patterns online by The Giddy Knitter
– #VATMOSS on Twitter will get you lots more links and info
If you sell zines or patterns, I’ll have another post up soon, explaining how to get your files up for sale on Lulu, Amazon and/or the iBookstore so that you don’t have to shut up shop.