Effects of the New EU Vat Law Comes that into Effect on Jan 1st

Because of the wonderful new EU Vat laws (yes, I'm being sarcastic) I've had to change the way the download store works. Basically the EU has decided to change the way VAT is charged for electronic download sales between EU countries. Up till now, when selling to another EU country you would charge vat based on the address of the seller, in my case Ireland. However, starting on the 1st of January, you now have to charge VAT based on the address of the buyer rather than the seller. On top of that you have to file vat returns to each country where digital downloads are sold. Fortunately, they've simplified that last part, by creating a portal where you can file all at once via your own country. It's still a major pain though, and it significantly complicates selling digital products.

There are a couple of implications for my store of this change. From now on, if you're buying something from another EU country, VAT will be charged based on where you're buying from. The exact amount will be shown in the shopping cart. You'll be charged VAT in your local rate, based on the overall price. Another change is that if you're a business in the EU you can now enter and verify your VAT number an you won't be charged VAT. The down side of this for customers is that I have to put my prices up. The accounting costs of having to deal with this are going to be significant, especially on a modest volume of low price sales, and on top of that the service I use to verify transactions (because all transactions have to have to record two pieces of non conflicting evidence to verify a customer's country of purchase) also charges.

The other thing I have to do is suspend image license sales from my Photoshelter store, because Photoshelter is not currently compliment with the new legislation. Until I figure out how to manage that I have to temporarily suspend sales, although I can still manually sell images if you're looking for something. To say that all this is a pain, is something of an understatement.

If you're a fellow photographer in the EU who sells digital products online, this new law will affect you. If you haven't heard about this then you're not alone. This was all kept very quiet. Only WooThemes sent out an email about it, and the fact that iTunes will be adopting these new rules and that made the news, I wouldn't have known. You would think that our tax authority would have sent out letters notifying people of such a huge change, but no. It never really made much headline news either. In fact the whole thing seems to have snuck through un-noticed. Anyway, I just wanted to let you all know, and if you're running your own stores you might want to check your local tax authority for the new rules, and how it will affect you.