New Regulations on VAT are coming into force across Europe on 1st January 2015. These will affect VAT payable on digital downloads. Essentially at the moment if you buy a pattern as a digital download then VAT is payable in the seller’s country – if that seller has a high enough turnover to be registered for VAT. From Jan 1st the seller will have to register for and pay VAT on sales to the buyer’s country. This means (potentially) registering for VAT in every EU country and collecting data on all sales, working out the VAT for each country (and they are all different) and . . . need we go on?! The alternative is to register for VAT in the UK and to submit quarterly VAT returns and then all the hassle of the EU payments is done for you – but you still have to collect all the data and make the returns; and records have to be kept for 10 years . . .
Most small businesses – including this one – cannot afford to do this; in time if nothing else and so will be forced to stop selling online. We would still be able to sell a pattern and then manually email it later, as this (we understand) is not governed by the Regulations. As you might expect, a petition has been set up to protest about the unfairness of this Regulation which was designed to prevent large companies taking advantage of differing VAT rules and rates.
You can read more about the changes on this website; sign the EU-wide petition on this website; sign the UK petition here; read HMRC Guidelines here; and find a wonderful cartoon summarising the choice facing small- and micro-businesses here. Susan Briscoe has also been writing about these changes and the possible effects they will have – on trade outside the EU as well as within.
If you would like to be able to continue to buy patterns, ebooks, photos, videos and other digital downloads from small companies in the EU please sign the petitions and write to your MP.