The EU, in all its wisdom, has decided to change in which country VAT is applied to a digital download. Instead of being in the country of sale as it is now, it will be the country of purchase. That means I have to add VAT to every European digital sale I make from the 1st January. As each EU country has a different VAT rate, the rates vary from 15% to 27%. The appropriate amount has to be added to each EU sale. We also have to keep details of every sale for 10 years and keep records to prove that we have or have not sold to an EU country.
As you can probably tell, this is going to be a major chore for a tiny, one woman business.
What's more, whereas in the UK we have the protection of an £81,000 threshold before we have to register for VAT, the new rules mean that anyone selling even 1 penny's worth of digital download is liable to pay VAT in the country of sale. We have to register for VAT on an HMRC (Her Majesty's Revenue and Customs) website (or, alternatively, every one of the 28 EU states) and send in four VAT returns every year. It applies to crafters, artists, musicians, authors, app writers, broadcasters, suppliers of telecommunications and electronic services, big businesses, small businesses. It also applies to anyone in the world who is selling digi-downloads - not just EU sellers. If you sell digi then you're caught.
It's big, it's scary, it's a mess. Anyone on Twitter can follow the scared and angry tweets of loads of tiny businesses who have been caught up in this by using the hashtags #VATMOSS or #VATMESS. I am part of a group on Facebook that has been pushing for changes to these new laws to protect tiny businesses. We are writing to members of Parliament, members of the European Parliament, the media, supporters of small business and anyone else we think may be able to help. Whether it will help is another matter.
I have already seen posts by many crafters who sell tutorials and digital collage sheets saying they will have to close up shop or stop selling to the EU altogether because of this. At the least it means price rises. Budding starts ups wont even get off the ground. It is too complex for many cottage industries and tiny businesses to cope with and I do not think the EU has thought this through at all.
In my case what it comes down to is what Etsy chooses to do about the new legislation. They are supposed to collect the VAT instead of leaving it to the seller. Sadly they have not made an announcement about what they are going to do yet. If Etsy does not step up then I will have to stop selling the downloads. Digital downloads were meant to be a new arm to my business. Instead it has become a nightmare.
So this post is really a plea. If you fancy one of my digital tutorials then I suggest you grab it now. I do not want to put pressure on my customers and followers at all. I always appreciate every sale I make. I just want you to know that if you fancied trying out some of my techniques then it is possible that they won't be there for long.
You can find the tutorials in my Etsy store.
