EU VAT Changes 2015 – What You Can Do

REFERENDUM UPDATE:

Leaving The EU: What It Means For Your Business

Leaving The EU: What It Means For EU VAT 

I am co-founder of EU VAT Action, the primary campaigner for a threshold for EU VAT for microbusiness.

What you can do about the EU VAT changes in 2015 Copyright 2014 Rosemary Slosek OneManBandAccounting.co.uk

REFERENDUM UPDATE:

Leaving The EU: What It Means For Your Business

Leaving The EU: What It Means For EU VAT 

 

[7/9/15] My EU VAT Action co-founder, Clare Josa, is representing you and the UK at the Fiscalis summit this week.

EU Finance Ministers can decide NOW to give us:

  • €100k threshold immediately for EU sales (i.e. sales to the EU if you’re UK based)
  • Domestic threshold for domestic sales (i.e. sales to the UK if you’re UK based)
  • 1 piece of location data, provided by your payment processor, for the smallest businesses

This last point is what I argued for in November 2014 when I wrote my original article below the updates. Read my piece in City AM.

Find out how you can help here and let’s make it happen.

[19/3/15] The PM is publicly supporting us and asking the EU directly – read more

[Older major updates below. Sign up here for all updates]

This post was written in November 2014. The fundamentals are still correct. However, it’s been a part time job keeping it current. This isn’t the best use of my client time as I’m sure you’ll agree.

Please join the EU VAT Action group to keep up to date or read our website updates.

If you prefer only to know when major events occur, then join my mailing list and I’ll keep you updated without the week to week updates we have in the main group.

Call to action:

Stay focused, stay strong, keep your business running. This is politics and as with all politics, a lot of what we are doing is behind closed doors. We need your help to keep in the public eye and keep the pressure on.

Remember, as I write EU VAT Action is 3 months old, and we’ve had meetings with Financial Secretary David Gauke and Prime Minister David Cameron, as well as several senior members of HMRC. Your voice is being heard.

[17/8/15] We’re going to Fiscalis, the conference with all EU Finance Minsters and the latest on the Irish EU VAT ‘scam’ – read more

[20/5/15] We are calling for the UK government to grant an emergency Extra Statutory Concession for micro businesses to allow us to continue trading while the EU goes through due process for a threshold – Read More and Take Action

20/1/2015: We’re going to Brussels! and join our Facebook group

20/12/2014: I met with government and HMRC here

12/12/14: New petition direct to the EU sign here and more details here

[Other updates now at the end of the post]

 

New EU VAT changes start on 1 January 2015.

This is not your usual ‘more red tape’. I won’t be writing my usual jaunty style as this is too serious, I won’t lie to you. It’s worldwide not only EU.

It’s a long post of several thousand words and I ask you to read to the end and promise me you won’t freak out. I have positive words to say at the end and suggestions for action 🙂

(Legal disclaimer: This post is my opinion and is not advice. I am not responsible if you do or do not follow any of the information contained in this post. This post is written as the personal perspective of an owner of a partly digital business).

 

What this blog post will cover

To be clear, I am not disputing the EU VAT changes legislation. It’s the implementation.

I’ll be including background, why it’s so important for the global economy and not just a red tape issue for a few businesses.

I’ll be sharing what I’ll be doing and what options you may have going forward so you can make a good decision for your business. I am speaking as an individual and business owner who is affected by this as you are.

If you are reading this, you’re likely a member of the global community that are digital content businesses. We’re making a huge difference in tackling worldwide issues like job creation, growing the economy, reducing burnout, increasing productivity in the workplace and caring for children and parents.

We also appear to be invisible as well as being the new global frontier.

 

What The EU VAT Changes 2015 Are About

Previously, VAT was charged in the country the seller was located and the seller applied the relevant rate of VAT.

(For most of you reading, VAT would be not applicable as you’re under the UK VAT threshold and you choose not to voluntarily register)

This legislation changes the place of tax so VAT is applied at the rate in the country where the buyer is located. So far so ok. It’s a pain in the ass but it’s part of business.

The problem is that this legislation hasn’t considered or clarified the most basic practical issues to be able to comply with the law. It’s quite astonishing.

What’s most astonishing is that –

  • It’s worldwide for even the tiniest of businesses (and blogs) with even one automated digital component
  • The VAT threshold hasn’t been applied so if you sell even one 99p ebook (or a live programme with only one automated resource) you are affected

More background:

Read these resources to give you more detail about what’s happening.

There is a lot of dry as a bone and contradictory and incomprehensible content in some of these links. Stick with it and get informed:

New EU VAT Regs Threaten Small Businesses > If you only have time to read one article, read this from Soozi Baggs at Huff Post UK

New EU Vat Rules Change The Game For Digital Businesses > If you only have time to read two articles, read this one too.

[Added: Going more into the details of the impact > From Heather Burns

VAT: Supplying Digital Services And The VAT Mini One Stop Shop > HMRC’s own advice. You will notice they helpfully contradict themselves in 1.4 Determining The Place Of Supply. Please also note that you can’t rely on HMRC’s advice as if another EU country disagrees they can pursue you in their tax system.

VAT Information Sheet 08/14 > HMRC reply to questions. The questions aren’t necessarily answered.

EU Telecommunications, Broadcasting And Electronic Services > Direct from the EU. Pack a few spare braincell battery packs for this one.

EU Explanatory Notes > Direct from the EU. Pack a braincell generator for this bad boy. Especially note the record keeping section and how the EU takes time to mention the explanatory notes are not binding so we can’t rely on them legally.

Taxamo Interview HMRC About The EU VAT Changes 2015 > Worth slogging through. It’s why this is not just about upholding the UK VAT threshold so it doesn’t affect the smallest businesses. In its current form, it’s unworkable for all but the very biggest worldwide companies.

MOSS is Mini One Stop Shop where if you are UK VAT registered you can make 4 VAT returns a year for the EU and UK and not do returns for each country individually.

It doesn’t help you if there is a problem (you then need to deal direct with the tax authorities in that country) nor does it account for claiming back UK tax and every refund means a VAT return amendment.

Take a deep relaxing breath if you notice you have tension in your body. Let it go. Take a few seconds break if you need to.

 

Who The EU VAT Changes 2015 Affect

Unfortunately these changes are global.

Since it’s not possible to restrict sales to only UK and non-EU countries with 100% accuracy (if you’re UK based) or worldwide except EU (if you’re not EU based) every business with any automated digital content is affected [update: 8/12/14 even if your content is dominantly live human-interaction].

Not only that, but they expect you to keep records to prove you haven’t made any EU sales (thereby still retaining the record keeping impossibility nightmare).

It’s not just about business income

This is not just about digital services and business income.

The majority of my clients have digital services (including me) and the majority of my clients have those services because it is a key part of their business model to build an income independent of time.

We are at the frontier of solving global problems by creating digital businesses with income independent of time and location that can provide for our families without dependence on ability to work.

Think of a few of the most challenging global issues: the cost of caring for the elderly, for paid childcare, for anyone temporarily or permanently too ill or injured to work. The cost of workplace burnout, lost productivity from stress, challenges of job creation.

IssDigital businesses can help solve and reduce all of these critical national and international challenges business by business, family by family.

Read the story of mum-to-be Issy Zinaburg, who started the Change.org petition >>>

Then there is education

The government, and most governments, have education and learning as a key part of their policies to keep the economy growing, to expand GDP, to build industry.

(I take it as read we all know that learning is good.)

Digital services, products and programmes are a key methodology of how the experts of the world disseminate their knowledge.

Did you know many leaders in education have ebooks and courses? One of them could easily be your kid’s teacher because I am talking about ordinary people who have extraordinary skills and giving worldwide access via digital content. This will stop.

As I was drafting this post, one of my favourite US bloggers posted she’s planning to add more e-courses to the wealth of information she provides about natural skincare and wellness which I personally use most days. Is all that going to go?

Digital businesses allow people to learn at no cost to the government.

So where does this leave us?

 

Why The EU VAT Changes 2015 Matter

I have no issue with the change in the law.

The problem is the legislation is mostly grey with very little we can make an honest judgment on to make sure that we comply with the law.

Even the EU guidance isn’t legally binding!

Let me take the buyer’s location as an example.

Example: the buyer’s location

You need to keep 2 pieces of non-contradictory evidence of the buyer’s location. How you are meant to do this is not made clear, especially when most of us use payment providers like Paypal.

Consider an Italian citizen buying an ebook using an Italian credit card on a cruise using the ship’s UK IP address and where the last port was in Spain. Is it the tax-resident country (Italy) as stated in the HMRC guidance, is it the IP (UK) as stated in a contradictory part of the HMRC guidance, is it the country of the port last left as stated in EU guidance (Spain). In addition, how are we meant to know which country an individual is tax-resident in?

I’ll skim over how we are meant to get this information as most payment providers don’t provide it because of other legislation keeping payment details private.

You need to keep this evidence for 10 years and at any time the country of the sale (assuming that was clear which it isn’t) can challenge you in their own country’s courts. The records need to be kept on an EU server, which is tricky if you use a non-EU server at any point which almost all of us do.

To misquote Kylie, it’s enough to spin your head right round.

Don’t get overwhelmed by the detail

You don’t need to know all the in’s and out’s of the new legislation. You only need to know enough to take the right action.

The buyer’s location is only one element that is unworkable and I didn’t mention individual wifi, VPNs and data by international SIM. I haven’t mentioned the different rates of VAT which are ever changing and the data protection issues.

You only need to know enough to take action and to make a decision that is right for your business now.

[Update 15/12/14: Having some or mostly  live human interaction as part of your product or service does not exempt you. There is no minimum, so sending a recording of  a live webinar (for example) means your service comes under the new rules. You can’t host resources on your website for your live workshop or your live programme. You also can’t change from previously automated to manual as that looks remarkably like trying to avoid paying tax]

 

What Needs To Happen With EU VAT Changes 2015

All worldwide businesses except the very biggest are unfairly exposed by this legislation, even when the uncertainties are resolved.

None except the biggest businesses can afford to keep up with the changing tax rates and changes of most of a continent’s countries and the technical challenges of the cutting edge of global digital business.

There is a simple solution to this nightmare.

Keep the responsibility with online platforms and payment providers. [15/2/2015 See EU VAT Action for updates on the payment provider situation and Paypal]

Online platforms – like Etsy, Folksy, Craftsy, Apple, Google Play, E-Junkie, Big Cartel, Shopify, Easy Digital Downloads, WooCommerce and Amazon – and payment providers – like Paypal, Stripe, Worldpay, IntuitPay and Google Wallet – are used by all but the very biggest businesses.

All but the very biggest businesses use a payment provider, including some of the online platforms, as the regulations surrounding use and data protection of payment details are rightly strict with severe penalties, and have similar technical and cross-country challenges as the new EU VAT legislation.  For them it is ‘just more red tape’.

The current situation with payment providers provides a precedent.

Allow online platforms and payment providers to be legally responsible for record keeping, correct tax rate provision and cross-country tax dispute resolution. They can use MOSS.

Our responsibility is to only trade through those platforms and providers and select the correct options for our business.

[Clarification in response to concerns: A lot of online platforms are independent. I use Easy Digital Downloads which is a WordPress plugin and Paypal as my payment provider. You can sell directly and easily using something like this and an integrated payment provider. You aren’t forced to use a big company]

This simple, low cost solution requires only one action from the EU

Clarify the legislation regarding online platforms and payment providers.

Make it clear and legally binding that online platforms and payment providers take the record keeping and correct tax-charging legal responsibility – with worldwide businesses not vulnerable to being persued by foreign tax authorities for up to 10 years.

[Update: Currently Paypal (and probably many other payment providers) cannot fulfil the requirements. That doesn’t change that it is they who need to be able to. There are precedents in other areas of data protection for fulfilling those legal requirements. Read more]

[Update 5/12/14: Are you part of the global tech community? Read web dev Rachel Andrews’s here and her Github resource here and this post which covers some of the issues. Here is an opportunity of a lifetime coding solid, trusted, UX-friendly solutions once we have EU-agreed interpretation and clarification. Get the big players involved and ask why the global tech media are barely covering this massive threat].

[Update 15/12/14: Are you a blogger? You are affected too. Your sales of anything with an automated component are included. So are self-hosted ads, where you accept payment directly (including a service like Passionfruit Ads). Ads via Google Ads are not affected as you display not provide the service.]

What You Can Do

Stop panicking.

I mean that. I can see you.

Panicking is the enemy of action and action is what is going to save our ass.

Action:

[Update 20/1/15: Join our EU VAT Action Facebook group]

Full details of the 4/12/14 government and HMRC meeting I attended here.

1. Keep Up The Pressure To HMRC & The EU

[Update 8:/12/14 The UK is now able to unilaterally suspend implementation of this legislation if they choose to.

Keep up the pressure to HMRC, your MP/MSP, your MEP, the press and on social media tagging the official accounts. Why are the national press not covering this more?

HMRC need our help for them to help us. Make it clear that nano businesses need exceptions at EU level to comply with all the relevant laws (data protection laws, non-discrimination laws, EU wide liability isn’t a good business risk at this level). It is not appropriate for nano businesses to keep identity theft level data for 10 years by law. It is also not currently possible to collect the data until definitions are clearly decided at EU level so the developers (techy people) can code (make) fully compliant solutions.

Focus on revenue (they like that word). The tiny amount of revenue lost by nano businesses having an EU-wide threshold and the benefit to country economies when people can create businesses that provide means to earn an income that keep people off state aid (benefits), enable people to stop claiming state aid (benefits), provide the means to provide care for children and parents so the state doesn’t need to contribute or pay, enables people who have mental health and physical difficulties to become a taxpayer (and stay off state aid). This hits them where it hurts in the coffers.

The UK is a global leader in nano digital businesses because of our high VAT threshold and other countries lose out on that revenue.

Ask HMRC and your politicians why the UK is not unilaterally suspending implementation to allow implementation issues to be resolved (it’s not just about VAT, it’s about data protection too).

We are voters, you are a voter, we are the people helping the government save on its huge education, child care, benefits, elder care and health care bills. I personally as part of my family saved the government around £100k by caring for my father in law. Give them numbers.

2. Make A Fuss To The People With The Power To Make Change

[Update: 8/12/14 PRIORITY: We need EU case studies of how it is affecting businesses in the EU and how businesses in the EU struggle to contribute to revenue because of the higher VAT threshold in your country. If you are in the EU, make yourself heard, they think you don’t exist!

  • The EU presidency changes to Latvia on 1 January. Do you know businesses in Latvia, are in Latvia and affected by this (as a buyer too), or have contact there? The Latvia presidency is Jana Salmiņa (jana.salmina@mfa.gov.lv)
  • Write to Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, (pierre.moscovici@ec.europa.eu); Maria Elena Scoppio, EU cabinet member (maria-elena.scoppio@ec.europa.eu); Simon O’Connor, EU Communications Adviser (simon.o’connor@ec.europa.eu); Frans Timmermans, EU First Vice-President, (frans.timmermans@ec.europa.eu); Andrus Ansip, EU Vice-President for the Digital Single Market (andrus.ansip@ec.europa.eu); Jyrki Katainen, EU Vice President for Jobs, Growth, Investment and Competitiveness (jyrki.katainen@ec.europa.eu); Günther Oettinger, EU Commissioner for Digital Economy & Society (gunther.oettinger@ec.europa.eu); Michael Hager, EU Chef de Cabinet (michael.hager@ec.europa.eu)]
  • Write to the Secretary of State for Business, Innovation & Skills, Vince Cable (details here)
  • Write to your MP or MSP and MEP (find out who it is here and here) (send a message here)
  • [Update: 8/12/14 Vince Cable has responded to the petition below with ‘the standard line’ showing he has no grasp of the issues. Keep up the pressure.]
  • Sign this petition to get the message across to the Head of the EU

3. Make A Fuss To The Press & HMRC To Show This Has Severe Impact

  • Contact the newspapers and the BBC. Who do you know who has in-house contacts?
  • Call, tweet, email and write to HMRC
  • Get onto the lobbying organisations for businesses, childcare, older people care, expanding the UK economy. This is not just a business thing, it’s a UK economy thing
  • Contact your local media
  • [Update:  8/12/4 WHY are the national press not covering this properly? Tell them how mad you are about this! (and yes, you can schedule it in your social media apps )

4. Share, Share, Share!

  • Share this post
  • Share articles and blog posts you see on this, get it trending. Get it in Facebook news
  • Use #euvat. Use hashtags that are global and Europe wide. This isn’t really a VATMOSS issue. Get it trending and stay trending, UK, Europe, global
  • Tell everyone you know. If people don’t have any automated digital content then they will have bought it. Plugins, music downloads, wordpress themes, it’s all included, even forum subscriptions and recordings of live webinars
  • Keep sharing
  • Schedule content about this in your Hootsuite, Tweetdeck, Social Sprout, Buffer

Keep it coming.

TRWiB-tv-Rosie-Slosek crop[Update 3/12/14: Watch my webinar with The Real Women In Business Society focusing on taking action and making a decision for your business]

Are you not in the EU and worried about the EU VAT changes 2015?

If you have a business anywhere in the world with any automated digital content (even a tiny bit), you are as affected as those in the EU.

I’ve seen posts from businesses as far away as Canada and Australia who will not have a business come 1 January. We need a global kick ass to get this legislation workable.

Your goal is to make sure your local and national elected political representatives know about this legislation and the threat it poses to the people they were elected to represent (you!). Their role is to pressure at national level and for national level to pressure the EU directly.

I want the presidents and prime ministers of countries across the globe pressuring the EU to make a change.

Online platforms and payment providers and the biggest businesses (who choose in-house) do the implementation, NOT us.

(We pause here for a reminder all is not lost. Hang tight).

 

Make A Decision For Your Business About The EU VAT Changes 2015

What you need to do is make a decision about what is right for your business right now.

If you only have affiliate income and advertising then one thing that is (probably) definitely ok is that you don’t need to do anything. I won’t be changing the affiliate links on my site.

The problem with the legislation is that there are few specifics.

For example, if you have a live programme (100% live is not included in the new rules) with one automated component, we don’t know if you are definitely ok. HMRC say that the dominant method is what matters, but there is no minimum. As I said earlier, if a member state’s tax authority disagrees with HMRC’s interpretation, you have a problem.

What about UK only sales if you’re UK based?

In theory you’re meant to be ok. This is the internet though, people.

I doubt even Moss from The IT Crowd could design a system with permanent 100% uptime and no failures ever, even if you had plugins and drop down boxes meant to stop non-UK and non-EU buyers.

100% is required by this legislation. Then there is the details of needing to keep records you can’t get to prove you haven’t done EU business.

#facepalm

Your Options:

Disclaimer: This is my opinion and I am not responsible for what you do or don’t do. This is my interpretation and I may be considered wrong by the EU.

1. Decide what element of vulnerability you are comfortable with

2. Keep on sale, adapt or withdraw your digital content and services –  for the time being. You may choose to keep your service pages live and add a link to this post about why your content is not available for sale

3. Adapt your content by making it a 100% live programme with no automated digital content

4. If you’re like one of the many people who contacted me with ready-to-launch or being-created content, take heart and adapt

5. This isn’t forever. It’s for now until we get a workable resolution

[Edit: Read what Cerries Mooney of The Brand Alchemist is doing and her reasons why. It’s about a good decision right now for your business, in the short term. There is no right, wrong or perfect here. It’s a good opportunity for trusting yourself]

 

What I Am Doing

I am withdrawing all my digital paid-for content on 31 December.

I have only UK content for a UK audience so I am not intended to be affected. I am affected nevertheless. How can I prove my buyer fulfils the criteria? I am a risk taker by nature and this isn’t worth it.

The Tax Return Toolkit is my flagship content and has been downloaded by hundreds of freelancers in the year it has been published (to be withdrawn on 31 December).

I have been creating From Blog To Business 30 Day Challenge e-course for the thousands of bloggers wanting to do the right thing by HMRC with their blog monetisation (now on hold until further notice).

Ironic that legislation about tax stops freelancers getting help doing their tax. I’m still available live but that isn’t the point.

 

Keep Up To Date About The EU VAT Changes 2015

Sign up to my mailing list and follow #euvat to keep up to date.

Keep taking action to keep the political pressure up.

Keep in heart about the impact to your business.

 

Take Heart

I gently suggest you buy any paid-for digital books and courses in your bookmarks, Pocket and Evernote while you still can. It’s what I’m doing.

You may need to make other financial arrangements for a while until we know where we are.

Take heart. We’re a community and we’ll sort out this mess as a community.

 

One last thing…The people meet the government about EU VAT. Rosie Slosek represents freelancers2

Because One Man Band Accounting is all about helping cake-loving freelancers in the UK do their own tax return and get kick ass money management, I will not desert you.

As always, I give you cake and a kitten (right here, at the end).

Snuggle him on your lap while you sip your hot chocolate and nibble a brownie – and get writing to your MP and making the right choice for your business, and then relax. Email me if you need to.

Courage my friends and hang tight. We can do this.

[Update: Within an hour of publication, I had an email from one of my readers wanting to help and s/he works for the EU. I love teh interwebz!]

Meeting with the government and HMRC at Enterprise Nation offices, 4/12/14, the photos >>> (up there)

Photos of me, Rosie Slosek, representing you, the cake-loving freelancing public, at a meeting with government and HMRC.

Get a feel of the vibe when a group of digital business owners who didn’t know each other existed until new EU VAT rules came along, started it all happening, and then we meet for the first time an hour before a meeting with government the day after the Autumn statement. This is what community means and I love it.

Now for the cake and kitten.

Overwhelmed by the EU VAT changes 2015 OneManBandAccounting.co.uk

UPDATES

[Update 4/12/2014: I attended a meeting with HMRC and the government today. Details here and photos at the end]

[Update 8/12/14: Focus on contacting and pressure on the EU. Details what to do and contact details further down]

 

Copyright 2014 Rosemary Slosek. Please email me for permission if you wish to reproduce this content and include a link to this post.

 

keep in touch

Join my Cake & Tax community

Comments

  1. Thanks for a very helpful article. Just one question though – why are you removing your product for sale rather than making it available through (say) Clickbank, which has been charging VAT to EU customers for a few years now? Are there still too many unknowns?

  2. The only problem with using big platforms like Amazon and Google etc to sell products you are effectively bringing new business and extra money to the businesses that this legislation was supposed to penalise. It was meant to stop the big companies who based themselves in low VAT companies to avoid UK tax, and now they will make more money whilst the rest of us get penalised! #unfair

  3. Nice post Rosie. Will add to my links, and tweet.

    Re establishing location – I think a lot of that is because ‘e-services’ is lumped in the same rules as broadcasting and telecoms, and a lot of those provisions are actually aimed at them. Because the people who drafted this stuff wouldn’t know a small online business if it bit them on the bum. Which I suspect we’ll see tested out over the next couple of months.

  4. Wayne Neale says:

    This is a great blog post! I think you’ve covered all the bases in terms of lobbying but one thing I have been going on about is the fact that this is not some accidental impact for micro businesses but a deliberate campaign to fulfil the EU’s policy, namely to broaden the scope and base of VAT. Put simply, as an institution, they simply do not believe in non-taxation and in particularly don’t like the many many ways that UK businesses avoid VAT.

    Our high threshold and our numerous zero rates are annoying to the EU but they cannot do anything about this as all 28 member states need to change. However, all 28 member states, including the UK, approved the legislation that implemented MOSS and in particular the requirement that a VAT registration was needed and there would be a zero threshold.

    Make no mistake, if the EU can ride out this storm and apply the usual 80/20 rule (meaning that Apple and Amazon will pay the tax), they will use it as a springboard to extend the destination principle to all sales, and look to achieve common rates etc. This can also be extended to corporate cross border taxation.

    What’s the solution? Leave the EU seems to be all I can come up with!

    Wayne

  5. FYI: there’s not enough clarity about what counts as an online platform. Craftsy are refusing to be VAT responsible and are ignoring this whole thing and don’t even provide the evidence needed for those who are VAT registered.

    Etsy still haven’t offered a solution or even a statement beyond “we’re working on it”.

    Then there are other online platforms who do not take the money but deliver the product – places like Ravelry or eJunkie – how are these places supposed to comply when the money doesn’t pass through their hands even though they supply the code?

    It’s an over simplification to say “use a 3rd party”. That’s how I plan to keep my business but it really isn’t very clear at the moment what constitutes a 3rd party, how they are responsible, and what to do if they don’t/won’t sort things out in time.

  6. Hi Woolly,

    The EU need to clarify what counts as an online platform which should have happened anyway. Online platform is their phrase not mine. Most online platforms use a payment provider, in which case the payment provider has the responsibility since it’s not delivery that’s the issue but payment. Free content isn’t affected.

    Hence by point about there are predecents for this. We all need to comply with payment regulations with are cross-country and strict with severe penalties. The vast majority of us (including a lot of online platforms) do this by using a payment provider. Our legal responsibility doesn’t change, but we can easily meet it by using a 3rd party payment provider.

    That’s what I am talking about and the EU hint at it in their documentation. They even clarify that if the legal contract of sale is between the seller and buyer – and bypasses the 3rd party platform – then the platform is still the party responsible for compliance for this legislation. The EU just haven’t said it in black and white and in a format which is legally binding so we know where we are.

  7. Hi Wayne,

    As I said, I don’t have an issue about the legislation itself. It’s the implementation that is a mess. It’s not even about the VAT threshold as it’s impossible to implement for any business who doesn’t have the resources to do everything in house including payment (and to be honest, I am not sure even they can comply with contradictions).

    An easy temporary solution for the UK’s tiniest businesses is to raise the threshold so we get some breathing room.

  8. Hi Tim,

    Quite. My partner is in broadcasting (the kind you do from your living room that no-one except a very creative person would do) and I have told him what not to do to make sure he doesn’t fall foul of that part of it. For broadcasting though, and telecomms, because of the logistics it almost always is big business.

    They’ll know about us soon enough – I’m getting emails from people worldwide about this.

    Thank you for adding me to your links 🙂

  9. Hi Fiona,

    Yes. Ironic isn’t it?

    On the other hand, payment providers always ned to be big because of the regulation in that industry and independent platforms can use one of those. I use Easy Digital Downloads for delivering my content (online platform via plugins) and I choose to use Paypal as my payment provider. It wouldn’t be difficult to keep the appropriate records once the situation is clarified and how to do that was implemented by both Easy Digital Downloads and Paypal. That part would be a pain but then we’re at the area of ‘more red tape’ which is different and part of business.

    It also wouldn’t surprise me if a group of world class developers got together and created an independent global platform as direct competition. It’s happening already with social networks and phones (Google Aral Balkan) and one reason I use Easy Digital Downloads is because it’s indie and has f*ckin awesome customer service.

  10. Hi Helen,

    Because of the grey areas. There is no way I can guarantee that no person outside the UK will buy. I have no way to check or keep the records. There is no clarification in the EU legislation that says if you do XYZ then you have taken reasonable care to prevent a non UK sale (or non EU sale) and you are safe from being persued by a foreign country’s courts.

    That part is a personal choice. Someone else only selling to the UK and non-EU may decide they’re ok with not being able to keep the required records.

  11. Thanks Rosie, your conversation with Woolly, above, sums up my concerns about online platforms too. Not enough clarity about what is acceptable. The way they work varies enormously, from Clickbank which buys the product wholesale from the creator and then resells it to the customer, taking VAT from EU customers as applicable (Will the EU agree with this? I don’t know) to those that just take the money and leave everything else up to the product creator.

  12. This is one area where the EU documentation is actually helpful and almost clear. It states that whatever the contract says, it’s the platform who is responsible for the legislation requirements. It’s not clear enough to know that if you do use an online platform that you’re safe and have fulfilled your legal responsibilities, and that’s the point. In addition, those platforms need to have processes in place to deal with this issue (such as drop down boxes etc) that the EU have said we can rely on as being sufficient to meet our legal responsibility. The payment providers also need to have extra boxes so we can add the relevant information in for our business (just as we do now for VAT).

    My online platform (WordPress plugin) wouldn’t need to do anything once the situation is clear as I have payments sent to Paypal who in the situation we should be in, would do it for me, and my legal responsibility ends at choosing the correct boxes.

  13. Thank you for your brilliant post! My husband has been mentioning EU VAT changes for a while, but being me I figured (wrongly) that any changes would pass me by (I too live in the UK and I’m below the VAT paying threshold or the old one or whatever). I now understand the juggernaut heading my way and it’s looking pretty grim. I suspect, like you, the only sensible thing is to stop selling until they untangle the mess they’ve created. I’ve self-published my historical romance novels and most of my sales are through Smashwords and Amazon so they deal with VAT, but I also have my own website where I don’t sell downloads, I simply sell a membership…so I sell access to content rather then content. Does this fall into the same category? I assume it does, but one can dream.

    I find this whole VAT the planet scenario completely insane. You have to laugh (because it takes less energy than crying)…they want us to keep records of information we have no access to, to pay tax on sales from points of origin we can’t pin point to pay foreign tax people in offices we can’t find who speak languages we don’t speak…(we’re only presuming all these EU countries are going to offer an English speaking option), but what about sellers from numerous countries outside the EU who don’t speak English and aren’t catered to? It truly is a juggernaut…one badly designed and implemented by people who I dare say couldn’t run a lemonade stand (which have probably been made illegal in any case due to health hazards caused by possible choking on lemon pips, possible drowning in a cup of lemonade without a CPR certified life guard at hand, and lack of insurance covering everything from terrorist attack to act of God lightening killing a customer).

    Thank you again for your helpful advice. I shall write to Vince and give him what’s left of my mind (not that he’ll pay much attention – for all we know he may end up taking forced retirement in six months or is it five?).

  14. Thanks Rosie – have had a quick skim but you don’t seem to have mentioned anything about the distinction between b2b sales and b2c sales. I am all b2b sales and even though the main evidence of b2b is a VAT number of the purchaser, the legislation also refers to ‘other evidence’ so I shall be adding a warranty into my terms that they are purchasing as businesses which should get me outside of the legislation.

  15. Also regarding restricting sales to the UK, you could have a warranty and tickbox that purchases are only allowed from UK residents.

    I suspect this VAT fuss will be like the cookie law – there is simply not sufficient resources to police this so at the 11th hour there will be some guidance watering it down.

  16. Thank you so much for explaining this in such an accessible way. I’d seen tweets about it, but the mere mention of VAT made me think I wouldn’t understand what it all meant! However, thanks to your post I can now confidently agree that the planned implementation is a mess, and I will be writing to my MP.

  17. Suzanne, I already have this in place in principle as my professional indemnity insurance doesn’t cover North America. I had the same conversation with them about what I needed to do so I was covered and I did it. My terms and conditions (from your template 🙂 ) specifically state you need to be resident in the UK. It doesn’t protect me from this though as the EU haven’t said what is ok, and no-one can have 100% uptime.

  18. I am only B2B too in the broadest sense. If there is no business element, I refer on. The problem is the legislation is explained by Guidance Notes that say on the cover they aren’t legally binding and if a country wants to disagree with interpretation of HMRC, it’s me who has the problem. I dont’ have the resources for that.

  19. Hi Cari,

    The trouble is that even though the legislation should say if the online platforms cover it, they don’t. So you are left trapped in the middle. One choice is to leave the big online platform sales and see what happens (I wouldnt’ do it, but that’s me, personal opinion). Unfortunately it’s all so vague, there is no ok anywhere, even for the internationally huge businesses.

    You may want to consider manual selling (you physically email them the book) as my understanding is that’s ok (although who knows it’s so vague).

  20. Hi Philippa,

    Thank you and if your MP gives you the line about ‘this will affect very few’ as I have been told they have been, you can give them the Twitter and Facebook stats as a starter for 10. 17,000 tweets on #vatmoss this morning.

  21. Thanks for the feed back! I’ll probably close up shop to be on the safe side until it’s sorted out, but I was also curious to know if there are any UK tax laws against using a barter system. Say if someone sent me a couple chocolate bars (for my personal consumption) in the post and I in return gave them an online membership would I still be liable for equivalent tax (say if thousands of people rained individual chocolate bars down on me from all over the world) if no money has changed hands? Just trying to be creative! 🙂

  22. That doesn’t help you unfortunately as it’s a transaction, like a skill swap. You’d need to put a market value on it and enter it into your accounts anyway.

  23. Rosie, You are wonderful…you are our Guardian Angel and clear in your description and action needed… Thank you xxx

  24. Thank you Lisa 🙂

    It’s quite something when it becomes actually impossible to comply with the law. Panicking doesn’t help though, it’s about making a conscious choice for now and reviewing. Stay tuned!

  25. Very clear article Rosie – thank you. I will definitely share it across all my links.

    I’m already making my list of points to bring up with my local MP Glenda Jackson – so this helps focus it even more. Once I’ve re-booted my brain I’ll read the links you gave aswell!

    Do you know whether coaching clients 1-1 via Skype in Europe is going to be OK?
    Would a free bonus package for a 1-1 Coaching Programme which included a downloadable pdf/eBook or access to materials in a members area on a website – be allowed?
    Thanks!

  26. Thank you for your easy-to-understand article.

    I live in Europe, in Greece, but my digital products will be delivered via US companies, for instance Smashwords and Craftsy.

    In my mind this is just one more measure taken to destroy the constantly developing positive buds of love, trust, growth and joy in this world – a last-ditch effort to stay in control by spreading chaos and fear.

    The counter-measure is to stay calm and even-minded and to act with consciousness and awareness of what we want.

    I’ve just started a quilting blog and will soon offer patterns, e-books and so on. Rather than give in to another ridiculous tax, I’ll give my products away for free 🙂 I won’t earn less that way than by not selling at all, but I’ll increase my readership, I may make some people happy, and at the same time I can use the opportunity to spread the word about what is happening.

    Incidentally, I’ve just signed the Free World Charter for a thriving, generous, caring world without money. No money – no taxes 😉

  27. Hi Laura,

    I’m in the constituency next to you 🙂 Glenda is brilliant.

    Live coaching is definitely ok and I love being able to say that. Don’t use automated downloads as part of what your client pays for though (and I’m glad you mentioned it as I need to change my live coaching packages too).

    You may want to point your new client to your free downloads rather than have it as part of their package to keep it clear. We don’t know a lot of the grey areas, that’s the problem.

  28. Hi Maria, I believe it’s an oversight as businesses like ours aren’t within the status quo of macroeconomic measuring, even the experts have agreed the current system is out of date. They know we exist now!

  29. I have to say that some of the information provided in this blog post is flat out incorrect. Since yesterday I have spoken with PayPal and an accountant who both say this is completely unworkable because nobody has access to the seller’s details prior to the sale and even afterwards only the billing company has these details for security reasons.

    Cart providers like e-junkie rely on the limited information they are supplied by billing companies such as PayPal after the sale, so it’s impossible to calculate VAT rates in advance of the purchase on 28 different countries when the information is not available.

    There is no “simple” remedy here and being forced to sell through the likes of Amazon is hardly encouraging competition and free trade inside the EU…

  30. Hi,

    Tried to join your newsletter to keep updated but the signup link above in the end of the article just takes me to a MailChimp signin page.

    Dale.

  31. Thank you for writing this and sharing your wisdom. I feel there’s not enough communication from HMRC about this, and many people are only now hearing about this.

    I’m lucky that the current digital product I provide is non-automated and fully tutor-supported (active, individual feedback on assignments), so I don’t have to change anything there.

    I’m planning to launch a few automated digital products next year and am planning to use FastSpring. They act as a reseller. I’ve checked with them and they take responsibility for VAT. You might want to check them out. I’ve not use them yet, but heard excellent stories about their customer service. (Of course it does mean that they’ll charge VAT to your customers.)

  32. Hi Henneke,

    It’s good you’re not affected in the short term. I am waiting for all of the EU countries to agree that using a platform that takes care of it for you legally meets your obligations. Charging for it is only part of it. Of course this may be clarified by the time you launch 🙂

  33. Hi Dale

    Thank you so much for alerting me. All sorted now so try again 🙂

  34. Hi Ashley,

    Paypal can’t do it with their current systems but they are the people (like other payment providers) who are in the position to solve those technological problems without it being a user nightmare (UX) affecting sales. That is an issue for all businesses not just the smallest ones. There are data protection issues about the information, but again there in precedents for dealing with that in other areas. I use one myself to comply with other legislation.

    Secondly, as I said in other replies (and edited my original post), there are lots of ways of using independent platforms with a payment provider. I do that myself.

  35. Thanks for your reply Rosie, I found a rather useful blog post here earlier today that makes some good points on this issue http://www.clarejosa.com/articles/from-passion-to-purpose/what-you-need-to-know-if-youre-relying-on-your-payment-processor-to-dig-you-out-of-the-vat-moss-mess/

    Having spoken with a tax expert this morning from the Federation of Small Businesses I am convinced the situation is even worse than most of us realise, since we risk fines and audits from all 28 countries. HMRC have been giving out very conflicting information which isn’t helping either.

  36. Hi Ashley,

    Yes, Clare has given the ok now for me to publicise her post and it’s already been added. It is just how you say. That’s why this is not about small businesses, it’s about all but the very biggest. Whatever HMRC say (which conflicts endlessly) if another country disagrees, they can persue you, even if you file under VAT MOSS.

    The important part is to not panic and decide what action is right for your business in the next few months. That will be different for everyone.

  37. Hi Rosie,
    The key part for me when following the HMRC Twitter feed was that any sale which involves some kind of manual intervention for delivery falls outside the scope of this legislation because it is no longer considered an e-service. For example if you attach an eBook to an email manually there is no need to register for VAT.

    The EU has effectively created a technical problem and a technical solution would be for the delivery services to include a manual button to authorise downloads. It’s certainly a step backwards but nothing like as bad as dealing with all the other problems and automated processes could continue as normal for non EU sales.

    BTW I have also been pushing the Federation of Small Businesses to take up our case here and spoken with their press & parliamentary officer. In addition I contacted my MEP who is looking into this.

  38. Since becoming a microbusiness LTD selling software programs several years ago, and getting a tap on the shoulder from a US state tax authority for nexus (that was frightening too) I have used a payment processor “FastSpring”. I got that same feeling reading this blog item about EU VAT 2015 as I did with the nexus. According to FastSpring they have it covered. Hope it is of help to 0thers !!

    http://info.fastspring.com/blog/2015-vat-changes

  39. I just stumbled upon this article, and I just had to say a huge thanks. I’m a micro business advocate, and there’s a lot of confusion and fear out there. Thanks for helping folks understand what’s going on.

  40. Hi and thanks.

    I know a few people are going to Fastspring route. Personally, I wouldn’t feel happy trusting my international tax liability to a 3rd party platform if they promise to do it all for me, but I recognise I am probably a bit uptight on that one.

    The main priority is making a decision for your business that works for right now, and for that options like Fastspring can work well.

  41. Hi Liesha

    I am so pleased you feel better now. It’s all about doing the right thing for your business and staying updated at this stage.

  42. Hi Ashley

    In theory yes, and we hope that is what will happen. The problem is that HMRC are putting out conflicting advice and different answers with different people on different days. There is also the issue of each country will have their own interpretation and we need to abide by that country’s interpretation (which of course is during the unpredictable automated sale). Tricky.

    There have been suggestions of what you suggested, and also suggestions that any manual element which is there in what would be otherwise an automated process, would come under the legislation.

    I completely agree with you about the FSB and your MEP and thank you. I am attending a meeting with HMRC and the Treasury this week as part of a wider group which is an indication that at least something positive is happening, I hope.

  43. Hi Rosie,
    You raise a good point about the way that different countries will interpret this legislation and that worries me greatly for a very simple reason… Five minutes after this becomes law the tax authorities in Spain, France and Romania etc may well start to target foreign sellers by applying spurious reasoning and creating massive fines to raise money. Let’s not forget these countries are broke and we are easy targets.

    With the new legislation we would be expected to issue invoices according to the standards of each member nation so it’s only a question of when rather than if you get problems. Throw in the European arrest warrant that the government has recently joined and you could find yourself sitting in a Greek prison for 12 months before you even get a day in court.

    I contacted my MP who has written to Vince Cable and I’m waiting for an answer.

  44. Quite. There is an issue of anti-discrimination law about restricting sales to UK and worldwide (ex-EU) too and I suspect a lot of countries may start to implement something similar to the EU legislation.

    I’m not pessimistic, we’re a resilient bunch who will continue, but it’s going to be ‘very interesting’ for quite a while until our businesses have adapted around the changes and they become workable. We don’t want to avoid paying tax – but when a tax paying business closes because complying with the law is not possible or too risky, that doesn’t help governments get money to pay their bills.

  45. Hi Rosie
    Thanks for the reply.
    I just wondered if you had ever come across the concept of “economic nexus”. It is something that is very little known about in this country, I certainly wasn’t aware. Certainly the DTI and FSB knew nothing either. It is very much like the new EU VAT rules but applies to sales in the USA. It is where individual US states apply the concept of nexus so that even selling software like I do from the UK means you can be liable for collecting and remitting sales tax as well quaterly tax returns in that state. And there are many states that do it, so you could end up doing complicated tax returns for there too as most states have differnt sales tax regimes.
    I was contacted by a US state tax authority that was auditing a company I had sold my software to and one of my software sales was flagged up and they contacted me and asked for the last 6 years sales in that state. I was lucky in that the threshold was $1000 a year for the state I was contacted by, I was less than that, but it cost me a lot of money to hire a tax specialist in the US state to help me, plus a bit of worry and uncertainty. The plea of not knowing about the tax would not have helped me, they would have implemented fines & penalties going back 6 years.
    It is yet another minefield for unsuspecting UK sellers of digital goods. I am also left in the dark as to what extent the US authorities would persue this and exactly how they would persue. It is slightly worrying still even using FastSpring, which I agree with you, can only be taken at face value, if tested who knows what would happen.

    Cheers
    Ian

  46. Hi Ian

    Yes, it’s a big concern for software sellers. Probably we are seeing the beginning of a massive change in worldwide tax systems. One challenge at a time though.

    It does illustrate my concern that it doesn’t serve the authorities collecting tax if it’s difficult to sell to markets because of the admin burden. They get less tax then, not more.

  47. Wow, i don’t sell anything, i’m but a new blogger interested in monetising my blog through affliate links. Detailed info and quite scary of how it will all work. Shame about the disruption it would cause; I wish policy makers will connect more with users and beneficiaries of their policies. Well, I’ll be watching ‘the space’ and hoping for the best.

  48. Hello,

    Good news for you. You’re in a great position. Ads and affiliate links are not affected (I’ve been told). You may want to stick to affiliate links from bigger companies or through a provider like Skimlinks or Afilinet for the time being.

    Keep records of your blog expenses and income (free spreadsheets http://onemanbandaccounting.co.uk/tax-for-bloggers) and don’t add a ‘Work With Me’ to your blog unless you want to start being a business. A blog can be a business too and if you want to know more about that download the flow chart on the Tax For Bloggers page and email me if you have any questions 🙂

  49. Hi Rosie, I just wanted to say you’ve done an awesome job with this post and with building awareness. There’s a lot of confusing and contradictory info floating about. i’ve found your post very helpful with the clear and simple explanations of some of the details. It’s been a big help with passing some of this info on to the digital sellers using our ecommerce solution that have been asking for more details. One of the biggest concerns for sellers still seems to be around using VAT MOSS and the implications for VAT registration if under the threshold. Hopefully more details will be released soon to clarify this and if its possible to separate the two. Thanks again, keep the info flowing. Geoff

  50. Thank you Geoff. Could you email me with details of your ecommerce solution? I can pass you onto someone who can help with the dev side. The current position is deciding whether a business continues to sell in the short term until compliant solutions are coded/tested/released (you know the drill).

    Getting the word around the tech community is so important, I have tech clients and understand it, so it’s important to me not just from a compliance angle.

  51. Paul Shires says:

    Hi Rosie,
    Wow, what a minefield!
    I sell access to members only information pages on my blog and also deliver sports betting tips via email. Since the vat changes were announced I had planned to switch everything to Clickbank and now have everything set up with them ready for the new year.
    Reading the comment from Ashley above made my eyes light up. Currently customers pay for access to my members pages via paypal (and some through Skrill). Having received the email notification I then manually email them with a registration link and then a second email is sent with instructions on how to access the members only content.

    I appreciate you say it is a grey area but is it possible my delivery process means I avoid the new laws?

  52. Thanks Rosie for your offer of putting me in touch with someone on the Dev side. Since we heard about the proposed changes we’ve had our own development team here at Selz focused on building the tools that merchants need to charge, collect and report those taxes as simply as possible. We explain more in this post on our blog about what we are doing to make the EU VAT as painless as possible https://selz.com/blog/eu-vat-moss-digital-products/ We intend on releasing the first of the reporting features this week. I would see that in the new future (well before the first filing date in April 2015 ) we would provide merchants with reports in a format that would be compatible with submitting returns with VAT MOSS. It would be good when HRMC provide more clarification about the VAT registration and using VAT MOSS. This appears to be one of the main concerns for people that are under the threshold currently.

  53. Hi Paul, your members pages are automated content. I would hope in time your delivery process (keep proof you did it this way before the law changed) would mean you aren’t included, but we’ll see. After all, readers don’t need live interaction with you to access the content once they have the link. So you need to make your own decision as one of the problems is this incredible greyness so it’s difficult to know where we are when there is no minimum automation.

  54. Hi Geoff, yes, quite.

    The charging of the correct rate and correct invoicing according to the countries rules is only the start. There is the evidence required, the need to register with each country’s ICO equivalent, the need to keep the data and back ups on EU servers for 10 years, the confliction of data requests.

    Devs and coders need clear clarified lines before they can work on a technological solution to this that is fully compliant. VATMOSS is only one part of it, and mud is currently clearer than the rest unfortunately.

  55. Paul Shires says:

    Thanks for the reply Rosie and also thanks for the comment on my blog.

  56. There’s now a free WooCommerce plugin for WordPress to handle EU VAT/MOSS issues, here (I am the author): https://wordpress.org/plugins/woocommerce-eu-vat-compliance/

    Best wishes,
    David

  57. Cool service and superbly well research and expertly written article. Thanks.
    I operate in Gibraltar. One of a few zero VAT zones. How do I register to pay VAT in a zero VAT zone? If there’s no VAT chargeable on my works ( as I am in a Zero VAT zone) then can I just sell from Gibraltar VAT free work without suffering this new regulation? Or should I setup a payment service in Gibraltar for Gibraltar small businesses. Will One Man Band or Mom and Pop shops flood into offshore tax free zones like Andorra, Canaries or Gibraltar? It is all as clear as mud to me at the moment…..

  58. Hey Rosie, I thought I would let you know we’ve now released our free EU VAT reporting feature https://selz.com/blog/new-feature-eu-vat-reporting/ which captures the location evidence needed at the checkout and calcs the VAT liability based on consumer’s country.

  59. Chris, exactly. Have you signed and commented on the EU wide petition? https://www.change.org/p/pierre-moscovici-a-unilateral-suspension-of-the-introduction-of-the-new-eu-vat-laws-for-micro-businesses-and-sole-traders

    If you could also email David Gauke, MP today saying just what you said to me (inability to comply with the law) and also do the survey (in Take Action at http//euvataction.org) then you make your voice heard. We urgently need hundreds of letters from across the EU for what needs to happen to happen – by 18 December.

  60. Rosie thanks for the article. I’ve posted a couple of articles on the topic and just been pointed to yours.

    One other thing that affects a lot of small photography businesses is the selling of digital photos. If a photographer is commissioned to photograph an event, and then offers digital downloads of the images to people who attend the event, then I’m of the view that such digital downloads sold via an automated gallery service or wordpress type plug-in fall under the scope of this vat mess. It’s not possible to limit sales of such items only to UK residents. I have contacted an online gallery service provider but as yet had no response from them on the topic.

    For me it’s simple; the e-books I was planning are now on hold and i’ll refrain from selling digital products from my site while the issues around this become clearer.

  61. I am a newly relaunched photographer and writer and this is a nightmare for me. I will have to go entirely B2B for image licencing which will not be too onerous but I will only be able to deal with business in EU that have a VAT number. I cannot not use downloads as stock photography is entirely electronic these days – clients expect it instantly or no sale.

    But it is a problem when it applies to tangible goods like books and prints. That is a B2C marklet I was going to seriously target next year and I expected it to provide the bulk of my income going forward. I am targeting low effort residual income after a long career of dealing with government. Unless I can find a fulfillment service that can do the administration or at least the data collection, tax pricing and ecommere I will not be able to do it. I will have to cancel my exisiting service before Christmas as it is US based and seems to be non-compliant.

    Talking to a photographer friend in France it appears very small businesses (auto-entrepreneur) in France seem to be completeley exempt from this requirement. So why can’t those of use below the VAT threshold be equally exempt.? Has HMRC and the UK Civil Service gold plated EU legislation for their own purposes again?

    I was relying on automation to make it work as a time and location independent income, and despite lower energy and eventually being less able as I get older. Hopefully I have a good few years to get it organised but this is a huge blow and will seriously slow the ramp up of my newly launched photography business. I am probably going to have to spend another year getting organised rather than creating product and marketing the business. That means the return on the significant investment will be delayed. It would be very easy to sell up and let the state keep me!

  62. Hi Martin

    Yes. If you could email your MP, MEP, David Gauke MP and Andrus Ansip (EU VP of Digital Single Market) with what you’ve said to me, that would be taking good action on your part. As soon as you read this if you can, as the EU closes for Christmas on December 18. Addresses are on my original blog post above or in my mailing list update coming out tomorrow morning (17th) at 8am.

    I’m a founding member of EU VAT Action who are responsible for making the government listen and we know about France. It’s being brought up. You may like to mention it in your above emails 😀

    (If I may be permitted a moment of self promotion, on Friday my Tax-Deductible Photography Gift Guide blog post is published)

  63. Brian, exactly. Restricting to UK sales would be breaking anti-discrimination law anyway. I suggest you read Martin’s comment and my reply 🙂

  64. GREAT article and thank you so much for all of the research you’ve put into this post. I have two questions:

    1) I’ve read that businesses will not be held responsible for customers who mask or falsify their location. If this is true, could a seller simply not put a disclaimer in their shopping cart checkout that says something like, “If you are based in the EU, you are not eligible to purchase this product”. I know it’s not solid, but maybe?

    2) how about donations? What if EU customers were making “recommended” donations for “free” digital products?

    Thanks in advance!

  65. Hi Dave, I’m not sure about the reliability of the businesses not being held responsible if customers use fraud or mask their location (e.g. saying they’re in Luxembourg when they’re in the UK or using a VPN). You aren’t allowed to restrict sales to the UK because of the anti-discrimination laws. Of course, if you are outside of the EU, then you CAN do this and businesses already have, including Google. Donations in the way you describe would be a tax dodge and I’m pleased you know that obviously isn’t ok 🙂 Of course a general donation to a site that isn’t a business in appreciation for a free download would be ok.

  66. I’ve had to stop trading with Europe. (1) I use Paypal “Buy” buttons, and would have to replace each one with 20 others for each of the new VAT zones. (2) Neither Paypal “Buy” buttons, nor any free open source shopping cart software support VAT at the point of purchase, nor collects the required “proof” of residence information. (3) I’m aware of only one partially compliant commercial shopping cart which would cost be £700 per website, plus installation costs, plus cost to migrate data. Not cost effective when I do under £400 trade per year. (4) As I am way under the VAT threshold, I do nothing. The new EU VAT rules require me to track VAT in 26 tax zones, and be aware of all the exceptions, acquire proofs of residency and keep them for 10 years, and file reports every quarter. (5) This is not one Common Market, but 26 difference zones. (6) The implementation is onerous, costly and currently not technically possible.

  67. I kicked up a big stink about this issue in December, and I’m quite upset that all the politicians seem to be waiting for all of us annoying sole traders to shut up about it. Because we will. Because we’ve all had to redesign our income streams to fit the new rules.

  68. Hi Angela

    Big surprise if they think we’re going to shut up. I’m a member of EU VAT Action and we’re meeting the EU’s Head of VAT and have already met with David Cameron. This is not the usual ‘more red tape’. Keep going!

  69. Very in-depth article, thanks for sharing with us.

  70. Hi Rosie,
    I know I’m a bit late to the party and all the cake might be gone 🙂 but can I ask …
    From your answer re: live coaching, am I right in thinking I can offer live coaching via internet platforms like Skype, Google Hangouts, etc? If so, can I offer this after payment, e.g. one-off payment?

    Also, what about Affiliates? Are they affected. For example, if I sell other people’s ebooks, courses, etc will I fall under EU VAT? I noticed from reading the HMRC gov. site that any info product that’s advertised on my blog is affected. Would this cover any affiliate links I include in my blog posts?

    Any kittens left? 🙂

  71. Hi Tom

    At the moment, 100% live coaching is ok and not affected. It’s a bit more of a grey area if you offer your live clients downloadable resources as part of the package they pay for.

    For affiliates, it depends on the contract and also whether you are the person who is the affiliate or the person affiliating.

    Please note this isn’t advice 🙂

    Rosie

  72. Hey Rosie,

    Thanks for this awesome article. Already bookmarked it and will be revisiting this page more than a few times in the future!

    I’m a microbusiness (nanobusiness?) owner living in Turkey and I’m about to go global with my service (WordPress speed optimization and maintenance for a one-time fee) but I’m confused about my service being an “electronic service” or not. I tried to explain myself in a tweet (already mentioned you, also you can click on my name in this comment to see it) but I’ll try again here:

    – In Paragraph 1 of Article 7 in the “Explanatory Notes” (p. 85), it says that electronic services “include services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.”
    – In Annex I (p. 86 in the same document), it says that “automated, online and distance maintenance of programmes” are included.
    – My service does include software that runs tests and optimizations, but they have to be adjusted and run by someone (me) in order to complete the service (the customer can’t do this), making the service both “manual labor” and “requires MAXIMAL human intervention”.
    – Yet, I’m not sure that it will be acknowledged as “manual labor”. I’m hundred percent sure that my work is NOT automated, but I also know how the laws work. *sigh*

    So, I’m stuck. Can you help me out? Please please please don’t leave my cry for help unanswered.

  73. Hi Baris

    Bespoke and individual work isn’t included in this legislation, and from what you have said, you tailor it to each client. Having said that, I need to say that this isn’t advice 🙂

    Hope that helps, Rosie

Trackbacks

  1. […] EU VAT Changes 2015 – What You Can Do by Rosie Slosek at One Man Band Accounting. Points out the nigh-impossibility of complying with the vaguely defined rules, and gives practical suggestions for small businesses. […]

  2. […] to say that here is a piece written by a woman whose opinions closest to my own, by Rosie Slosek of One Man Band Accounting.  Nice job, […]

  3. […] EU VAT Changes 2015 – What You Can Do […]

  4. […] several months, and their future is now uncertain. Rosie of One Man Band Accounting has written an excellent summary blog post, and Rachel Andrew is keeping a list of information and […]

  5. […] a solopreneur selling digital products in your business – please read this. And then this). And that applies to readers in the US too…this affects […]

  6. […] EU VAT Changes – What you can do by accountant to solo business owners, Rosie Slosek. HMRC claim that the vast majority of micro businesses will not be affected because we use third-party marketplaces such as app stores, which isn’t true  in my experience. Rosie’s article explains why using a marketplace isn’t straightforward as it first appears. […]

  7. […] Ysolda’s incredible helpful summary – much more detail for sellers about the problems. Advice from an accountant Summary from a web consultant This is an incredibly in-depth summary from a web developer, […]

  8. […] a law change in the EU which means I will have to do a ton more compliance paperwork if I keep selling direct from 1 Jan […]

  9. […] on how to write and revise a novel? I have a multimedia course with Joanna Penn, but because of a law change in the EU we’ll be forced to withdraw it from 1 Jan […]

  10. […] a law change in the EU which means I will have to do a ton more compliance paperwork if I keep selling direct from 1 Jan […]

  11. […] that are for sale on January 1st, 2015. If you haven’t heard of the tax changes, check out this article and sign the petition to help out. I’m not exactly sure where my business will be going in […]

  12. […] Rosie Slosek, of One Man Band Accounting – EU VAT Changes 2015 – What You Can Do […]

  13. […] Slosek has a really good run down of the challenges that sole traders in particular are facing on her blog but essentially virtually none of the small businesses that will fall under the new EU VAT rules […]

  14. […] You can read more about the change in taxation for sales of digital products here. […]

  15. […] You can read more about the change in taxation for sales of digital products here. […]

  16. […] You can read more about the change in taxation for sales of digital products here. […]

  17. […] I have been doing some reading this morning and found an informative post on the subject. FIND IT HERE  […]

  18. […] • Rosie at One Man Band Accounting has a very good guide to all the ins and outs of the new legislatio… […]

  19. #VATMOSS | says:

    […] shouldn’t affect any of us, except that the whole thing is a big fat unworkable mess. This article runs through it all better than I could. But basically, whereas before if you were selling ebooks […]

  20. […] Slosek – EU VAT Changes 2015 – What You Can Do (Recommended […]

  21. […] month with lots of posts about quitting, about income dropping with Kindle Unlimited and the new EU Tax Law, about this or that […]

  22. […] The objective of this post is not to give you any legal advice. I’m no expert myself. But I just want you to know about the potential repercussions of this law on your blogging income. You should definitely seek professional advice on this matter and study this law in more detail here. […]

  23. […] This is also a hugely helpful and informative post from the lovely Rosie Slosek: EU VAT Changes 2015 – What You Can Do http://onemanbandaccounting.co.uk/eu-vat-changes-2015/ […]

  24. […] I used it during those government meetings in the discreet way Linda taught […]

  25. […] who have created a #VATMOSS update section, and Enterprise Nation.  Also please see this epic and very popular post on EU VAT from our regular contributor Rosie […]

  26. […] uncertainties, issues and risks being discovered and discussed daily on blogs like this and this, on Facebook groups & pages, and over Twitter (#EUVAT, #VATMOSS, […]

Speak Your Mind

*