We launched the new Admin public beta on an opt-in basis last week -- see the announcement with access link here:

1http://www.e-junkie.com/bb/topic/69171



With that accomplished, we'll be able to turn our focus to other things, such as settling our approach to accommodate EU VAT changes by 2015.

HMRC have now said that emailing of files would mean the transaction falls outside of the regulations. See their chart here: http://a3.mndcdn.com/image/upload/t2next_gen_article_large_767/cupriy34fjyc7oabkzbj.jpg





So for me what would work is the ability to separate customers into Uk (as I'd still be under the Uk VAT threshold), EU and Non-Eu (or even just EU, non-EU if the other option is too complicated)





Some ways it could be done:



1- all customers providing addresses and those in the selected region don't receive the instant download but instead the transaction details are sent to me so I can email/post the file myself



2- the use of variants under a product so a customer chooses if they are UK, EU, non-EU (or whatever is applicable to everyone else) and the digital file not automatically being sent to regions I have chosen. Again I'd be sent the transaction details and can then email/post the file





Sadly this all needs to be in place before Jan 1st!



edited to add- it seems to be unclear from HMRC as to if emailing a file still counts as digital but the principle still apllies- I'd just send a hard copy instead- so I'd need the option of having a different price maybe

I just don't see how this is going to work on a practical level because neither e-junkie nor any other cart provider really knows details of a buyer's precise location and fiscal residency prior to sale. How can cart prices be calculated on this basis?



I would also add that even after the sale we only receive minimal details that I very much doubt will meet EU requirements for VAT purposes. As a matter of security only the billing company has these details.



Assuming we had a situation where a flat rate price was applied to all sales across the EU it would then be incumbent on the seller to meet the VAT costs out of their own pocket, which would severely cut down on any meagre profit margin that remained.



The irony of this legislation is that it will push many small sellers to an uncomfortable choice between selling through the likes of Amazon or closing shop. Frankly I am aghast at the whole situation and the damage it will do to small startup companies that will now find online trading far less attractive than before.



There have been a few articles in the newspapers today:



http://www.telegraph.co.uk/finance/businessclub/11254829/New-EU-VAT-rules-threaten-to-kill-UK-micro-firms.html



1http://www.theguardian.com/small-business-network/2014/nov/25/new-eu-vat-regulations-threaten-micro-businesses1



If you are based in the UK I would urge you to sign the petition against this at https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products



On a side note today I read that there are 28 countries across the EU and 77 different VAT rates that need to applied on a case by case basis. For a small one man business with minimal turnover the situation is completely ludicrous. I have spoken to three other online sellers today who have all said they will simply remove their products from sale.

It seems like a classic case of officials not fully thinking things through, not seeming fully cognizant of how things actually function at the real-world brass-tacks level -- one has to wonder if they've ever purchased something online and paid close attention to the order of steps they took through that process -- and presuming that something easy for them to describe must be easy to technically implement, as this recent xkcd comic illustrates:

1http://xkcd.com/1425/1



We've had a somewhat similar proposal here in the US, the so-called "Marketplace Fairness Act" which fortunately got stalled in Congress (though some are still pressing to get it passed by year end), whereby merchants nationwide would be expected to collect and remit sales taxes according to the rate at their buyers' respective locations. This raises a question of who exactly is being taxed, the merchant or the consumer? IMHO, since it's the merchant who must ultimately remit the tax to government, they are the party being taxed, so they should only be subject to taxes levied by their own representatives; they should not be subject to taxes determined by and payable to other jurisdictions where they have no representation or recourse. The latter amounts to "taxation without representation", and I seem to recall we held a revolution over that matter some time ago...



Unfortunately, even if the UK grants an eleventh-hour reprieve to those under the UK-only VAT threshold -- which it's not clear they can just do unilaterally if this is pursuant to a treaty with the EU -- that still leaves Continental EU merchants (and possibly all merchants worldwide who sell to consumers in the EU) subject to this absurdly complex scheme, made all the more Kafkaesque by the fact that, unlike the UK's MOSS, they don't even have domestic clearinghouses for EU-wide VAT collections/remissions, so they'd be required to register for VAT with each and every single EU country they sell to. Complying with domestic red tape is challenging enough for any merchant, so 28 countries' worth of red tape is simply untenable.

Earlier on I spoke to a recently retired accountant with considerable experience in international trade who concurred that this plan from the EU is completely unworkable because it is technically impossible to comply. They may as well shut down the internet.



More to the point it will act as a massive deterrent to those who might otherwise wish to sell online right at a time when most of the world's economy is in deep trouble, but then again the EU seems to be at the forefront of prolonging the global economic crisis. It's the one area where they lead the world.



Although the UK is providing the MOSS option it will still force sellers in the UK to deal with individual countries over discrepancies in payments and law, so in theory any seller could find himself audited by any of the other 27 countries, even a decade after closing the business. Indeed I am informed that if I make one sale in Hungary I am obliged to go and register there for VAT in person...



Thinking outside the box here I am just wondering if this is one of those cases where changing the product description or online delivery method might be sufficient to legally fall outside the fast approaching mess. For example software sellers always say they are selling a usage licence rather than a product.



Is there any word from PayPal on how this might be handled? It's already hard enough calculating sales when they charge different overseas transaction rates on each country.

@jp

Just wish to let you know emailing your files to customer still counts as providing digital downloads. The image you linked to... it's misinterpreted. It's meant to exclude biz which provide physical goods but include emailing some attachments.



Read this link here:

1http://ysolda.com/blog/2014/11/26/they-didnt-know-the-impact-of-vatmoss-on-really-small-businesses1

The most astonishing oversight of the buildup to VAT MOSS has been a failure to recognise that the data collection and retention obligations are so onerous that sole traders and the self-employed will be required to register as data processors and controllers with the Information Commissioner’s Office.

I just called up PayPal but they couldn't offer me any kind of useful assistance, merely stating that they won't be changing the way they work. All of this information came from a standard telephone agent though and I think we need some kind of word from higher up the organisation.



From what I have read if each customer receives a unique custom item or service then we would fall outside these VAT requirements. In a sense I already manage that because every eBook I sell goes out with an individual transaction watermark. Can we see a way forward through this avenue?

I just wanted to come back to concrete things that could be done into Ejunkie cart, in order to help all of the be in situation to simply be able to calcule clearly our tax revenue to possibly declare to MOSS.



What we need is:

-a similar system as for the one already there for US states in the account's VAT settings page: a list with all the 28 EU countries with for each one a field were the specific % rate can be entered/modified

-a check box in product page to indicates that the EU VAT is applied (actually we could just simply use the VAT checkbox already existing)

-a check box in product page to indicates that VAT is calculated as a deduction (thus, not an addition) from the price indicated in the product page: THIS IS IMPORTANT because for my case, we sell 99% to public (not to company that have a VAT registratoin number), and public requires to see the price inc VAT! When a product is in the cart, impose the user to enter his country: depending the country, the cart can now calculate the specific VAT amount, and the price excl VAT: these amounts can then be listed into the Ejunkie transactions database of the seller, plus maybe sent to Paypal too for compteing the transaction :in this case, I suppose that if the user ask for a receipt/invoice through Paypal, the VAT part could then be proprely displayed.



Adding this feature does not seeems long and so complicated (...my opinion, I'm software engineer), but this could then allow us sellers to export each month a CSV report with totals of VAT collected per each country: with this under excel we get easily totals to declare with MOSS system.

I can't help feeling that all of this could be solved if PayPal simply changed their setup so that they became a store and handled the VAT themselves. Yes you would still go to an individual website for the purchase but the cart would interface directly with a PayPal store. Sales would suffer a bit compared to now because of the added details required by buyers but it would be some way forward.



Perhaps I'm being too simplistic here but I don't see how else PayPal expects to serve sellers and buyers of digital downloads. Maybe they have already decided to write off this market.

HMRC ran a brief Q&A today on Twitter about this whole VAT question. From a technical standpoint it seems to revolve around the process of automated delivery following the sale. Basically it all depends on whether the seller is manually involved or not at some level.



One HMRC tweet said: "An e-service is one that is fully automated and involves no or minimal human intervention.". Then in another tweet they said "minimal human intervention is where a person takes some physical action for the service to take place".



Manually attaching an eBook to an email is acceptable but sending them automatically isn't, which is a point they made repeatedly. It's also still illegal to die in the Houses of Parliament or eat mince pies on Christmas day, proving they haven't lost their talent for creating strange laws.



In theory if an option was enabled whereby downloads to countries in the EU had to be manually authorised by the seller I suspect this might no longer be counted as an e-service for VAT purposes. Worth investigating?



Curiously HMRC are arguing that live content such as video behind a subscription service is not included in these new VAT regulations that only apply to automated downloads, yet they seem oblivious to the fact that streaming videos involves downloading content to the computer via the internet and that no human involvement is required...

I've been reading this thread with interest as these changes make it not worthwhile selling within the EU for me.



I followed the link to HMRC on the post by JP and if I understand it correctly if you only sell to businesses you are not affected by the changes. Does anyone know what the definition of a business customer is and how would I tell from the information I get on a sale from e Junkie or Pay Pal if my custmer is business or non-business.



I sell sales training courses as eBooks. In one respect I would presume all my customers are business customers as what use would a sales training course be to a non business customer, but I doubt HMRC would look at it that way.

I think the requirements for proving you are selling to a business will be pretty onerous and for these purposes it would mean a foreign VAT number that was verified as legitimate prior to purchase.



Judging by the information I receive after making a sale it's just not sufficient to establish that a buyer is a bonafide company. We have an email and an IP number that is also pretty meaningless if you know anything about the internet.

@jp



This twitter q & a is worth checking out. There should be a summary out soon.

1https://twitter.com/HMRCcustomers1



Apparently, there's a clarification on manual attachment of a download. The key is to manually attach or send. Not the best solution but a workaround.



If you manually attach the download to an email it is exempt providing the email is also manually sent.

https://twitter.com/HMRCcustomers/status/538011365135626240



Provided that the file is manually attached to the email, this is acceptable.

https://twitter.com/HMRCcustomers/status/538012875760353281



To clarify manual download, files attached to manually-produced emails are not e-services.

https://twitter.com/HMRCcustomers/status/538009984546922497

Sgt_Bilko

On a side note today I read that there are 28 countries across the EU and 77 different VAT rates that need to applied on a case by case basis. For a small one man business with minimal turnover the situation is completely ludicrous. I have spoken to three other online sellers today who have all said they will simply remove their products from sale.

Sadly/ happily this is my main source of income so trying to work with this is my only option but if it wasn't I think I'd stop selling too!

After the HMRC twitter q&a yesterday I'm partly hopeful that manually emailing will be enough to get around all the requirements but as they have previously (and in official writing apparently) said it's not I'm not relying on a twitter answer.

Supposedly today they will release an updated FAQ based on what they were asked yesterday so we'll see if that's in there.

If that is the case then I'll either have to set up all my products as tangible goods and then, after I get the email telling me about the sale, send out the file.

However if the option to only have to do this to certain counties is possibl that'd be a great help and mean 50% of my customers would still be able to get instant downloads

SteveC



I followed the link to HMRC on the post by JP and if I understand it correctly if you only sell to businesses you are not affected by the changes. Does anyone know what the definition of a business customer is and how would I tell from the information I get on a sale from e Junkie or Pay Pal if my custmer is business or non-business.



I sell sales training courses as eBooks. In one respect I would presume all my customers are business customers as what use would a sales training course be to a non business customer, but I doubt HMRC would look at it that way.

From what I've read the supply of verifiable VAT number from a customer is what you need to know they're a business!

This blog post is essential reading, explaining why none of this will work with PayPal and probably no other billing company 1http://www.clarejosa.com/articles/from-passion-to-purpose/what-you-need-to-know-if-youre-relying-on-your-payment-processor-to-dig-you-out-of-the-vat-moss-mess/1



The key phrase is: "Here’s Why PayPal’s Solution Is A VAT-MOSS Waste Of Time

As I explained above, the information that I (and hundreds of thousands of other businesses – huge and teensy) am required to supply under the new EU VAT regulations is where the customer is at the time they purchase – NOT at the time when they created their PayPal account."



Worse still it goes on to point out that you the seller, rather than PayPal will be entirely responsible. I can understand that e-junkie are as frustrated and confused about this as the rest of us, perhaps more so, but time is short and we really need some kind guidance for what they they are planning here. For me personally the one option that isn't an option is registering for VAT amid this level of complication.

According to the following:



http://www.ft.com/cms/s/0/2d77e358-74c4-11e4-a418-00144feabdc0.html#axzz3KMCaS9JQ



The Treasury said: “The vast majority of microbusinesses are unlikely to be affected by the changes – because they trade through a third party platform or marketplace and where this happens it will be the responsibility of the marketplace operator to account for the VAT.”

Another wonderful figure they will have plucked from the air. Lets face it government predictions on future numbers are not exactly reliable, especially when they are trying to downplay the effects of EU membership.