Let's talk about tax, baby
I'm afraid to say that his lovely picture isn't what this post is about today. It's more a soothing balm to use as an antidote to the contents of today's post, for I'm here to talk to you about tax - whoopie do!
Please don't run straight for the hills though, because this is a message to customers who would like to buy one of my patterns. But also, if you buy or sell online you could well need to know about this.
So who does need to know?
Sellers: Anyone, anywhere in the world who sell digital downloads online.
Buyers: Anyone based in an EU country.
And: All my EU customers!
What's going on?
Due to some changes in the EU VAT laws everybody who sells digital downloads online now needs collect and remit VAT on behalf of their EU customers. Julie from Little Cotton Rabbits kindly gave me permission to use her explanation here...
"On January 1st 2015 a new EU-devised law will come into force regarding VAT on all automatically electronically supplied services (telecoms, video streaming, e-books, apps, music, pdfs etc) full details are here. Previously VAT has been payable on the seller's location and there were some sensible thresholds in place to nurture the smallest of small businesses and encourage entrepreneurship and trade.
From January 1st the VAT will be payable on the buyer's location and there is no de-minimis threshold - in other words if you sell a single pdf file/music download etc. to anyone in a European country that you are not resident in (whether you as the seller are in Europe or anywhere in the rest of the world) you will be expected to charge VAT at the buyer's country rate and send that VAT to that country's authorities. You will need to become familiar with the 75 different tax rates across the 28 European member states."
(You may want to take a moment to read all of Julie's post about the EU Tax changes here, as she explains it very simply and clearly.)
What does this mean to me?
My EU customers: You can still buy my patterns without problems, but in order to comply with the changes, your orders will be diverted to Love Knitting for checkout and you will need to register with Love Knitting to complete the process.
(Not ideal but options are limited at the moment.)
(Not ideal but options are limited at the moment.)
Please also note that VAT will be added to the pattern price at checkout, once your country is determined.
My customers in UK and the rest of world: Nothing changes for you!
Buyers online generally: Outside of the EU, you probably won't notice a change. Although many people are closing their businesses because of this new ruling, so it's possible a few of your favourite independent online sellers will disappear.
Buyers online generally: Outside of the EU, you probably won't notice a change. Although many people are closing their businesses because of this new ruling, so it's possible a few of your favourite independent online sellers will disappear.
EU buyers (inc UK): Well, prices are going to go up for you. Partly because you will now be paying VAT and partly because sellers will end up paying more in fees to comply.
The buying process might become more time-consuming as buyers will need to collect more data from you about where in the world you are.
Some sellers will also stop selling to you. (Some already have!)
The buying process might become more time-consuming as buyers will need to collect more data from you about where in the world you are.
Some sellers will also stop selling to you. (Some already have!)
Selling online: Anyone who sells the relevant products online will be affected by this unless you have a way of blocking sales to the EU. (Third party platforms are supposedly responsible for dealing with the changes but as plenty of big names like Etsy, Craftsy, Folksy and Paypal were unprepared for this, you'll need to check what plans (if any) they now have in place.)
This doesn't sound great, what can we do?
The sad fact is the people who conjured up this law had no idea at all how people buy and sell on the Internet and so the law just doesn't take into account how thousands, if not millions sell online. We need to tell them to make changes. If you are outside of the UK and even if you are outside Europe, please lend weight to our argument by signing the petition below. Tell the EU that you are not happy because this affects the whole world, businesses and their customers.
One more thing...
You also need to know that the EU is planning to bring in this law for all products sold online next year, not just digital downloads. So if you sell anything online, soon you will be affected. Also be aware that the rest of the world is planning on bringing in similar laws soon.
That's why it's so important to sign these petitions and get some changes now!
Petition Link
Suspend the current EU VAT laws for micro business
You can read more about the changes and what action you can take on the EU VAT Action website.
: :
Ok folks, that's it
If you made it this far, thank you and well done.
If you signed the petition, thank you very, very much.
Now go and scroll up to the look and look at that nice soothing basket of yarn again to make yourself feel better!
S x
That's why it's so important to sign these petitions and get some changes now!
Petition Link
Suspend the current EU VAT laws for micro business
You can read more about the changes and what action you can take on the EU VAT Action website.
: :
Ok folks, that's it
If you made it this far, thank you and well done.
If you signed the petition, thank you very, very much.
Now go and scroll up to the look and look at that nice soothing basket of yarn again to make yourself feel better!
S x
♥