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Removal of Paid-For Electronic Downloads/Services: January 2015

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Shimmin Beg

So as not to clutter this thread even more than I already have, I have put some musings on my blog.  Do not treat as legal or financial advice, please, but they might be worth investigating if you do sell files online.

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wombat1

However, other countries generally have much lower thresholds or none.  Thus, as soon as you sell anything at all to other EU countries, you now must register for VAT with that country or with the VATMOSS scheme (which lets you deal with one entity rather than every country individually).  It's not yet clear to me whether you also need to collect customer location data even if you're only selling within the UK!

 

So no, it's not a simple matter of deciding not to collect and pass on VAT... otherwise nobody would.

 

This still doesn't answer the question regarding non-EU countries.  I understand that if someone in the United States ships a physical item to Europe, the tax is going to be collected by the customs or postal authorities when it arrives.  But a pdf or electronic item doesn't do anything of the sort, so how does the European Union plan to collect?  In the absence of a tax treaty (and I am not finding one) there would be no obligation to collect on the part of the merchant, and it seems an infringement on the liberty of the citizen to intercept their electronic communications to collect from them.

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DadsAngry
From what I read I believe the seller has to keep records of the VAT that they charge for each item and then make payments to HM Revenue and Customs’ (HMRC) bank account by the deadline shown on your VAT return.

 

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yockenthwaite

In the last couple of days HMRC have clarified that where there is a non minimal human intervention in the supply of the digital goods e.g. emailing a PDF, or otherwise manually enabling an order, it doesn't come under the new rules and VATMOSS doesn't apply. I don't know if this might be a get out clause enabling Yoggie to continue selling PDFs. Anyway it's got me out of trouble with my own £6 PDF which I take payment for by PayPal and supply manually by email afterwards. I will be able to sell it after 1st January without hassle.

 

For the new guidelines about this see https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance

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PoC

I'm glad the clarification in the rules is a help, Viv.

 

Alas, our situation remains the same I'm afraid. I've spent a fair amount of time and effort trying to reduce administration!

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PoC

In preparation for next week, the last of our buyable digital products have now been removed from sale.

 

On a better note, I hope everyone is having a good holiday break!

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tgaitskell

Indeed, Merry Festive Season to thee and thine, fine and noble sir!

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PoC

I've now been made aware that there are plans to extend this law to also cover the sale of physical goods online from January 2016.

 

This being the case (incept date yet to be officially confirmed), then this year (2015) will be our final year of selling goods through YSDC, so if you want any physical products from us then 2015 is the time to get them!

 

As such, The Long Con is now on general sale if you want to pick up a copy (very limited copies available right now as we're holding some back for UK Games Expo).

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jlynn

I've now been made aware that there are plans to extend this law to also cover the sale of physical goods online from January 2016.

 

This being the case (incept date yet to be officially confirmed), then this year (2015) will be our final year of selling goods through YSDC, so if you want any physical products from us then 2015 is the time to get them!

 

As such, The Long Con is now on general sale if you want to pick up a copy (very limited copies available right now as we're holding some back for UK Games Expo).

 

You have to wonder what genius of an economist could possibly think driving small businesses to shut down and go out of business is likely to somehow improve revenue.  But, whatever, I guess....

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Buchhalter

The geniuses are in the European parliament and they did not consider small business.

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jlynn

Hmmm.  Thought the British government wasn't that keen on the European experiment thing.  And as far as not considering small business, or real people for that matter...obviously!  ;-)

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WinstonP

I suspect I'm not the first person to make this joke, but wasn't the VAT MOSS the evil slime in Barbarella?

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Shimmin Beg

For those generally curious about VATMOSS, some updates here: https://www.enterprisenation.com/blog/posts/exclusive-hmrc-update-on-vat-moss

 

Some highlights:

 

 

* Guidance will clarify how a business can register voluntarily for VAT, and then for VAT MOSS, without having to charge VAT on its UK sales (i.e. the new arrangements do not threaten the UK's current high VAT registration threshold);

* Registering voluntarily for VAT will only involve filing a quarterly 'nil' return - it is only the VAT MOSS return that then needs to be completed to reflect cross-border trade in the quarter;

* When it comes to record-keeping, small businesses will only have to collect and keep two pieces of data;

 

In addition, HMRC will allow businesses who use payment service providers:

a) to ask the customer in which Member State they are resident at the point of sale; and subsequently
B) to review data provided by the payment service provider (normally billing address and Member State where bank or credit card is registered)

Provided the above tallies and the business records this information, that is all the business will need to do. HMRC confirmed that payment providers are working to ensure this happens as seamlessly as possible;

 

I noted something in GBSteve's link suggesting that one reason for all this is that the USA and Canada have for years forced something similar (FACTA) on other countries, and now the EU is reciprocating.  Murky waters.


I really wish there was a way to stop b + ) from turning into a smiley!

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PoC

In slightly more encouraging news, Patreon handles VAT MOSS for you.

 

Interesting. Like Etsy their first response was to ignore it saying "it's none of our concern", but also like Etsy they've since... changed their mind... I wonder how long DriveThruRPG will hold off? At least that means The Cthulhu Breakfast Club Patreon will be sorted out (sans 20% + processing fees).

 

I really wish there was a way to stop b + ) from turning into a smiley!

 

Uncheck the Enable emoticons Post Option when making a post. :-)

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Shimmin Beg

Interesting. Like Etsy their first response was to ignore it saying "it's none of our concern", but also like Etsy they've since... changed their mind... I wonder how long DriveThruRPG will hold off? At least that means The Cthulhu Breakfast Club Patreon will be sorted out (sans 20% plus processing fees).

 

Uncheck the Enable emoticons Post Option when making a post. :-)

 

Ah, I don't usually use advanced posting so that's why I couldn't see it!  Thanks Paul!

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wombat1

In the absence of a tax treaty between the United States and EU member states, would an American business have any obligation to collect VAT for electronic sales (physical sales can have their VAT collected by the postman or the customs officer). Other than the brick-and-mortar store or presence rule, there is no effective sales tax on internet sales in the U.S.  

 

So why wouldn't retailers based in the U.S.with no physical presence in Europe continue to ignore it indefinitely?

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Shimmin Beg

Wombat: as far as I can tell right now, they probably can.  However, the EU might implement some other rules that force their hand, possibly by using a third party.  The American FATCA law forces foreign financial institutions to disclose information about US citizens' activities and accounts, or pay large additional taxes on all their US transactions.  Something similar isn't impossible.  Or the EU might find a way to twist the US government's arm (like existing financial arrangements).  Or find another way to get money from US trade, and use that as a stick.  If the US does ever budge on this, retailers might find themselves stuck with past liability for having knowingly failed to pay.

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Nightshade

Wombat: Although it has been almost a decade and a half since I have studied EU trade law, I would suggest that the EU is very good at finding ways to work around holes in their regulatory schemes such as the lack of physical presence contingency. For the most part, US trade and anti-trust law prohibits specific acts and allows in varying degrees others. The EU tends to ban all of certain activity and then dispense exemptions for certain activities. It is a subtle but powerful distinction you see a lot in Compulsory Licensing Agreements, anti-trust and the like. Besides, any government body that regulates sheep flatulence, pig toys, declares Sicily not to be an island, and playground equipment will not be deterred by such a fine distinction.  8)

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Stoker

The geniuses are in the European parliament and they did not consider small business.

Most probably they're in European Commission, Parliament may approve, neject or amend a law proposed to their vote, but ost of the initiative comes from the Commision, an entity composed of nominated people without any voting, by countries who distribute the posts among them (each country tries to have a representative in the Commision, whatever this representative is competent in its domain or not) and those are then targets of lobbyists (mostly US originated BTW which is why the Commision is so adamant of pursuing the TAFTA secret talks).

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Shimmin Beg

I thought this news might be worth sharing.  Still work in progress, but I know various people on here have an interest in VATMOSS developments.

 

In summary – businesses exporting below €10k of digital sales into the EU (excluding their home country sales) will apply their home country VAT rules, not digital VAT. Those above that but with sales below €100k will be eligible for a ‘soft landing’ of just one piece of data, to prove the customer’s location.

 

The post is here: http://www.julietemckenna.com/?p=2445 with more detail if you follow the link trails back to the European Commission at http://europa.eu/rapid/press-release_IP-16-4010_en.htm

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PoC

That sounds extremely encouraging. Thanks for the heads-up, Shimmin!

 

Now we have to hope it gets enacted into law.

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