UGH. You may or may not have heard about this: the way VAT (Value Added Tax) in Europe is being charged and handled is changing as of January 1st, 2015, and at the moment, it’s being implemented in a way that is a HUGE burden for small businesses.
Until the dust settles and good solutions arise, it means I have to switch off the ability to take digital patterns orders from countries outside of the USA as of December 31st at midnight – so if there’s anything you want for yourself as a late holiday prezzie, hop to it! Note that orders for physical products are not affected in this go around (although there are rumblings that they will be next year). The law is intended to get some good money out of the likes of Amazon, but there is no small business threshold of forgiveness, so yeah, We the Little People are taking the hit, as usual.
This affects EVERYTHING digital… from ebooks to music to patterns, etc. Basically, for all sales to the European Union, I have to collect VAT (at each country’s rate) and file quarterly tax returns and payments to EACH country. I also have to collect a bunch of data about the transaction (like the IP address it came from) that isn’t yet being made available to me by my payment providers like PayPal (they’re working on it, but it’s not in place). And then I have to store that data for 10 freaking years. And if I put my head in the sand and hope not to get caught, I could be forbidden from traveling to the countries in which I would then be considered a tax evader. Go here If you want to read deeper details.
I have already put my Etsy shop on hold, and I will be limiting the payment locales in PayPal, which affect the digital orders from Craftsy (who don’t have a solution in place yet, but I hope are working on it).
So this is how it looks for my customers right now (and I’ll let you know as soon as it changes):
EU folks – until I find a digital provider that will handle the VAT stuff for me (at a rate that makes business sense) I can’t do digital business with you. I can do a credit card and snail mail of a physical product only. UPDATE 1.06.15 – I’m looking into PAYHIP – will probably implement at the end of January. In the meantime, you can order my PDF patterns through PatternSpot.com (as they are taking care of VAT filing for us)
Canada, Australia, and New Zealand folks – as PayPal currently allows a US customer to block only “non-US” customers (not on a country by country basis) I can’t sell digital files to you either or I risk being open to the EU penalties. I can work around it with a credit card and emailing a file though, so just email me and I’ll do everything I can to get you what you need. UPDATE 01.06.15 – I was able to manipulate PayPal to allow everything but EU – you should be fine now, and if you’re not, let me know.
US folks – you’re in luck. Business as usual for you… carry on. Although you’re probably going to see prices go up all over to cover the costs of dealing with this.
I’m seriously bummed. ALL of my customers matter to me, and I’m thrilled that the internet has shrunk the borders and allowed me to make friends all over the world. I HATE that I have to shut some of you down.
Oh, and other countries like Japan are looking at implementing similar things next year. The global digital economy is about to change. I just hope in the race for more tax dollars it doesn’t kill off all the small businesses that make it so vibrant.
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