Sunday, December 28, 2014

VAT, really?

According to the Etsy blog, the New European Union Rules on the Sale of Digital Items threatens to make small businesses like mine international law breakers starting January 1, 2015, unless we collect Value Added Tax (VAT) based on the VAT rates of the country where the customer is located, not on the rates of the country where the business is located. Etsy does not yet have a system in place for accomplishing this. All this hassle coming at a time when my family is really depending on my Etsy sales to put food on the table.

I may have to put my digital patterns "on vacation" starting January 1, until there is more guidance about this in terms that are practical enough to understand. I really don't know what to do about my digital patterns for sale on Craftsy, either.

I'm hoping all the "hoopla" will blow over soon. Meanwhile, I've started tatting around a cabochon, a very pretty blue Druzy. I'm sort of following CM-Handmade's instructions, but not exactly. I guess I'm already an International Law breaker as far as following tatting rules are concerned (grin). The tatting police will be coming for me! I already met one at a Tollway Tatters gathering earlier this year :) She was very, very nice!

20 comments:

Connie Eyberg Originals said...

They (powers that be) want to make sure they suck every cent out of small businesses just trying to honestly earn a little extra money. Meanwhile there are well-known public figures, including some politicians, that evade taxes and owe more money than we will ever see in our lifetime walking and talking without a care in the world. I don't (yet) sell digital but hope this goes away for the sake of those like you who do.

Connie Eyberg Originals said...

By the way, I forgot to mention...your tatted jewelry is very nice. Beaded tatting is on my 'learn it' list for 2015.

Miranda said...

That is really frustrating. I don't know that you have to take your patterns off sale, though. Surely Etsy will come up with a solution soon-- it can't be that hard-- and in the meantime, you just put up a notice that you are temporarily unable to sell patterns in the EU. I assume most of your sales are in the US and Canada, so it's got to be better than stopping sales altogether.

StringyDogs said...

I really laughed out loud at the "Tatting Police"..with a picture, even!

Sometimes I think that government only exists to throw barriers in the way of innovative thinkers and industrious people. I'm sorry. Surely ETSY is big enough to address this.

Sam said...

Hi Marilee. As a small online business myself, I've been looking into it via HMRC here in England and their guidelines seem to suggest that 1, if it is through a marketplace like Etsy you're ok and 2, if you do sell them through your own website (or Etsy for that matter) and it's not an AUTOMATIC download;- ie. you do it manually yourself via email, then again, you are in the clear. It's totally crazy and many small pattern makers, digi artists are in panic mode and are now just selling through the marketplaces as they just can't afford to be VAT registered. Luckily for me, I'm not to your level of expertise with my tatting so I'm not in the market for selling patterns at the moment, but it's sell crazy and it must be so hard to police if you sell worldwide, keeping a tab on all the VAT rates for every country you sell to.....madness, total madness. Anyway, all the best for the coming year hun x

TAT19540 said...

Might have to put a " at this time can not do international sales" thing on your shop. Got to love all the blood sucking, get everything out of you governments.
Positive note love the color of your current work.

Jane McLellan said...

I read about this on a blog about knitting patterns. It sounds as though the new rules haven't been properly thought through. I hope common sense will prevail!

Margarets designer cards said...

Yes Marilee it's a mine field, I have taken my patterns out of esty before Christmas. As I have read a lot if you manually email the pattern to the seller then it's not vat payable. Esty has not been a lot of help in fact they have only just given some thought to the problem. It's also against the law to say you won't sell to certain countries apparently. I have to find out about Craftsy not heard anything about them.
It would be a pity that no one could buy your gorgeous patterns in the EU.
Happy new year lets hope it's a better year
Margaret

TotusMel said...

After reading countless posts on the VAT subject, I'm personally not going to worry on it. As it stands it seems that it is unenforceable outside the EU. If you don't have a physical presence in an EU country, I just don't see how a foreign country can force you to collect taxes for it. Besides, even if they tried, the dollar amount of the patterns I sell are so low, it would be pennies. I'm thinking they have bigger, Amazon like fish to fry with this tax rule.

zarina said...

It's beautiful to see a police lady interested in tatting.

However, life is hard enough without figuring the VAT issue. So far, I have not 'sold' any digital product. May in 2015 but I'm under a company so they should take care of this issue.

Hope that all goes well for you.

God's Kid said...

That piece is so gorgeous unfinished!! I am sure it will be totally outstanding when finished!!!! :)

Jenn said...

I agree with the suggestion to not sell any digital patterns to anyone in EU until it is sorted out. In the mean time, please still sell to US, Canada, Australia etc :). Hopefully you can restrict countries on Etsy.

Marilee Rockley said...

Thanks to everyone for your input. It's comforting to know that I'm not the only one who thinks this VAT issue is craziness.
My decision for now is to just leave my digital patterns up for sale as they are, as instant downloads, for anyone to purchase. I prefer to not go back to the "dinosaur" days of emailing files, and emailing isn't an option on Craftsy, anyway.
Hope you have a wonderful 2015!

tattrldy said...

The VAT thing sound pretty crazy! What a pain! I know here in the states they've talked about having to collect the tax from where an item is sold instead of where they originate - how complicated is that? Don't know how that would effects digital sales, either. (I haven't sold anything online so don't know if this ever went into effect?) Good luck in finding out about the VAT.
Your tatting looks as lovely as ever!

Red said...

I have to agree with TotusMel, there's literally no way for them to enforce this here in the US. The only way this could possibly be a problem for you is if you were planning on going on a vacay in the EU and somehow the visa people found out you had an international online business and weren't VAT cert. Your tatting is, as always, gorgeous!

Lilas said...

In France, where VAT should be collected, this does not really apply to your business. Let me explain: on the one hand, many people practice without being reported. On the other hand, those who like me are declared, were under a special scheme for small businesses exempt from VAT (status autoentrepreneur).
I can not speak for other countries, but it would be incredible that you pay VAT while I'm not!
First of all I wish you a happy new year 2015!

Pigmini said...

You may well find that small businesses are 'exempt' from charging VAT in different countries.... for instance here in the UK your turnover has to be over £40K before you need to register for VAT, so, small businesses who cannot claim VAT back because their turnover is below the minimum do not charge VAT as a separate item!!

I hope you do not have to 'holiday' your patterns!!

Lilas said...

Thank you Pigmini. It's exactly that... my english isn't good enough :<

YorkieSue said...

Not sure if the effects this ridiculous legislation but to collect VAT in the UK you have to register once your income is above the threshold. And I quote:
"your VAT taxable turnover is more than £81,000 (the ‘threshold’) in a 12 month period"
Now don't you wish???
https://www.gov.uk/vat-registration/when-to-register

Marilee Rockley said...

Wow, £81,000 is over 122,000 U.S. dollars! In my wildest dreams only :)
Thanks, YorkieSue, for that bit of info.