EU VAT changes 2015

[deeproot]

Anyone selling their programs from your own website with automated payments? I'd be interested in any opinions or advice on how best to handle the EU VAT regulation changes that kick in on 1st January 2015.

I've only just found out about this (place of supply change) and am fairly confused! To put things in context, I only make a tiny income from my sales and my time is precious so I've no intention of registering for VAT.

My concern is with the situation working from the UK, but I think the issue is the same for everyone selling "digital" products to EU customers.

Here's a couple of links on the topic:
The Guardian
TechCrunch

[IdeasVacuum]

I'm in the UK too - our Government has not done a good enough job in telling us about this change eh?
First things first - all developers in the UK (and maybe Europe?) need to sign this Change.org campaign:
https://www.change.org/p/vince-cable-mp ... l-products
I think the only thing small business can do is put up their prices to pay a third party service to handle the sales and record the buyer's address etc. It is a completely ridiculous law that hammers the small companies and new kids on the block and favours the really big companies like Apple and Google. It is a disaster waiting to happen. Certainly, it has not been thoroughly thought-out.....

[IdeasVacuum]

Well, looks like the cost of complying will exceed the profit on small apps, so all sole trader developers through out the EU might as well stop working now.

I'm very surprised that the likes of PayPal are not kicking-up a fuss about this since they are guaranteed to lose their small trader clients.

[deeproot]

I'm in the UK too - our Government has not done a good enough job in telling us about this change eh?

Totally agree - I stumbled onto this a couple of days ago as complete fluke! I'm a properly notified and tax-paying sole trader, but nothing on this from HMRC. OK, I've been rather "off grid" this year, so did not spot this sooner (busy moving house to a nicer part of the UK )

Yes, signed that petition yesterday!

Thinking about a 3rd party service - it's a good suggestion but unfortunately so far it does not look like a good fit for my PureBasic programs. I will investigate further. I have got a small Android 'app' on Google and that's fine. The shame is - my current website method works and pricing is about right.

[JackWebb]

Consider using a crypto currency and screw those government peons!


https://www.youtube.com/watch?v=dAUV5FvceM4

https://bitcointalk.org/index.php?topic=895020.0

https://bitcointalk.org/index.php?topic=404364.0

[DarkDragon]

I've only just found out about this (place of supply change) and am fairly confused! To put things in context, I only make a tiny income from my sales and my time is precious so I've no intention of registering for VAT.

You have to register (at least if you sell in Germany), otherwise it is illegal and a tax fraud.

How it was before: register your company separated in every country and fill out your VAT-formulas in every country.

How it is in 2015: register once and only give one country all information about the incomes in other countries.

Thats the mayor change, but I give no warranty about this information. Please go to a tax professional. I'm just selling in Germany and I'm paying my tax professional a lot of money even though my income is not high enough for this.

-------------------

Btw.: does someone of you know how google play behaves in 2015? Will it be a reseller then?

[deeproot]

You have to register (at least if you sell in Germany), otherwise it is illegal and a tax fraud.

Thanks for the information about the situation in Germany.

In the UK I'm a very long way below the VAT threshold, so no need to register up to now. I am of course properly declared as a trader and have always paid full income tax on my sales - all totally legal (while sales were counted from the place of the seller!).

I have spoken in person to the HMRC and my problem is that the cost of the needed data collection, accounting and record keeping for VAT is considerably more than I would ever earn from my software sales. I know about the costs of professional tax advice and accounting as I've used them in the past. It would not make any sense for my current business. I cannot see any satisfactory (and legal) solution at the moment.

As far as I can tell (?), Google Play will act as a reseller and handle the VAT. If this is the case then maybe a big move to Android is an answer - but not good for my PureBasic programs or my old customers

[DarkDragon]

Sorry for hijacking this topic a bit, but ...

As far as I can tell (?), Google Play will act as a reseller and handle the VAT.

Well I was asking, because nowadays the developer is on the bill, but if google will pay the taxes at 2015, will they change that and google will be on the bills? Google doesn't answer to my email regarding this, and I need the information to go to my tax professional before it is 2015.

If this is the case then maybe a big move to Android is an answer - but not good for my PureBasic programs or my old customers

No, android isn't really an answer . It is really horrible to manage and google technically doesn't really support companies with the "Kleinunternehmerregelung" (small company rule, which says you won't need to pay VAT unless you have more than 17500€ income per year), because you can't design the bills google rolls out in your name.

[IdeasVacuum]

I'm just selling in Germany

As a member of the EU, if you are selling digital products online, you have to make those products available to the other 27 EU member nations (You are not allowed to discriminate)
http://euvataction.org/

[c4s]

As far as I can tell (?), Google Play will act as a reseller and handle the VAT. If this is the case then maybe a big move to Android is an answer - but not good for my PureBasic programs or my old customers

There are several (cheap but good) payment processors that act as a reseller of your software. I can recommend Avangate.

[DarkDragon]

I'm just selling in Germany

As a member of the EU, if you are selling digital products online, you have to make those products available to the other 27 EU member nations (You are not allowed to discriminate)
http://euvataction.org/

Well ... I'm currently not selling anything online, only offline, especially because of all previous problems (with Google Play and their enforced bill design). But there is still the alternative to go to share-it (the reseller of Milkshape 3D)! A reseller which handles everything, even the "Kleinunternehmerregelung".

But why can't I say I only sell to German customers? Where on this website can you read about the fact you've written above?

[JackWebb]

http://www.forbes.com/sites/aarontilley ... tal-goods/

[IdeasVacuum]

But why can't I say I only sell to German customers? Where on this website can you read about the fact you've written above?

It was one of the first proposals, to allow businesses to survive while the wider picture was sorted out, but on the Change.org Campaign it was pointed out that such discrimination is illegal and the penalty greater.

Something I didn't know which is related and complicates things even further:
Japan VAT on digital Goods

.....and apparently several of the USA states are looking at a similar VAT system too?

[DarkDragon]

But why can't I say I only sell to German customers? Where on this website can you read about the fact you've written above?

It was one of the first proposals, to allow businesses to survive while the wider picture was sorted out, but on the Change.org Campaign it was pointed out that such discrimination is illegal and the penalty greater.

I still don't understand you. Restricting to sell at one place is usual. You don't buy the whole world's area and all flats and houses of the world before starting to sell your goods. You buy a single flat first. Otherwise you would need to do the tax for every country in this world, which would mean there would never ever be any startup anymore. Nobody would every try to sell anything online anymore if you'd have to sell it world wide. You'd need a whole team just working on the tax for you.

Discrimination would mean selling only to Germans. Selling only inside Germany is not discriminating. I don't get it.

I'm not allowed to sell outside of Germany without registering the company there and you tell me I need to sell outside of Germany?

[IdeasVacuum]

Otherwise you would need to do the tax for every country in this world, which would mean there would never ever be any start-up any more. Nobody would every try to sell anything online any more if you'd have to sell it world wide. You'd need a whole team just working on the tax for you.

That is broadly what the Campaign seeks to address, but it is only looking at the EU. A lot of businesses in the UK have already closed down because the cost of administering the VAT exceeds the profit made on the items for sale.

The rule is this: If you are selling digital goods like software, e-books, pdfs etc online via a website or 3rd party market-place and you are based in an EU member state (e.g. Germany), you must make those goods available for purchase by the whole of the EU, i.e. all 28 member states. If you state, for example, "My products are only for sale in Italy" the EU are going to charge you with discrimination.