EU Value Added Tax Issues

In theory, setting yourself up to sell products on the internet is the easiest thing in the world. Once you've created the product, you upload it to a 3rd party platform that will handle all the sales and deliveries automatically, and you just sit back and watch the money roll in.

New EU rules on VAT (value-added tax) come into force on 1 st January 2015. At present, the tax applied is the rate prevailing in the country of supply. Thus my ebooks are taxed at the rate of 20%.

I'm a founding member of EU VAT Action (representing tiny businesses across the world) who are meeting with government & HMRC to find tiny business appropriate compliance solutions for the new EU VAT legislation [added 20/12/2014] [Latest major updates below.

We are a group of small business owners located in the EU. We all sell digital products around the world or work with people who do. Just like you, we are concerned about the new laws taking effect from the 1st of Jan 2015 and just like you, we only found out about them by accident.

UPDATE: Discussions with HM Treasury / HMRC have led us to realise that the kind of meaningful changes to the legislation that we are asking for need to come from Brussels - so we have started an EU-wide petition calling on Pierre Moscovici to implement a unilateral suspension of the new EU VAT laws for all micro businesses and sole traders.

On 1 January 2015 there will be an important change to the VAT rules for business to consumer supplies of digital services within the EU. From 1 January 2015, the place of supply to non-business customers of telecommunications, broadcasting and e-services services will be the country where the customer is located.

EU VAT legislation coming into effect on the first of January 2015 means that anyone who sells digital products online, if they sell to any countries in the EU, will have to charge VAT in the country of the buyer instead of the seller.