The Magic Café
Username:
Password:
[ Lost Password ]
  [ Forgot Username ]
The Magic Cafe Forum Index » » Latest and Greatest? » » Bad News for Anyone Selling Magic ebooks or Downloads (14 Likes) Printer Friendly Version

 Go to page 1~2~3~4~5 [Next]
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
I've posted this here as it applies directly to anyone purchasing the latest and greatest magic releases in digital format. It's also helpful to retailers that naturally focus their attention on this forum topic..

Selling any magic ebooks or downloads?

If you are not VAT registered, that's going to change from Jan 1st 2015. Terrible news for start ups and magicians selling their magic..

More info http://rachelandrew.co.uk/…/the-horrible-implications-of-t…/

BUT I am only a small magic shop or magic creator and only sell a few digital products, so I am well below the VAT Threshold I hear you cry...

The VAT exemption threshold is being removed for anyone that also sells a digital product as of the end of 2014. You have to register for VAT in each individual EU country. Some have no minimum threshold, so the only way around that is to sign up to the EU MOSS system meaning you automatically become vat registered as a result. Basically, if you sell even 1 ebook, you need to register for VAT.


BUT I'm a US magic shop or seller: It also means that US companies have to charge VAT on digital sales to Europe from the end of 2014 too. VAT is payable in the US to Revenue, who then pass it on to the individual countries.

Info on how this impacts US companies selling downloads to EU customer:

http://www.taxamo.com/us-digital-companies-eu-vat/

I'm no accountant, so have a Google about it or talk with an accountant, as there's a lot of unhappy small business's kicking off..

Hope this helps
Dominic
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Sorry, first source link above was not complete. Here's the full link

http://rachelandrew.co.uk/archives/2014/......-change/
Tom Jorgenson
View Profile
Inner circle
LOOSE ANGLES, CALIFORNIA
4452 Posts

Profile of Tom Jorgenson
I wonder how this will affect Lulu.com. Will they handle it for everyone at once?
We dance an invisible dance to music they cannot hear.
13
View Profile
Veteran user
350 Posts

Profile of 13
In ancient times the powerful had dungeons in very close proximity to their sleeping quarters ... visit some castles in England and you will see.
These holes were filled with screamers. People chained and tortured.

Scream all you want about taxes, war, corruption ...
Your wailing is a sleep tonic to royalty.
13
RedDevil
View Profile
Inner circle
Deep South
1213 Posts

Profile of RedDevil
I ask this out of total ignorance and in good faith. Also, I have no intention of fooling with any VAT because I do this for fun, not the money. Thus, I will quit selling things before I deal with tax crap.

1. I am a US citizen that sells pdf's of mentalism effects.
2. I take money via paypal
3. Can the EU track this?
4. Does this mean they can actually go after a single US citizen (not a part of a business)and expect me to send them money?
5. By what enforcement would I be compelled to comply?

Any guidance, advice, clarification? Smile
RedDevil's 5th Book of Close-Up Mentalism is here...
Pre-Order "FAUXLOGICAL" at www.reddevilmentalism.com

F-F-U-L-Ri-F-F-Li-R-U-F-F
John C
View Profile
Eternal Order
I THINK therefore I wrote
12052 Posts

Profile of John C
Screw the EU! VAT THIS!!
The ULTIMATE Routine Series: rebirth soon!
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Quote:
On Nov 19, 2014, RedDevil wrote:
I ask this out of total ignorance and in good faith. Also, I have no intention of fooling with any VAT because I do this for fun, not the money. Thus, I will quit selling things before I deal with tax crap.

1. I am a US citizen that sells pdf's of mentalism effects.
2. I take money via paypal
3. Can the EU track this?
4. Does this mean they can actually go after a single US citizen (not a part of a business)and expect me to send them money?
5. By what enforcement would I be compelled to comply?

Any guidance, advice, clarification? Smile


From what I can tell from reading about this (I'm no expert, and just making sure my company's comply in the UK), should you get an audit one day from the IRS, they would also be looking at your paypal account.

Potentially an issue could arise if :
A European customer demanded a VAT refund as they were tax exempt, an unhappy customer complained to the IRS, or an aggressive/jealous competitor reported you for tax avoidance.

The EU have done a deal with the U.S. so it's your own country that would be looking into you tax compliance on behalf of the countries you would have exported too.
I would have thought it very unlikely that would happen though. It's more an issue for companies or people that are likely to have an audit one day.
The new system requires that records need to be kept for 10 years, so payment processors like paypal, lulu, click bank etc, will hold those records as well.

I think it sucks. It's been designed to go after the big guys like Amazon, apple etc that have been using tax loopholes in Europe, but as usual, they have the funds to work around it, so it's just the little, creative, small business's that become the 'collateral damage'. :-(
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Here's a good source of information that is pretty clear :

http://www.accountingweb.co.uk/article/e......n/564247

I had someone pm me as they are currently selling downloads through Murphys Magic.

Regardless of who 'delivers the download' if that person sells a download to someone in Europe, they must charge VAT and register for VAT in the country that the buyer lives in. Or register for VAT in their own country and use the MOSS system. Either way, they become VAT registered regardless of their turnover. Smile

If a U.S magic shop sells a download to anyone in Europe after 1st Jan, they are required to register for tax in EACH country that their sellers reside in. They need to charge the correct tax level for EACH country

So a business selling an app to a customer in Luxembourg, will have to charge VAT at 15%, but at 27% for same app if the customer lives in Hungary.

There are 28 countries in the EU with 30 different VAT rates which creates a high administrative burden, plus enormous potential for mistakes.
Paul S Wingham
View Profile
Inner circle
1364 Posts

Profile of Paul S Wingham
Rather sadly; the following if complied with would render most individuals selling PDFs unviable in my opinion, unless we start seeing more overarching market places who can deal with the red tape in exchange for a commission (like apple does):

Businesses will have to submit separate VAT returns for their cross-border digital services and pay tax due every three months. But the government’s online service won’t apply to Britain’s smallest businesses, which trade below the threshold for VAT registration, which is £81,000. These businesses will have to register for VAT in each EU country they sell digital services to.

As it goes I am not a huge fan of PDFs, although I recognise its a way of getting things out to the community without the initial outlay of a book release. On this basis, it can only harm magic. However; I think if it were me, I would contrive a way to give away the PDF and to sell something tangiable. God willing we'll realise how stupid it is to expect small companies to in essence; manually collect VAT on behalf of other EU countries. or even better; we realise what a waste of space the EU is in general and sack it off.

On a more popsitive note, I had no idea that the merchant of magic was so close to where I live in Littlehampton, so I'll pop in some time.
Jamie Ferguson
View Profile
Inner circle
Alba Gu Bràth
3642 Posts

Profile of Jamie Ferguson
This is crazy!

However, the opportunities global trade presents still outweighs the administrative challenges presented.
When the chips are down, the duvet is uncomfortable.
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Quote:
On Nov 20, 2014, Jamie Ferguson wrote:
This is crazy!

However, the opportunities global trade presents still outweighs the administrative challenges presented.


I'm not so sure Jamie..

UK: For small start ups with under an 81,000 turnover, it means that if they sell a download, they then lose their VAT Exempt status and will have to charge VAT on all their physical goods sales as well. If they are selling downloads for magic creators they are already paying a large proportion of the sales price to the author. Take another 20-27% to the tax man, and it makes the products unviable, especially with all the costs of the admin.

US: Magic shops that sell downloads to Europe will have to register in each country, that's very expensive. They will then also have to charge VAT on any physical goods that they ship to customers in those countries as they have become tax registered in that area.

In reality, US companies have had to do similar to this since 2003 but it was not inforced and hardly anyone bothered. The general opinion was ' Heck, we are not in the EU so go jump...' From jan 2015 it becomes law. Small magic creators selling their own downloads probably won't have an issue. Unless they have an enemy in business that reported them to the IRS.
Michael Daniels
View Profile
Inner circle
Isle of Man
1450 Posts

Profile of Michael Daniels
Sheesh! This looks bad.

Mike
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Just had a good question asked via pm

Question: Should I be worried about supplying my downloads to magic shops to sell?

Answer: You are fine to supply your downloads to other companies to sell for you, such as Murphys, Penguin, Merchant of Magic etc as usual. It's the shops that sell it to the customers that require registration and have to pay VAT. (Obviously, you still need to declare any profit from sales as usual though.)

The Jan 1st law change only impacts you if you sell your ebooks directly to a retail customer through your own site and take payment directly. In that case, YOU are making the sale.

Selling your products on Merchant of Magic, Lybrary, Penguin Magic, Wire, Murphys etc etc doesn't affect you or require that you register for TAX. ( I should point out I don't speak for those companies, apart from MoM) You are supplying a licence to a company, NOT selling a product to an individual retail customer. You are either paid a commission for each sale as part of a licence agreement for the digital product, or you sold the company a licence to sell the product. That's not a retail sale. Business 2 Business sales are not covered by this rule change.

As a magic creator, you are fine to supply your downloads to a distributor or other magic shop to retail. It's only an issue if you sell your downloads directly to a retail customer yourself.

Question: I use paypal to take my payments. Does that protect me?

Answer No, Payment gateways like paypal don't count as shops that make the sale, so the fact that customers pay using paypal etc doesn't mean that paypal is deemed to make the sale. It's still a sale between you and the customer.

However, if a magic shop sells your downloads for you, it is the MAGIC SHOP that is making the sale, so you don't fall foul of this new law.

Hope this helps
Dominic

You are fine to supply your downloads to murphys, penguin, mom etc as usual. It's the shops that sell it to the customers that require registration and have to pay VAT
RobertMarsi
View Profile
Loyal user
237 Posts

Profile of RobertMarsi
It was a pleasure doing business with Europeans up until now, but with something like this, from this point forward my products are only going to be available only for sale here in the United States and Canada. The European Union can kiss my American ass!
Low Key
View Profile
New user
97 Posts

Profile of Low Key
Lame! Smile
I have a feeling a lot less ebooks are going to be available to me when this comes into effect. And I can't blame people for wanting to avoid the VAT nightmare selling to the EU would be...
Dominic Reyes
View Profile
Inner circle
Got to a gig too early so wrote his
1417 Posts

Profile of Dominic Reyes
Quote:
On Nov 20, 2014, RobertMarsi wrote:
It was a pleasure doing business with Europeans up until now, but with something like this, from this point forward my products are only going to be available only for sale here in the United States and Canada. The European Union can kiss my American ass!


It's not as bad as you think, and there is no reason to limit access to your work Robert. Maybe team up with a magic shop in the US that will be handling all the tax stuff themselves, or some of the magic shops in Europe that sell downloads and are registered for tax anyway. B2B sales don't qualify, only sales to retail customers. Using a distributor is an easy fix.

If you do decide to limit access based on location, there's an issue of using a payment provider that will allow you to vet/limit which customers can order downloads based on location.

Don't worry though: There will be a LOAD of magic shops and sites to help you distribute your work in Europe and take care of the admin/tax for you.
ku7uk3
View Profile
Inner circle
1778 Posts

Profile of ku7uk3
I can see a lot of December sales happening this year!
Zack_Johnston
View Profile
Special user
California
659 Posts

Profile of Zack_Johnston
This looks very bad...
Tom Jorgenson
View Profile
Inner circle
LOOSE ANGLES, CALIFORNIA
4452 Posts

Profile of Tom Jorgenson
I predict a heyday for the chinese rip-off sites for hard-to-get DL's. They certainly arent going to be paying anybody anything for their DL's VAT charges.

Could one get by the regs by selling 1-off non-downloadable ACCESS to the PDF instead of the PDF itself? Whether the buyer would screenshot the PDF would be beyond the seller's control and responsibility.

Is there an app for that?
We dance an invisible dance to music they cannot hear.
rasp
View Profile
Inner circle
1061 Posts

Profile of rasp
I don't see a problem. Adapt, overcome and bend the rules............. Why not just advertise your product as a hard copy that also comes with a FREE pdf of the same item (for those that can't wait) and what with the postal system the way it is, items get lost Smile
The Magic Cafe Forum Index » » Latest and Greatest? » » Bad News for Anyone Selling Magic ebooks or Downloads (14 Likes)
 Go to page 1~2~3~4~5 [Next]
X
[ Top of Page ]
All content & postings Copyright © 2001-2020 Steve Brooks. All Rights Reserved.
This page was created in 0.27 seconds requiring 5 database queries.
The views and comments expressed on The Magic Café
are not necessarily those of The Magic Café, Steve Brooks, or Steve Brooks Magic.
> Privacy Statement <

ROTFL Billions and billions served! ROTFL