Well I have kindly been told by a person on Twitter after I left a message out there trying to confirm if the new European Union VAT tax would affect Australians and this is so, it does apply to anyone selling to an EU country from outside of the EU. Good old Twitter, quick responses too.
I guess people have to remember it is digital suppliers this year but it is planned to include all sales next year.
I don’t know how this will affect Ebay, PayPal, Etsy etc etc. As I mentioned in my last post the online music service Bandcamp has already on their blog said they will look after the taxes admin. You can read their site for more information. Sites like Etsy have said they will not be looking after the tax for consumers, mind you they have mainly non digital items. I guess we’ll see when it affects their business next year when all sales to the EU are affected.
From the 1/1/15 the European Commission introduced new VAT tax laws which will affect many small businesses and micro traders who provide digital services. This of course affects musicians as well as other digital artists. The new laws at this stage are for digital sales only with all other products supposedly to be covered by this law next year.
The new VAT tax law essentially requires businesses who sell digitally to pay the tax at the rate of, and record the details according to the country the digital download was sold to instead of where the supplier is located. In other words, the seller must find out where the buyer is located and then apply the local tax. This means if you sell from the UK to a French buyer you have to pay a French rate of tax to the French tax department. From what I gather there are 75 different taxes accross all the 28 markets.
I’m going to do more research in relation to an Australian seller who for example may sell a song download to a European buyer. This would affect myself and other non EU sellers of course. I only have music up for a focus and for the amount of sales I have it wouldn’t be worth the effort to go through the administration of the tax.
As a musician for example this will affect your sales when a person pays for a song download from the EU.
At the Bandcamp blog, Bandcamp say they will take care of the what sounds like to me, the admin of the VAT tax laws. You can read what they have to say and contact them for more information. I would imagine this would affect these type of services enormously too should a lot of independent musicians bow out due to it not being worth their while time wise to chase up and record sales for each territory they have a download in.
The idea of the tax is to stop large corporations setting up in low VAT tax countries and exploiting the system. This is all very good but as a by product it will wipe out many independent musicians, artists and all those small businesses involved in digital downloads and of course all items are to be part of this tax next year. Already I have read of musicians pulling out of online sites due to this whole process not being worth their while due to their small sales.
Information gathered by online businesses has to now be stored for 10 years, this is all your credit card and other relevant details which can include the information below. Sellers must store two pieces of non conflicting information about their buyer. I found this list at the screaming frog blog site:
The billing address of the customer
The Internet Protocol (IP) address of the device used by the customer
Customer’s bank details
The country code of SIM card used by the customer
The location of the customer’s fixed land line through which the service is supplied
Other commercially relevant information (for example, product coding information which electronically links the sale to a particular jurisdiction)
I will be looking into how this affects Australian digital businesses as I am still a touch vague on the laws around this.
In the meantime there is a petition going around the web which some of you may be interested in signing.