RISC OS Open Sales

“ROOL is VAT registered in the UK”

Are you guys aware that it’s all about to go really pear shaped with regards selling non-physical things? It looks like your only product that may be affected (consult a specialist) is the ROOL DDE digital download.

In case you haven’t heard, the organisation that is supposed to be helping to remove trade barriers in the EU has just erected a massive potential barrier. Namely, if you provide a digital product (I guess films, software, music, etc but also apparently includes auction platforms if not the auction contents) then you are obliged to register this sale and pay the appropriate tax in the country of the purchaser. So if one German person buys a copy of the digital DDE in 2015 and two French people buy copies… yup, you will need to make a declaration to Germany and pay the appropriate level of taxation on the one copy, plus the same in France for the two copies sold there. It is, for what it is worth, your responsibility to figure out who is where. In my case, I am using a .co.uk address but I am based in France. If you don’t ask for my postal address, how would you know? IP address would give you an indication, but not that many sales platforms pass along such information.
There is an organisation called MOSS which is supposed to handle smaller numbers of sales (you pay MOSS, they pay the tax, or something), but since this entire idea hasn’t been tested, and certainly not stress tested, it remains to be seen how well it actually would work.

The net effect that I can see is a number of people selling software will do one (or more) of the following:

• Prices will be all over the place, as different countries have different levels of taxation; though in general prices will probably rise to match the level of the highest tax (in order to provide a uniform price throughout the EU).
• Sales will be geofenced, so if I was selling software (for example), I would sort out sales in France (home country) and to the UK (most likely market) and simply refuse to deal with any other EU countries. I would also demand a home address of the purchaser even though I have no real need for such information; it would be used to keep my paperwork in order in case I need to justify the one sale I’m unlikely to get…
• Or… decide it’s too much bloody bother and just stop selling entirely.

I dunno. I sort of understand what they are trying to do, but it should be codified that sales of less than €5,000 per year do not need to make any declaration other than in the home country (that’s sales, not profit). To not have a lower boundary, that’s going to affect a lot of people. Yay EU, why don’t you shoot us all in the feet while you’re at it…

So, ROOL, are you ready for this bombshell? It takes effect nine days from now.
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers

The reason this came up – I was wondering if you considered “apparel” such as sweatshirts and such?

Here’s an example from cafepress (and this one tickled me): http://www.cafepress.co.uk/+it_compiles_jumper_sweater,422177625

[edit: and http://www.cafepress.co.uk/+select_from_users_where_clu_sweatshirt,52365216 ]

It takes effect nine days from now

I suppose the French response might be an option – ignore the rules you don’t like. :)

Then again:

“Do you supply digital services broadcasting, telecommunications or e-services, for example video on demand, downloaded apps, music downloads, gaming, e-books,anti-virus software or online auctions where
the service is automated?
(Merely communicating by email and sending attachments does not constitute Digital Services) "

Now from recollection of the process of purchase, click on bits to make a payment, wait and within days a link is posted for the location to download an advance copy clearly labelled as such.¹
later the physical copy came through the post.

I say I was sold a physical item and given a temporary¹ link for use in advance of the physical arrival.

¹ The advance copy link ages out in the same time period the physical copy takes to arrive

I say I was sold a physical item and given a temporary link for use in advance of the physical arrival.

Which is why I made specific mention of “the ROOL DDE digital download”. No physical product. One could argue whether or not the advance copy is or isn’t a digital service (that’s what lawyers are for; temporariness doesn’t matter, it’s digital, so does it count?) but there’s no doubt at all with the actual digital-only version.

Go here, https://www.riscosopen.org/content/sales/dde and look at the bottom of the page:

Digital download for £50 inc. VAT
If you don't need a USB stick and just want the digital
copy DDE download, this can be supplied with no P&P to pay!

I suppose the French response might be an option – ignore the rules you don’t like. :)

Sort of like the UK’s infamous “opt out” only with less paperwork (and nobody bothers to brag about it).

On the other hand, while you could simply choose to ignore it, wouldn’t this open you up to a tax liability if you were selling something in a way that should be covered and you weren’t declaring to a member state (or via MOSS)? If one country wanting to audit you is scary, imagine 26 countries saying “prove you don’t owe us something”.
I especially like how it is hitting the online “press” (for want of a better word) now. TheRegister covered it just a mere few days ago¹. Yeah, that’s a lot of notice for a pretty radical change.

Oh, and did I mention that in my largely-ignored opinion this whole thing is beeping stupid? ;-)

There is an organisation called MOSS which is supposed to handle smaller numbers of sales (you pay MOSS, they pay the tax, or something), but since this entire idea hasn’t been tested, and certainly not stress tested, it remains to be seen how well it actually would work.

There was an item about this on a BBC R4 programme a week or so ago. Highlighting the snag that the relevant ‘MOSS’ wasn’t even recognised by the VAT helplines, etc! Government advice was to get help via the helpline… which didn’t give any option for it.

IMHO About time VAT and corporation taxes were unified across the EU. But of course it’ll never happen as it would reduce the scope for big companies to money launder their profits and dodge tax.

Jim

If downloads from ROOL are automatic (i.e. no human intervention is needed before the customer gets the download) then they are going to be clobbered.
A copy of a posting I made about this on theregister.co.uk:

My wife sells knitting patterns on line. Global Turnover less than £2000.

To comply she will have to:

Register for VAT & MOSS. Keep full records for 10 years¹ and pay VAT through MOSS.

We checked all the sales in November and she had made one sale to Ireland and one to Germany, all the rest were within the UK or outside EU.

So she would have to pay approx. 93p to Ireland and 80p to Germany.

Any ideas how she can comply with the law without having to set up her own website?

There is an intra EU threashold for VAT registration of 35,000 euros. Why they didn’t incorporate Digital downloads into this I do not know.

Also of the estimated 240,000 UK businesses affected 99% of them knew nothing about this until about 4 weeks ago.

p.s. The guidelines are also wrong: https://www.gov.uk/government/publications/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance/revenue-and-customs-brief-46-2014-vat-rule-change-and-the-vat-mini-one-stop-shop-additional-guidance

They say “you will need to register as a data controller with the Information Commissioner’s Office” which unlikely to be true.

n.b. This new law applies to anyone in the world selling to EU customers. How they expect to enforce it I do not know. I doubt many foreign (African, Asian etc) courts would be interested even if there is a bilateral agreement in place (Which may well not cover this anyway).

Those affected contact your MEPs.

My MPdata+ has the option to contact your MEPs from the Contact Other Repesentives.

There are various campaigns aimed at MEPs, MPs, UK Government, HMRC and the EU.
More info:
https://www.enterprisenation.com/blog/posts/vat-moss-the-view-from-brussels

Ugh, what a mess. I recently ordered a DDE upgrade, and I stated in the email that I’m not in the EU. If I hadn’t done that then I’d probably have been charged VAT as there is obviously no way to determine physical location from an email.

Admittedly my original version of the DDE was supplied physically (NutPi) so ROOL does have my postal address, but I can’t imagine wanting to manually check addresses for everyone. This whole thing looks like a nightmare waiting to happen.

I think the biggest casualties will be mobile app platforms. I could buy an app upgrade and, well, how much info does Google have on me? I’m sure they know my address, but it was never explicitly given to them. I can pay in two currencies if I wish, and via VPN I can appear to be from a different country. This isn’t trying to be dodgy, if I’m in McDonalds I use VPN to encrypt on the public WiFi and it happens to be based in the UK.
As far as I can see, the EU is basically giving sales to the US (who are unlikely to wantto bother to comply). So, remind me, who are they trying to help with this disaster?

So, remind me, who are they trying to help with this disaster?

I’ve not been following closely, but the explanation that I’ve seen given a few times is that they’re trying to make it less useful to register your EU sales operation in the most VAT-friendly country and thereby reduce your tax liability across the EU as a whole.

but the explanation that I’ve seen given a few times is that they’re trying to make it less useful to register your EU sales operation in the most VAT-friendly country and thereby reduce your tax liability across the EU as a whole.

To limit the operations of the likes of Starbucks, Google et al.

and for the operations of sole traders bringing in pin money or ROOL bringing less ?

To limit the operations of the likes of Starbucks, Google et al.

Indeed.

and for the operations of sole traders bringing in pin money or ROOL bringing less ?

If “pin money” means that you’re based in the UK and not big enough to be VAT registered, then five seconds with Google brought me to a page where HMRC indicate that the new rules don’t apply to you. If you are, then the same HMRC page suggests that MOSS is they way forward if you don’t want to sell through a third-party (which I assume means the likes of eBay or Amazon Marketplace) or register with the VAT authorities in other EU member states.

If none of that applies, then you probably need to do some more work (or stop selling to non-UK nationals). From HMRC’s handy flowchart, however, it doesn’t seem that the changes should be that onerous for most small traders: most paths seemed to lead to “Doesn’t apply to you” or “Register with MOSS”.

That said, the phrase “be careful what you wish for” seems to apply here. Those campaigning against the likes of Google and Starbucks often seem to forget (or overlook) the fact that the same rules that benefit the big names also benefit the smaller traders who aren’t hitting the headlines. In the days of the internet, someone selling stuff from their bedroom is just as likely to be a “multinational” in the tax liability sense, too…

If you are, then the same HMRC page suggests that MOSS is they way forward if you don’t want to sell through a third-party (which I assume means the likes of eBay or Amazon Marketplace) or register with the VAT authorities in other EU member states.

I thought one of the problems on record was the quite large organisations (they went beyond the sole trader status a while back) that sell on ebay or amazon and make so much that their (unpaid) tax would pay my wages plus on costs. Your multinational example.

Working back to the start, I’m surprised ROOL get enough cash to be VAT registered:

“You must register for VAT if:
your VAT taxable turnover is more than £81,000 (the ‘threshold’) in a 12 month period.
you receive goods in the UK from the EU worth more than £81,000.
you expect to go over the threshold in a single 30 day period.”
Source: https://www.gov.uk/vat-registration/when-to-register

I should really have remembered the VAT threshold bit as I was chair of the hospital social club for a while and keeping tabs on the finances and ensuring payment of HMRC was in the supervisor remit.

The seriously naff bit is this from the distance selling page:
“If you’re outside the EU any sales you make to the UK aren’t distance sales.”

Oh, good so it’s open season for the USA then.
That one element needs deleting then everyone can be happy (except Google, Amazon, Ebay, Starbucks…)

To limit the operations of the likes of Starbucks, Google et al.

That’s a bit like sorting out the Hamas/Zionist problem by nuking the entire Middle East. How much collateral damage is acceptable?

If “pin money” means that you’re based in the UK and not big enough to be VAT registered, then five seconds with Google brought me to a page where HMRC indicate that the new rules don’t apply to you.

Less than five seconds told me entirely the opposite : http://www.businesszone.co.uk/topic/business-trends/vat-moss-hmrc-issues-guidance-small-businesses-hit-new-vat-rules/58780

It is the impression that I got before → You won’t need to be VAT registered in the UK, but you will for the rest of Europe.

if you don’t want to sell through a third-party

I can imagine that these platforms will pull the “we’re American” excuse to throw all liability into your hands. As I said earlier, in some cases transactions are immediate (app sales platforms, in-app purchases) and I’m not sure how much information on the purchaser the platform delivers to you (as the seller).

Those campaigning against the likes of Google and Starbucks often seem to forget

I tore into the Daily Effing Mail on a blog post for their tactless references to Google and their less-than-lawful tax avoidance¹. I’m sorry – Google isn’t the problem. The screwed up tax regime is the problem. Google might be a bit immoral in not paying ooodles of tax, but hey – given a choice – who would voluntarily pay more tax? Mr. Depardieu is a bigger laughing stock than usual over here because in protest to the new tax regime he upped sticks and moved to Russia (yay, smart move!). Google was paying their legitimate tax obligation and based in Luxembourg or somesuch. All entirely legal. It’s the system that is wrong, not the companies that are using it to their advantage.

In the days of the internet, someone selling stuff from their bedroom is just as likely to be a “multinational” in the tax liability sense, too…

Doesn’t “multinational” mean it has offices in multiple countries? That’s one heck of a bedroom! ;-) Yes, some people make a living importing cheap tat and flogging it on eBay and the like. They probably ought to be taxed. Now how about people such as David Pilling, ROOL, myself… we offer things for sale (except me, that is) but there’s not exactly enough turnover to pay for the website hosting, never mind anything that resembles profit. Think of the various on-line sales of RISC OS packages. DiscKnight? Is that a download? That’ll count. How about MW Software? TechWriter, ArtWorks2, etc → http://www.mw-software.com/paying2.html – that looks like online ordering. That’ll count. EVEN if the software is emailed once the payment clears (see chart in the link I posted at the top). Do any of us make enough of a turnover that this isn’t just going to be a massive headache? I bet MOSS registration isn’t free (I’ve Googled a fair bit and not found anything that I can point to and say “it costs this”). If a tenner, not such a big deal. If hundreds – it might be more cost effective just to cease trading (can your sales platform even reject foreign transactions?).
As I alluded – nuke it from space, it’s the only way to be sure.

¹ The main gist of the article was slamming Daily Mail for their wholly distorted article on internet child porn. It’s potentially NSFW, depending on your employer’s moral standards (namely, are they Daily Mail readers?). Link.

To follow up, The Guardian says this:

The reason this change will affect SMEs directly is because businesses with turnovers of less than £81,000 a year are exempt from registering for UK VAT. This exemption will now be lost once an SME registers to pay VAT in another EU country and, as a result, UK VAT must also be charged and accounted for future sales. And there is no threshold – even if the sale is for 99p, there is an obligation to charge VAT in the relevant member state and on all subsequent sales in the UK. This will have the impact of increasing costs in the UK, which will have to be passed on to the customer or absorbed by the company, which in turn would lead to reduced profitability.

[ http://www.theguardian.com/small-business-network/2014/dec/08/new-vat-regulations-affect-smes ]

Oh, and don’t forget another issue raised by The Guardian article. You will probably need to demand address information and stuff (to justify your tax obligations). Which means you are processing personal data. Which means you will need to register with the DPA (UK, probably similar in other EU countries). So there’s an extra expense. Oh, and keep records in order for a decade.

Really – the more I find out about this, the more I’d be inclined just to remove all software offered for sale, if I had any. At the rate of turnover I am likely to see, it just isn’t worth it…

The pain isn’t one direction. NIN say they aren’t accepting registrations outside of Germany. No doubt there’ll be others.

It is the impression that I got before → You won’t need to be VAT registered in the UK, but you will for the rest of Europe.

Basically Yes. But there is an alternative to registering with each EU country.

Use the HMRC MOSS scheme for which you have to be UK VAT registered but you can register with HMRC for VAT but state that you are under the £81,000 limit and are opting out of UK VAT (i.e. you don’t charge VAT on UK sales or recover VAT on your expenditure)

What Chris says doesn’t agree with the Guardian bit I quoted, and (following a comment in another thread) I didn’t easily find anything concise on the official govt site. Just a lot of articles on various websites and publications all saying slightly different things. This is absolutely brilliant for a tax obligation that begins in five days. Did everybody stick their fingers in their ears and say la-la-la-la or something?!?

Ah, more searching (not so easy on a mobile phone) suggests that you will need to be VAT registered but can choose to not pay tax on UK below the threshold. Given the other countries will be collecting tax, I wonder for how long this will continue..?

How about MW Software? TechWriter, ArtWorks2, etc → http://www.mw-software.com/paying2.html – that looks like online ordering. That’ll count. EVEN if the software is emailed once the payment clears (see chart in the link I posted at the top).

There’s better descriptions elsewhere on the site that do the digital services description better, and no, mailing a copy ordered on line isn’t digital services in that document.

As to registering in each EU country – what’s the threshold? If you don’t need to register then the whole issue of paying 93p or whatever is moot.

No, mailing a copy by post isn’t digital, it’s just really old fashioned.

I think the point of MOSS is you don’t need to keep track of the variations in 26 different tax regimes.

Interesting…

From the flowchart linked (in the Merry Christmas thread): Do you only sell your eservices through a third party platform or marketplace? (For example not through your own website)?

If Yes, the changes don’t apply to you. Is this the new EU tax in general or specifically UK? This implies that app stores will not be covered so nobody needs to panic there. Also ebooks and such. So that is slightly better, but still a PITA for those selling software directly. I guess we’ll need to warm up the CD burners and do it old-school. ;-)

I guess we’ll need to warm up the CD burners and do it old-school. ;-)

Just carry on with the memory sticks – also physical media you know.