EU VAT Changes on Digital Selling January 2015 – The Problems
21st century digital enterprise means it’s possible to turn a good idea into a digital product and take it to a global marketplace by investing time instead of money.
Some of today’s most successful enterprises have started this way but this ingenuity and innovation will be stifled by EU VAT regulations being introduced in January 2015.
From their first digital sale of a knitting pattern, craft, self-help or business handbook, a new game or commercial software and many more products , a fledgling business run from a laptop on a kitchen table will be subject to the same new regulations as an international billion-dollar corporation.
They must establish their customer’s location and charge and administer VAT according to each EU country’s rates. They must also keep customer records securely for ten years, registering with the ICO.
This is impossible using the software and payment systems these smallest businesses rely on.
It doesn’t matter how simple HMRC claims their online MOSS system to handle all this might be, when the first steps towards independently complying are not just difficult but impossible.
Telling digital entrepreneurs to avoid complications by using third-party vendors is forcing them to give away a substantial percentage of their profits from the very start.
That’s when the third-party vendors accept their liability. Many are simply refusing to accept the responsibility.
Advising them to pay for software packages to handle the reporting and recording issues completely misses the point of starting up a digital business without any start-up cash.
Thus far, payment providers are showing no signs of adapting their free systems to accomodate this. Instead they’re simply offering sellers outside the EU the option to block sales into the UK and Europe.
The EU VAT Action Team is determined to make the UK Government and EU Commission realise how this will devastate the growth of e-commerce across Europe.
Small businesses need –
• A minimum turnover threshold to allow a business to grow big enough to afford the costs of such administrative overheads.
• A workable system of establishing and recording a customer’s location.
The authorities who devised these regulations will only act if they are convinced of the true scale of the problem they’ve created. This means everyone who’s affected needs to act.
• Write to your MP, MEPs and other legislative assembly members.
• Sign our new EU petition.
• Join the social media campaign on Twitter and Facebook.
• Tell organisations representing your particular business and interests know what’s going on.
• Show your support for commonsense changes whenever you see a news story discuss this problem.