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anyone else sell digitally and seen the new EU?VAT rules coming in as of January 2015?

(11 Posts)
nipersvest Sat 22-Nov-14 13:07:15

if you haven't, then you need to read up on it quick. in a nutshell, if you sell anything digitally, eg ebook, online teaching course, anything downloadable etc, you now need to pay VAT on any sales to a EU based customer. it looks like a paperwork nightmare! This is going to kill so many small businesses.

ClashCityRocker Sat 22-Nov-14 22:04:45

Just to point out, hmrc are offering a 'mini one stop shop' to avoid having to register in every country you make a sale.

However, as far as I know, this will mean you also need to register for uk vat if not already done so and charge output vat on sales you make in the uk.

I agree it is going to be a huge financial and administrative burden on many small businesses.

ClashCityRocker Sat 22-Nov-14 22:05:39

Info here:

https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop

I'm surprised a bigger fuss hasn't been made about this, tbh.

TalkinPeace Mon 24-Nov-14 19:45:15

Sorry but I can see nothing in there requiring UK businesses below the UK registration limit having to register.

ClashCityRocker Mon 24-Nov-14 20:15:28

They have to register for uk vat to use moss - you can't complete the registration process without a uk vat number. Hmrc are being very quiet about it.

GT explain it better

www.grant-thornton.co.uk/Documents/Briefing-paper-Mini-one-stop-shop.pdf

Basically if you make digital supplies to eu countries (other than uk) you have two options:

1. Don't register for uk vat provided you are below the registration limit, but register in each eu country where you make a sale, or

2. Register for uk vat so that you can use the mini one stop shop, have to charge/absorb output vat on sales to the uk and charge vat at the local rate on eu products.

It's going to be a bit of a nightmare, I think, and will see lots of smaller businesses only selling to the uk and non eu countries.

TalkinPeace Mon 24-Nov-14 20:22:55

Then logically small businesses will sell to a UK based reseller who will handle the whole VAT stuff

the EU are being pig headed, but most other countries have VAT reg limits 1/10 of the UK one

ClashCityRocker Mon 24-Nov-14 20:27:35

Or none at all, which is why it's come about.

But I agree, most small business will go through a uk based third party...suspect it will push up prices somewhat.

TalkinPeace Tue 25-Nov-14 13:47:55

https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products

ClashCityRocker Tue 25-Nov-14 18:22:32

Signed.

snappymarie Thu 27-Nov-14 13:56:34

There are many of us who create digital scrapbooking kits, card sheets and other paper crafting projects that are sold as digital downloadable products and this will affect all of us who do it to bring in a little extra pocket money or are trying to run a small business.

None of us want to register for VAT and go through all the hassle of recording every single detail of those from the EU and then submit VAT returns, we just don't earn enough to warrant it - nor do most of us have the resoursces to create a system that collects all the necessary information needed to fill in these VAT returns. It is absolutely ridiculous and foresee many many online stores selling digital resources like this closing down.

At the moment the advice we are being given is to change our digital downloads to physical goods and that way we can choose which countries we ship to (blocking the EU countries) but that then means we would have to email the buyers their links to download the items which is old hat and very time consuming.

Those who are able to block the EU countries via their online stores can do so if they use Zencart or something similar.

Those who sell through platforms/market places (third parties) have to check if their platform/website hosts will take on the VAT burden. Etsy so far have not declared their intentions and seems likely to be that they will not.

The most annoying thing is that these big third party websites such as Etsy have known about this change for months and have done absolutely nothing to put anything in place or have any decent advice to give their sellers except to turn digital products in to physical products. Those who sell hundreds of kits on Etsy will have an enormous task to change their files over in this way, let alone the extra costs of hosting the download files.

I only found out about all this when I joined Etsy just a few weeks ago and saw it in their forums. I was gobsmacked. Only now has it become urgent for information so people like to me know where we stand.

What I can tell you is that if you sell in the UK to the UK or everywhere else except the EU it's fine but you will need a system in place in order to block the countries from the EU.

Only websites where you can install something like Zencart can you block these countries.

Chattymadam Thu 11-Dec-14 23:43:33

There is a great FB group with all the lastest information if anyone cares to join. It's an open group and they would welcome Mumsnet with open arms.
https://www.facebook.com/groups/DigitalVAT2015/

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