Whether you’re located in Chester or anywhere else in the UK, if you’re a nano, micro, or small business offering digital products through your own website, then you will be affected by the Digital EU VAT rules that come into affect on 1st January 2015.
Here’s an overview of the new rules, by Crunch:
- 34,000 quoted in the above video as the number of small businesses affected appears to be a gross underestimation [by HMRC/Government, not Crunch].
- if you sell just one single digital download item to anyone outside the UK, but located in the EU, you will have to charge and register for VAT, without benefit of the standard VAT thresholds [you’d otherwise be eligible for – removal of the threshold is unfair].
- you will be forced to comply with some challenging VATMOSS rules in order to fully comply. [headache tablets may be required].
- If the 2015 changes don’t ‘get you’, the 2016 planned changes probably will.
If you can plait sawdust, the rules and how you apply them to your own small business website should be clear!
What Are Your Business Options?
There are a number of options to choose from, clearly illustrated in Dave Walkers excellent cartoon below.
What we are doing
Like thousands++ of other small businesses Website Designs Chester will be affected by these VATMOSS regulations, and for now:
- I’m in the process of taking my digital products off-sale from my own websites
- Daughter#1 was about to start her own digital business, that is now put on hold!
- Our eBooks will continue to be sold via Amazon KDP (oh the irony).
- We’ll be reviewing our position in January 2015 [or as soon as ‘the powers that be’ locate their common sense]!
- We’ll be Voting in May 2015 Elections ~ Not sure who for yet!
Don’t ‘Panic Buy’ a Solution, and Take Action!
The EU VAT rules are literally scaring micro and small businesses into either closing their businesses, ignoring the rules, or panic buying potential solutions! Before you splash out to buy in a potential solution(s), ensure that you do your own due diligence and secure the advice of your professional advisor, although you may need to educate them on the new rules!
As many people are taking action against these rules, I personally recommend biding your time to see how these campaigns unfold over coming weeks. Hopefully a workable solution can be agreed that will relieve much, if not all, of the burden currently being imposed and that micro and small business closures can be avoided.
For me, retaining the current UK business VAT threshold is the obvious fair solution!
If your small business is going to be affected by VATMOSS:
- head on over to Facebook, sign in then join the DigitalVAT2015 Group to keep yourself updated as campaigns move forward.
- Or take some positive action ~ go sign this petition!
Do You Buy Digital Products? ~ How VATMOSS Affects You!
If you buy, for example Kindle ebooks, then you’ll also be affected. Authors can’t absorb the VAT burden in their existing small profits – so you’ll be paying more for your ebooks (and no doubt for other digital products if you’re a business and don’t possess a VAT Number)!
Further Reading and Resources
- Authors (and kindle book buyers) How EU VAT affects pricing
- Business Statistics November 2014
- Head on over to Twitter #VATMOSS where you’ll find many more posts and links to articles about the effects on and closures of micro and small businesses.
UPDATE: Common sense still lacking, but there you are :
- Additional Guidance 10th December 2014 from HMRC
- Enterprise Nation – HM Treasury & HMRC ‘Exclusive’ – If you don’t agree – add your comment
- Contribute to New Petition: Suspension of EU VAT laws for Micro Business