In broad brush strokes, here’s how things have changed, thanks to the new EU VAT laws on digital cross-border sales, for any UK author or small press independently publishing ebooks. By which I mean not just handing everything over to Amazon KDP. Bearing in mind almost all these people are doing this work in the evenings and at weekends, alongside the job that pays their bills. For whom reaching the VAT threshold with their business has never been a possibility – and they’re perfectly happy with that.
Up to 31st December 2014
Write your book and prepare it in epub and mobi formats, spending your own time and skills where possible, and money where you must, to buy in help, to get it copy-edited and proof-read, formatted, and source cover art and copy.
Quite possibly use a crowdfunding platform such as Kickstarter or Indiegogo to raise the money you need to do all this.
Decide if you want to use ISBNs, to benefit from your book being fully catalogued by libraries and databases, more easily found in searches and being quickly, provably your work in cases of copyright infringement. If so, buy some ISBNs. Not cheap but you can really bring down the price by buying in bulk. Then you are at least set for future projects.
Upload your book to Amazon.com to use the world’s biggest book market place. That automatically puts your book on sale in all their stores.
Bearing in mind that involves quite a bit of administration, including proving that you have the legal right to actually publish the book if you’re a small press rather than the author personally.
Upload your book to Nook and Kobo and Google, to give people who don’t want to use Amazon for whatever reason a choice. And to give yourself options if Amazon decides to do something odd like de-list whole swathes of books for no readily apparent reason. You know it happens after all.
Sort out the administration required to have a US Tax ID or acceptable equivalent if you don’t want all these sites to withhold 30% of your income from US sales just to keep the IRS happy.
Bearing in mind that using all these sites costs you a hefty percentage of your book’s price, under their non-negotiable terms and conditions, subject to change at any time as they see fit.
Remind yourself that if any of those sites’ those terms and conditions become outrageous, you can always point readers towards buying copies direct from your own website.
Have a look at iTunes and the general small-business-user unfriendliness of their terms and conditions etc. Quite possibly decide not to bother since iPeople can always buy epub copies direct from your own website.
Have a look at other independent, specialist ebook sellers and come to mutually acceptable terms with the ones most suited to your particular book’s genre and target audience.
Use PayPal’s ‘Buy Now’ button as your payment gateway (available in 203 markets and 26 currencies) and a free, simple e-commerce plug-in so you can offer direct sales from your own website.
So that should cover pretty much everyone who wants to buy your work, right?
While you won’t sell nearly as many books direct as you do through the big platforms, you will benefit from getting all of the money and getting it straight away rather than waiting for the 4-6 weeks it takes for the big platforms to pay revenue through to you.
So it’s been quite a bit of work, but that’s been manageable to maximise your potential income.
After 1st January 2015
Contemplate the additional costs now required in time, software, payment processing fees etc to continue with direct sales from your own website, now that you must gather 2 pieces of non-conflicting location-confirming data (which in practise means you must collect 3) to enable you to calculate, apply and collect the correct VAT applicable in a customer’s home country.
Realise the practical and technical difficulties of doing any of this in anything approaching an accurate or verifiable way. Have the people who put this system together ever actually used the Internet?
Realise there are over 75 different VAT rates in 28 EU member states (plus internal regional variations) only officially available as a pdf from the EU Commission updated every 6 months. But you know you saw something in the news quite recently about some country in Europe changing their VAT rates on something or other – but you cannot for the life of you remember the details or where you saw that.
Find the most recent EU Commission VAT rates pdf. Notice the prominent disclaimer “The information has been supplied by the respective Member States, but part of it has not been verified by some of them yet. The Commission cannot be held responsible for its accuracy or completeness, neither does its publication imply any endorsement by the Commission of those Member States’ legal provisions.” So that’s reassuring.
That’s before you consider how to go about meeting the 10 year data storage requirements and the need to complete quarterly VATMOSS returns to account for your EU cross-border sales where you are now acting as an unpaid tax collector for HMRC.
Do you really want all that extra administration and worry, when every country seems to be interpreting these regulations differently? Plus those definitions seem to change every time you try to check?
Never mind these hassles. Most likely realise that the additional costs simply make it uneconomic to continue with those direct sales which have never been the majority of your business, even though it’s definitely been useful additional income.
Assess how much longer it will now take for you to recoup the upfront costs of the books you have already published and/or save up enough to cover the costs for producing future projects.
Give up on using crowdfunding to finance new projects as you discover no major crowdfunding platforms support the new VAT legislation.
Adjust your business plans accordingly. Decide if your business is still viable.
Consider the workarounds suggested, such as processing orders via email and sending digital files to each individual customer. Realise how quickly that will become unworkable above a minimal level of sales. And may be illegal anyway as some countries are now deciding that manually emailed files do still fall within the scope of this legislation.
Assuming your customer’s inbox even accepts files of the requisite size and your own ISP doesn’t decide you’ve suddenly become a spammer when your pattern of email use changes so markedly. Wonder yet again if whoever dreamed this up actually uses the Internet.
Consider the helpful suggestion of posting out your books on CDs or USB sticks. Right, that’ll work because there’s a CD drive or standard USB port on every tablet or phone – NOT. Stop laughing some while later.
Okay, what about SD cards? That might work. But all these things have to be paid for up front, in bulk if you want them cheaply, plus postage and packing and then there’s the time taken making trips to the post office…
Oh, come on! What customer is going to bother ordering copies of books to be sent on digital media through the post, with all the risks of stuff getting lost or damaged, when they can just go to Amazon, Google Play or Kobo and get an instant download?
Get serious. Wish whoever dreamed this up would get serious.
Find out how many of those specialist online booksellers you’ve been working with so far have no idea what this is all about, thanks to the abysmal way this has all been communicated. Discover how many of those based outside the EU have decided their simplest option to escape this mess is to abandon sales into the EU entirely.
Most likely decide that your only realistic option is now to only sell through 3rd parties. So you’ll be giving up that hefty chunk of fees on all your income instead of on just most of it.
Take a moment to contemplate the irony of a new system designed to stop the big digital corporations gaming the tax system having the effect of consolidating their dominance of e-commerce.
Maybe indulge in a little conspiracy theorising. Did Amazon etc realise the benefits they would reap, to offset losing the Luxembourg-based taxation arrangements which have enabled their predatory pricing? Because they certainly do use the Internet and understand how it works. Just look how much easier life already becomes with every step an author takes to hand control of their epublishing over to Amazon…
Meantime, back in the real world, give up on Nook completely when you realise it’s now impossible to set the single European ex-VAT price they ask for which also enables you to meet separate German and French retail price maintenance regulations.
Realise, quite possibly for the first time, that Google Play only makes books available for sale in 57 countries. So what about everywhere else? Okay, granted, the chances of you selling an ebook in a lot of these countries is pretty remote. But at least there used to be a chance. Now that’s gone.
Take another look at iTunes and wonder if there’s any way to find out how many of your direct sales used to be to iPeople. Is it worth tackling their system now?
Realise that iTunes only sells books in 51 countries, to people with credit cards registered in a subtly different list of 54 countries. You can only offer books to the remaining 104 countries they list for free. Realise that list includes some pretty big countries like Russia as well as smaller ones like Croatia. Those particularly catch your eye because you know your books have keen readers in both.
Look at the list of 57 countries where people can apparently access Kindle content, according to the Amazon.co.uk website. It says to visit ‘the following page’ to find out about what people in countries not listed can do. Er, what following page? There’s no link or anything…?
Discover that when your books were tax free you could enter one price and rely on Amazon to adjust prices to match current exchange rates. But now Amazon wants you to enter tax inclusive prices in some countries (with different rates) and tax exclusive prices in others. Oh lovely, yet more work.
Read some stories on the Kindle User forums about having problems buying Kindle content depending on where you happen to be living or travelling, if that doesn’t tie up in the right way with the country where you bank or where your Amazon account is registered.
Realise that the chances of you selling an ebook in what looked like unlikely countries aren’t quite as remote as you thought.
Should you put a note on your website offering to post these people having trouble getting your books a CD, SD card or USB stick? Um, not really because if HMRC change their mind yet again and decide this isn’t a workaround, you’ve just convicted yourself of tax fraud.
Be realistic. There’s no point offering to post CDs anyway because these people will be getting your book so much more quickly and easily in an illegal download from a pirate site, won’t they?
Well, at least Kobo reckon to sell books in 190 countries. Keep your fingers crossed that their market share increases.
Read some EU pronouncements on the importance of the digital single market and the value of the online knowledge economy to employment growth and wealth creation.
Wonder if these people actually talk to each other, ever, at all, let alone talk to somebody who has the first clue about how the Internet really works in this day and age.
Digital Microbusiness Action Group 