Monday, 15 December 2014
Sell software in the EU over the 'net? There are big VAT changes in less than three weeks' time.
The VAT rules for digital downloads are changing from January 1st 2015. This
will affect everyone.
If you sell even a single item in Europe you will be affected, even if you
are well under the VAT threshold.
They changed the law so that the VAT must be paid in the purchaser's
country, not the seller's. This was intended to catch out companies like
Amazon who sell from Luxembourg where the VAT is lower.
But they never realised that this will catch out the tiny one-person
businesses as well. They've only just noticed that it will even hit people
like housewives earning pin money while looking after the kids. So they
haven't even told them about the change!
If you sell a song, an ebook, an app, a knitting pattern, anything like
that, you have two choices: (I am not a lawyer, this is my understanding of
1> Check which country the purchaser is in. Make sure you are registered for
VAT in that country and pay them the VAT. Some countries have a zero
threshold for registration. And you have to check the country for every sale
just in case.
2> Register with the 'VAT Mini One Stop Shop' the government have set up,
which will handle the details for you. However to do this you will have to:
Register for VAT here (though you won't have to pay VAT here until you hit
the threshold). For every single sale, collect two non-conflicting pieces of
evidence of which country they are in. Retain this data for 10 years. Since
this makes you a data controller, register for that (and pay the annual fee)
as well. Oh, and find a sales package that will handle all this for you
(Hint: there aren't any yet).
Many people have already said that they will simply have to stop trading.
And it is intended to make the same change for physical sales, in a year's
There's a fuller explanation of all this here:
ansible@cix has some useful links here:
And search for the hashtag #VATMOSS
Thanks to rafe at cix.co.uk for the above warning. What makes the situation worse is that the HMRC automated telephone hotline did not recognise enquiries about the one-stop shop until Radio 4's Money Box followed up a listener's complaint earlier this month.