hi all, how did you start your first day of the new year?
for me, i started my 2015 by deactivating the instant downloads from my etsy shop and removing the patterns from my craftsy shop.
you might have heard that starting from 1 January 2015, the EU has applied a new regulation for VAT on sale of digital products, which stated that an online business will need to account for VAT in the EU member country where its customer lives, at the VAT rate applicable to the buyer's country, rather than charging the seller’s country VAT rate as it was before.
who will be affected by the new law? anyone selling digital content or e-services, including telecommunication providers and broadcasters, are all impacted. the legislation applies to businesses based inside and outside the EU, all now accountable for paying the VAT owed to the buyer's EU state.
you see, i don't live in the EU, but still subject to pay the VAT if i sell my digital patterns to buyers from the EU countries. if i don't comply with the new regulation, i could be charged with unlimited fine
i read somewhere that it's quite a fine line between what is, and isn't affected by the new EU VAT. for example, emailed content which was manually attached to the message by the seller before sending to the buyer is not considered as electronically supplied and is therefore not affected. however, manually sending the buyer a link to downloadable content in an email instead of attaching it is considered as electronically supplied.
some of you will ask 'why don't i just comply with the new law and agree to pay the VAT?'. i would not mind really to pay the tax, but i could imagine that it would be quite troublesome to deal with the paperwork
anyways, since both etsy and craftsy did not (have not?) come up with any solution to this issue, i have decided that starting from 1 january 2015, i will limit my transactions only for buyers from non-EU countries.
since i could not control who will buy my patterns, thus, i have to remove all the instant downloads from my pattern shop and go back to manually e-mail my patterns to the (non-EU countries) buyers.
it is sad indeed. what will happen to the idea of a free global market? and not to mention to give up the convenience of having the instant downloads.
meanwhile, i'm still selling digital patterns in my etsy shop. i also offer free patterns in my craftsy,
good news is: i have found another online platform to sell my patterns, especially to buyers from the EU countries: payhip. it says that it handles the EU VAT by automatically including it in the price when the buyer comes from the EU countries. visit my payhip here.
i do hope that etsy and craftsy will come up with solution that will ease the burden of the small business in dealing with this VAT regulations. fingers crossed.