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Post by lyn on Dec 15, 2014 11:14:35 GMT
If you live in the UK and sell digital products (e.g. tutorials) to Europe, you need to know about new legislation starting Jan 1st 2015. In a nutshell, micro-businesses don't have to pay VAT in UK, but VAT will be due on every sale made to the rest of the EU - there are 28 countries in the EU with 75 different VAT rates. Thank you to Sara of Sara's Texture Crafts for this informative blog post. Sara's informationThere is also an article in 'The Guardian' The Guardian article
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Post by Teri Berry on Dec 15, 2014 19:38:43 GMT
Interesting if rather scary information Lyn - thank you for sharing. I am registered as a sole trader but HMRC didn't see fit to let me know about these changes.
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Post by Teri Berry on Dec 15, 2014 19:40:50 GMT
As a side note, if you are outside the EU and thinking this doesn't affect you, you might want to take a closer look. I'm still trying to get my head around this but it appears that if you sell ebooks to customers in the EU you are liable to pay tax to country where your customer resides.... utterly bonkers!!!
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Post by lyn on Dec 15, 2014 21:47:31 GMT
I think you may be right Teri. This is from Sara's info:
"Businesses outside of the EU are also affected by these rules. They will either have to register for MOSS in a member state or register in each member state where they have customers."
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Post by MTRuth on Dec 15, 2014 23:49:13 GMT
In this world nothing can be said to be certain, except death and taxes. Benjamin Franklin
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Post by MTRuth on Dec 15, 2014 23:52:22 GMT
Just thinking about this, does anyone know if this applies to online classes?
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Post by lyn on Dec 16, 2014 0:01:37 GMT
My head is spinning Ruth - I've been reading everything I can and getting more confused than ever.
One thing I keep coming across is that a digital download (so could mean online class) is downloaded i.e. "purchased" in the country of the purchaser and is therefore liable to local tax laws.
p.s. It's quite scary to think that I haven't had notification from the taxman about this - I only found out about it from Sara when her blog post dropped into my inbox.
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Post by Shepherdess on Dec 16, 2014 1:50:19 GMT
They care nothing for businesses that do not have employees and small business her is usually means about 10 employees. I wonder how they are going to enforce it for people that do not live in the EU. For physical things they get you at the border. we get hit with the HST. If it comes through without being caught we are supposed to be good citizens and submit it ourselves.
Maybe for online classes we can say the price includes free downloads. Tax on 0 is 0. what could we say you are paying for?
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Post by lyn on Dec 16, 2014 8:26:10 GMT
Ann - Interesting idea!
With regard to physical items, the purchaser is liable to pay their own tax, whatever that is in their country, once the item is received.
This new law transfers the onus from the buyer to the seller for digital items, and there are plans to extend the law to physical items too.
This new law is going to hit business - whatever the size - really hard. I daresay the idea behind it is to raise revenue via taxes, but in reality it's going to reduce trade.
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Post by zed on Dec 16, 2014 11:09:28 GMT
That's a good idea, Ann. The course info is stored on a server, they've paid to access it, so it's only fair they get to download it free.
I saw this last week on Fiona's facebook (lovefibre) and have seen bits and pieces since. What I don't understand is (and my business course was in about 1990, so chances are stuff has changed!) if you register for and charge VAT, you are then entitled to claim back any VAT you have to pay yourself on items for your business. If you don't want to register for VAT here in the UK, but register with EU member states where people might buy your stuff, will they refund your VAT, or does that only apply if you buy stuff from their country?
Anyway, are we exempt, Lyn, since we use 3rd party sites?
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Post by lyn on Dec 16, 2014 12:38:49 GMT
Zed - this issue is fuzzier than felt!
I've contacted Etsy to clarify how we stand with selling - Etsy is a third party right? - awaiting reply.
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Post by luvswool and dyestuff on Dec 16, 2014 13:46:32 GMT
Lyn, I know nothing about these issues but will advise not to hold your breath while awaiting Etsy’s response. They do have search capability for forum topics and a seller advice manual on-line…if you don’t hear from them. Hope I am proven wrong...
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Post by zed on Dec 16, 2014 14:19:07 GMT
Teri posted about it on Facebook too, and I said wouldn't it be easier if there was something on PayPal so EU citizens added their own tax, and Ann said there is, or used to be when she used it, so there might be an easier solution after all. I very much doubt I'm going to register for VAT and increase prices for everyone, when probably 3 or 4 people in total from the EU have ever bought anything from me. I'll recommend they get their mates in Norway to buy it for them and email it to them
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Post by lyn on Dec 16, 2014 17:39:59 GMT
I've had a reply from Etsy, but considering how soon the law comes into force, I'm surprised there is still no answer! Here's the reply: Hi Lyn and Annie, Thanks for writing to Etsy about this issue. I completely understand your concern regarding this situation and that you would like to get some clarify on how to proceed. Our policy and tax teams are aware of this upcoming change and have been working to determine the best way to help our sellers understand and prepare. At this time, we don't have any specific information to share, but we hope to soon - we understand how important this is. I would encourage you to bookmark the following pages, where we share this important information once we have any news: --https://www.etsy.com/blog/news/ --https://www.etsy.com/teams/7716/announcements p.s. this is interesting Daily Telegraph article
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Post by MTRuth on Dec 16, 2014 18:04:51 GMT
Lyn - thanks for researching this. It sounds like a can of worms. And I agree, Etsy should be a bit ahead of the game, not behind. Sounds like you know more about it then they do.
Ann - I like the free download idea for classes. I also wondered how they could hope to police the purchase from other countries much less in the EU.
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