Are you aware of the New EU VAT Tax Laws and how they affect you?

This new law was a real shocker to me. I am a USA citizen. I only collect sales tax on items I sell within my own home state. Yes, it’s a pain in the (bleep), but it’s the law. Now the entire EU, which includes 27 countries and the entire UK, thinks I should collect sales taxes for them. Each EU country has different taxes, rules and regulation that they expect me to know and follow. They expect me to register with each country separately if a customer from that country has purchased a digital download product from my online store. I have now removed all digital downloads from my Etsy shop to avoid all this.

Now I am hearing that by 2016 they want to expand this to include physical merchandise purchases, too.  This plan will not only damage by micro business, but most likely put me out of business. Good news though, I am reading that there are “Thresholds” for physical purchases. Meaning, you would have to make more $ in sales than the “Threashold” of that particular country before being forced to collect & pay the VAT taxes to that country. Each country is considered separate and VAT is handled individually for each country. Read about Thresholds here: http://www.vatlive.com/eu-vat-rules/distance-selling-eu-vat-thresholds/

Hopefully this Threashold thing stays as is, because I might as well just close up shop if they make me collect on all physical goods sold to EU customers. If I am forced to start turning away all my EU customers it will be detrimental to my business.  I estimate that 35 % – 50% (depending on the month) of my buyers are from the EU. In a good month I profit $400 – $600. So you do the math. If I lose half my customers will it even be worth keeping my Etsy shop open ?

There is a US Petition you can sign to let our legislators know we do not agree with this new EU Law.      https://petitions.whitehouse.gov/petition/call-european-commission-suspend-introduction-new-eu-vat-laws-micro-businesses/VH1P82X0

Plus a survey you can fill out so your concerns are heard. http://euvataction.org/ Click Take Action Now to fill out the survey.

Links to read on the subject:

http://thebluebottletree.com/taxman-cometh/

https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products?recruiter=36681676&utm_source=share_petition&utm_medium=facebook&utm_campaign=autopublish&utm_term=des-sm-no_src-no_msg

http://www.buyusainfo.net/docs/x_2011043.pdf

http://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/blog_posts/eu-vat-changes-twitter-q-a-31555

 

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5 Comments (+add yours?)

  1. laurie larson
    Jan 01, 2015 @ 22:24:31

    but can we still purchase thru emails?

    Date: Sat, 27 Dec 2014 23:47:59 +0000 To: marlib8@live.ca

    Reply

  2. Janis
    Jan 02, 2015 @ 01:48:05

    It is troubling and a hassle for you and other on-line businesses. But where there is a vacuum and need, it will be filled. Chances are, some enterprising person will put together a program that small businesses can buy which will allow the small business person to calculate and aggregate the total of taxes due to each country, thus allowing the ever-growing on-line sector of the economy to contribute toward the society they live in and benefit by the same way the brick and mortar stores do; you know, the ones that the on-line stores are driving out of business.

    Reply

  3. laurie larson
    Jan 10, 2015 @ 18:07:33

    hi Tonja I was talking to my sister about this and she looked up the definition of digital download. According to what she read pdf files are not digital downloads. what do you think? Date: Sat, 27 Dec 2014 23:47:59 +0000 To: marlib8@live.ca

    Reply

  4. tonjal
    Jan 10, 2015 @ 20:40:58

    Laurie – it’s my understanding that if you can download it it’s considered digital. Doesn’t matter what’s in the download. I you use a download service, like Etsy supplies for us sellers, you are on the hook for these taxes if your buyer is in one of those MANY countries.

    Reply

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