vat moss on digital downloads – designed to catch the big fish but only catching the small fry!

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CONFUSED – YOU SHOULD BE!

some definitions/explanations given below ……

Today’s assignment on the blogging101 course is to follow up on yesterday’s assignment which was to visit various blogs and leave comments and see if you could start a conversation going!  The challenge for today, is to write about your comment and expand your thoughts into a longer piece.

Yesterday, I started photographing the new stock that came in (plug), and then had a dentists appointment.  He insisted that two teeth needed to be taken out, and I wanted to keep them. For the first time in my sessions with him, I won, but I paid a price!   By the time I came home, the four injections that my dentist had used whilst filling the teeth, had numbed my mouth so much that I didn’t know where it was, and made me feel so ‘woozy’ that I had to go to bed.

So that’s my excuse for not “doing my homework”!  However, I can write something that fits into today’s brief, and its a subject I was planning on writing about anyway.

cropped-3vert-dry-stone-wall-version-2.jpgThe title of this blog may well sound like gobbledegook to you – actually it is!

Just before New Year, I got one of those regular emails you get from etsy as a buyer, or a seller.  I usually just skim them, and perhaps click on a picture of something someone has made that I like. (its a site for craftspeople to sell their work)

This time there was a blog about the introduction of VAT MOSS to all digital download sellers, which caught my eye because I was planning to open a second shop on etsy to sell digital downloads of my photographs.

I read the blog, I read the comments, commented on the blog and on other sellers comments.  Most of them were absolutely furious, not only that they were now going to have to register for VAT MOSS, but that etsy had left it until the last minute to tell them about it.

I don’t blame the etsy team all that much, after all, not even the tax office seems to be able to explain what to do, although it does seem it is the site that takes the payments that is responsible for registering for this scheme.  I would give you a link to this post, but so many of the hundreds of commenters are easily identified by their pictures, so I think I should just give you the link https://www.etsy.com so you can find the blog for yourself, if you want to.

A good number saw no way round this new regulation, because the digital downloads are done thro’ the etsy site, payments made through PAYPAL, and you don’t even know what country your customer comes from!  Many were seriously intending to close their shops rather than deal with the new regulations, or treat their EU customers separately.

The regulations have been made by the EU, but they affect all small businesses, and large businesses,  selling digital downloads of any kind, from any country to EU customers.  That means that anyone in any country has to pay this tax, and what’s more, you have to register with the tax authorities, even if you only sell £1, $1, 1 euro’s worth of downloads – and that, I think anyone would agree is RIDICULOUS!

As a result, I started looking into this issue and couldn’t believe what an idiotic law it is.  How badly drafted it is, and how the “law of unintended consequences” is going to crush all those small businesses that are now becoming the only way to earn a living since the recession.

cropped-3vert-dry-stone-wall-version-2.jpgI said, in my last blog, that I was now living in a digital world – and now that world is going to be TAXED! 

There are:

photographers selling their photographs – they have to register,

artists selling all digital formats of their work – they have to register,

self publishers selling their books – they have to register,

musicians selling their own music – they have to register,

people selling training videos – they have to register,

knitters selling knitting patterns – they have to register,

(altho the knitters site Ravelry has arranged that another retailer takes the responsibility for tax payments)

 

and nearly everyone who sends digital information around the world is theoretically caught in the EU’s net.

As far as I can tell, the reason the law was drawn up was to get some revenue out of those large tax dodging companies, like Amazon, Apples’s iTunes and SKY, and possibly, it was widened to try and catch those nasty pedophile rings.

Those are the big fish – and, no doubt, they will find a way round the regulations.  We are the small fry, and will be badly affected.  I have put the idea of selling digital downloads of my photographs on the back burner, but at least I hadn’t started yet and won’t have to comply.  There are others that actually earn a reasonable amount from this, and they face the choice of shutting up shop, or paying tax to all the EU countries, all of which, set their VAT at different rates.

And there are not thousands, but millions of small businesses around the world, who will theoretically be affected by this, even if they don’t comply, they will be worried that they might get prosecuted.

There are various angles to this whole discussion, but for once, I think I will make my point and keep this post short – but not sweet.  If you don’t know what I’m on about, the basic explanations are below.

I have signed a couple of  petitions I found against the introduction of this scheme – if you want to sign them too, these are the links – if you can find others to sign, please let me know and I will add them to the list.

http://euvataction.org/take-action-now/  is a site that has been set up to campaign against VAT MOSS

This petition is to the EU official responsible and can be signed by anyone from any country

This is the email address of the UK Treasury official responsible public.enquiries@hmtreasury.gsi.gov.uk    UK  ONLY

This petition is to Vince Cable MP, UK Minister responsible  not sure if those outside the UK can sign it, but you can try.

For UK sellers only, Vince Cable has negotiated that the regulations can be side-stepped, if you email your customer directly – but as I said, etsy sellers don’t know where their buyers are from, so you have to opt out of the digital download  scheme altogether to comply.  As far as I know, no other country has this arrangement,

Brief explanations of the gobbledegook

cropped-3vert-dry-stone-wall-version-2.jpgI will try and be succinct here, and explain what this involves.

VAT is VALUE ADDED TAX – that currently adds 20% onto the cost of each purchase in the UK – excluding most foods and children’s clothes.  The customer pays the tax – usually hidden in the price, and the seller has to add up all those 20%’s and declare them to the VAT man, and pay the tax they have collected to the government.  In return, they are able to get a refund of the VAT they have paid for business supplies etc, which is usually a much smaller amount than they have collected.

In the UK, you can run a small business and NOT be registered for VAT, the threshold for registering for VAT is a turnover of £88,000 (approx) a year  – so why do we have to register for VAT MOSS for a £1 sale?

VAT MOSS is the pan European name for the scheme to collect this tax.  MOSS is “Mini One Stop Shop”

If you really want to read gobbledegook, this is the site for the UK’s HMRC (tax office),  I don’t understand it, and there’s enough confusion as it is!

Basically, it tells you how to register and then how to send in your accounts, by country, of your sales, so YOU have to work out what you owe, to all the 26 European countries, pay a total, and the HMRC will distribute each bit to the relevant country.

This blog by Heather Burns is the best account I have seen of the complications and unforeseen consequences of these new regulations.

and just cos I’ve put in all this work to inform you – you can find my etsy shop  here

cropped-3vert-dry-stone-wall-version-2.jpg

5 responses »

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