2015 EU VAT rules ("MOSS")

[Compyfox]

Okay, a quick dig through the net revealed, that "services provided digitally" (meaning: send in material, mix, send back) does count to the new regulations.

I have to close my border-doors as well and start from scratch.
Great start into 2015.


And Germany's MOSS equivalent is called KEA ("kleine einzige Anlaufstelle"/small single contact point).

[coincidental]

Don't despair @Compyfox, I think you should be OK. I wrote about this up above. The latest guidance from the UK authorities is very clear that what you're describing isn't covered by the new regulations: it may be an e-service, but it's not electronically supplied. Check it out here (look at the table under "Defining ‘electronically supplied’").

Whether the German authorities will take the same view is, of course, a moot point, and you can't rely on the interpretation taken by the tax authority of another Member State, but I think you're on pretty solid ground here. Ask them! The more people start agitating for change and making a nuisance of themselves, EU-wide (or even world-wide), the more likely it is that concessions can be won.

[Compyfox]

Thanks, but it's still worrying me and I preemptively closed doors temporarily. I need a new page anyway, so I made a paragraph on my launch page, that states the reason for it.

It's now stating:

PUBLIC SERVICE ANNOUNCEMENT:

Among the "local" and "field" services I'm offering, the main fork of my small
studio is to offer a so called "digital service" (send in material, I edit and send it back)

Due to fundamental changes in EU VAT legislation which come into play on January 1st, 2015;
I am unfortunately forced to temporarily close down doors and stop offering my services,
especially the digital one, until there is a suitable/understandable solution found for
the European wide VAT/MOSS implementation.

I hope to be able to reopen doors within Q1/2015 - along with a new web presentation.
The studio page remains open for information purposes.

I am sorry for the inconvenience and thank you for your understanding.

I then took a dive at your link to the UK GOV system. And man, this is definitely more informative. Especially with the charts. I'd still count to half of the new "MOSS" regulations, and I need to get in touch with local tax agencies about this. i.e.

Code: Select all

Telecommunications services

This means transmission of signals of any nature by wire, optical, electromagnetic or other system and includes:

...

It does not cover services simply provided over the telephone, such as call centre helpdesk services.
Electronically supplied services

This - is actually a good thing. As I plan to expand my services with Skype maybe.

Code: Select all

The rule change only applies to ‘e-services’ that are ‘electronically supplied’ and includes things like:

-  supplies of music, films and games, including games of chance and gambling games, and of programmes on demand
-  online magazines
-  distance maintenance of programmes and equipment

This is not that good on my end. I am not a traditional songwriter, so there is no program or CD to download for money. But who knows where this will lead to. Online magazines is a different issue (see my signature with video tutorials), and I'm throwing around that idea for a couple of years at this point. More headaches does the "distance maintenance" thing induce. In recent years, I had it a couple of times that I logged on to a clients rig (with TeamView or Skype) and helped out fixing things.



Then again, the positive side:

Code: Select all

Sales not affected by the change

Using the internet, or some electronic means of communication, just to communicate or facilitate trading does not always mean that a business is supplying e-services. Using the internet for the following doesn’t count:

- supplies of goods, where the order and processing is done electronically
- services of lawyers and financial consultants who advise clients through email
- educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link)
- offline physical repair services of computer equipment

This pretty much says "if you're not handling that through automatized means, it's not counting to the new MOSS regulation". That is a huge thing.


If I look at the list you linked to, technically everything that involves a "real person" handling things (consulting, mixing) doesn't count to the new rules. But actually sending out a "Link to online content or download sent by manual email" does. That means, if I author a CD and upload it to my server, then send out the link to the client... it suddenly does apply to the new regulations - even if it's a so called "bundled supply".

Crazy stuff, really.






This is where Fabien (TDL) could really help out.

He is leading a studio, and he is doing the software branch. But he is handling everything through PayPal if I got that right (which has it's own setbacks, i.e. the "extra fees" for the service, extra for withdrawing money as you can't pay with PayPal everywhere, and the always higher "exchange rate fees" - so additional 5% at bar minimum on top of that - which is why I try to stay away from it). He could really speak of experience for people on German borders. And I am wondering if he/his company signed up for KEA.

I also got in touch with a couple of fellows a minute ago. We'll sit down in January and try to figure out things. And I'll try to get an appointment with the local tax office for sure.

One possible finance math solution for me is to write "additional vat applies". This way people can figure out that stuff themselves. But... I need to do the extra math per country once I write an invoice. Unless I always calculate with +25% as VAT (currently highest EU VAT) and +5% PayPal fees on top of my regular fees and write "VAT included for EU countries". But then every country outside the EU will be like "whaaaaat?! - how is that fair?!".

This is just time consuming for a (small) freelancer.



Still - for the time being - my doors are (sadly) closed for everything that has to do with "digital services". "On-site" and "field" service on Berlin/Brandenburg borders should be possible still - but I'm currently not taking any chances.

To me, that is a huge cut in for sure.

[do_androids_dream]

Compy - I really think you and I are ok. We are not providing music as a 'product'. We are providing a bespoke, custom service to help musicians provide 'their' product. We just happen to send the result digitally - we do all the work manually with human involvement of a lot of time. I really think these new rules apply to businesses which basically run themselves without much human involvement. That's my take on it.

http://www.digitalartsonline.co.uk/news ... essionals/

Another way round if you are unsure is to use a 3rd party like Airgigs - that's where I get a lot of my work - which as far as I know is classed as business to business so it will not be affected by the new rules.

[do_androids_dream]

:What I do (among outdoor services):
People send me material, ask me to mix. I do the mix/master then send the material back.
So it is basically "trading digital goods", no?

This is what I thought at first but I've come to the conclusion that this is not the case. What we do is akin to what an architect or a designer or an engineer does. There was an example in their own documentation of a lawyer giving advice digitally as NOT being a digital product. I think what we do is exactly the same kind of thing.

[Compyfox]

I really appreciate all the input. But I definitely need time to wade through all that.

As of this moment, I am not(!) planning to sell anything digital.
Read: no e-books, no videos, no music, no templates (I tried that - didn't work out for me), no VST.

If I'd go either of that route, I'd find a service that handles this "for me" and I basically only collect funds, with cut ins. i.e. Bandcamp for Music or even iTunes (I'd really rather not), or other more affordable routes (e-checke or how this is called) - but then the workload is on me again.

The only thing where I'd be puzzled would be, if I'd offer tutorial videos for download (as complementarity to YouTube), but be like "please donate". Or... going the Patreon Route (pay, until a certain goal is reached, no updates). Then I'd be like "wait, what?! Does MOSS/KEA now apply to me or not?!".


Else: Doing engineering work (in house, field, "remote"/international) and classic "customer service" (consulting, help desk, etc). Summed up: The old rules as "service persons" apply, (in theory!) with standard small businessman registrations only.

But then what about the international handling?
VAT still "per country", or "VAT from the soil the material is engineered"?


I do understand the need for a more fair solution compared to big companies in the streaming business. But in the end, we have to pay twice. First as freelancer, and then as regular customer as well (prices will go up - and digital distribution is sometimes really not that fair).


I will keep an eye on this.
But I definitely need time to process. Nothing to handle within the first 2 weeks of January.

[trimph1]

I really hope things work out for you, compy.

This whole thing seems a mess.

[valerian_777]

We only use Paypal and its IPN. We previously had to track customer locations anyway. IP tracking is (although not really legal) a piece of cake. Presentation wise, we simply include the potential tax into the price ("includes taxes where applicable").

Sure, it's easy to make it much more complicated with further payment gateways and complicated price structures, but that's a business decision. Same with the fact that we generally do not work with re-sellers.

I'm automatically generating a monthly excel for the consultant. For everything else, time will show. There's no question that certain interpretations of the new regulations aren't realistic, but these will correct itself.

A piece of cake? I wouldn't do that (IP tracking). You would have a problem if for example someone order while on vacation or whatever. You have no other chance then asking customer details like adress etc. before the order proceed.

Also i don't get why the end price (SlickEQ) is without any tax information in your shop still (and 30€ for everyone?). Shouldn't it be now different prices because of the different taxes in each country?

[audiothing]

This just in from Bandcamp:-

http://blog.bandcamp.com/2014/12/30/eu- ... -bandcamp/

I sent them a message because I already got a few sales from EU today and no VAT or other tax/cut was taken from the payments. I think they didn't change anything in the way transactions are handled. That's misleading and potentially risky.

[synaesthesia]

It's sad to see guys going out of business over this, but not surprising.

A quite incomprehensible, unworkable and ill-though through piece of legislation. More troubling is the fact that HMRC, who should be completely on top of this, are constantly putting out weak, or occassionally incorrect and/or contradictory, information on this. In particular, they seem convinced that most micro-businesses sell through a 3rd party system (like the App Store, Etsy, Bandcamp etc.), which simply isn't true. It's also no excuse anyway... the idea that since most people aren't f**ked over by new legislation that that somehow makes it good legislation?! Idiots.

I'm currently moving over to FastSpring as my e-commerce provider, as e-junkie are flat doing nothing about the situation, which is incompetent.

Sadly, this means that in avoiding a tonne of VAT-related paperwork, I'll be having to either up my prices or accept a significant drop in income.

For me, I'm now looking very seriously at spending more time focusing on creating and selling music, so will be slowing down the commercial sound design work. Not something I wanted to do, but I have no choice if I want to move forward in this industry.

And all because of legislation designed to tackle large companies operating fraudulently that won't even touch them! Even where it does, they are far better equipped to deal with it than small and mid-sized companies.

Ah well... we must comply, to avoid being the company that gets shafted by the EU to show an example to others. Even though, at some point, this legilsation is bound to be repealed when someone notices it is unenforceable and, in some parts of the EU, pretty much illegal, from a data protection point of view.

Gah!

P.S. I'm also not sure how I feel about the fact that I'm going to comply with the laws when I'm certain many won't bother.

[Zaphod (giancarlo)]

@valerian
you can keep the same gross amount. For what we know, nobody forces to expose vats in explicit way
So yes, each country pays differently the same product in such case
What is important, you should pay correct vat in each country accordingly, but the report is produced later

[Ivan_C]

I have found a lot of information here : http://euvataction.org/

And the "official" petition seems to be this one : https://www.change.org/p/pierre-moscovi ... le-traders

[Angus_FX]

It gets worse...

Whether the German authorities will take the same view is, of course, a moot point, and you can't rely on the interpretation taken by the tax authority of another Member State, but I think you're on pretty solid ground here.

... but as a seller, your exposure and liability is, at least potentially, to all of the Member States. It seems the tax authorities will have their cake and eat it:

- if a seller owes a debt to a foreign authority, their own nation's tax office can pursue them for it

but:

- a seller's tax office advising them on the interpretation of a specific rule does not guarantee that they'll be safe from another territory choosing to interpret the rule differently. So if the UK tax office says it's not an e-service if it meets condition X, and the Belgian tax office says differently, a UK seller can still end up in hot water - because it's not up to the UK tax office to determine the rules for a sale made in Belgium.

Am reminded of stuff like this:
http://www.telegraph.co.uk/finance/news ... cakes.html

[Wildfunk]

It's sad to see guys going out of business over this, but not surprising.

Only the lazy people go out of business and use the new vat rule as an excuse

It's really not that hard to group your sales by country and file the report quarterly (especially when you are just a small company with only a few sales in only a few EU countries).

[Compyfox]

Sounds to me as if you don't have that much business then and you actually have a regular backup job.

Oh and btw - greetings to my hometown (Nuremberg (Maxfeld)).