The new EU Vat laws are causing a significant problem for authors, artists, and many other small businesses including unfortunately, this website. Basically if you sell to EU consumers you have to pay VAT in their country instead of your own, and there is no VAT threshold. We’ve already heard from authors suspending releases until this is solved or, sadly, preparing to stop writing.
Myth: If you are under the VAT threshold for your country you are exempt
Fact: This rule has a seperate VAT threshold of zero. You have to pay VAT from the first cross-border sale.
Myth: 4% of businesses sell cross-border
Fact: 96% do, including micro-businesses.
Myth: If you sell German language products the law does not apply
Fact: It does.
Myth: That there is leeway on small amounts.
Fact: One British company has already received notice to answer to a foreign tax office over a euro 4.67 bill. They paid, but the tax office think there should be more.
Myth: That VATMOSS solves the issue.
Fact: VATMOSS does not calculate the effective VAT rates, remove the reporting requirements, or change the data storage requirement. It is a payments mechanism. Reports have come in of payments being directed incorrectly.
We’re scraping round them – as a British site we only list books from the UK and English-language countries where the EUVAT other tax treaties are in place. This does mean manually checking all books and ads that we sell, and has cut the site’s funding significantly. We’re hanging on, but as you might have noticed the number of reviews has fallen and improvements like the new theme that would improve the book display and the full email upgrade have been dropped.
We started this for a bit of fun. It’s a club, not a business, (although we get free support from one) and suddenly our book club with a subs of 50p a week for the cake kitty has to pay VAT?
The facts are that if we fell under this law the site would have to close. We don’t have the infrastructure to store customers’ address, transaction, and bank details securely for ten years, it’s why we use Paypal. Paypal does not provide enough information to comply with the VAT law, but the processors that do charge a monthly overhead that results in immediate closure.
There have been complaints from authors, artists, software developers, knitters, and more all of whom either have to sell only through third parties (losing over 30% of income), close, or find a way to block sales to the EU. Reports of issues have come in from as far as Lithuania, Indonesia and unsurprisingly there have been many from the US. The law was meant to deal with Amazon and other larger entities, and even the EU have admitted small businesses were never meant to fall under it.
If you would like to know more about this situation please contact EU Vat Action http://www.euvataction.org, a cross-european effort to either get a threshold put in place or the law suspended until it can be corrected.
