VATMOSS ... vat a mess
Hey guys.
So, today I was reading up about VATMOSS, because I create digital content (a webcomic called Cottonstar, more specifically) and use sites like Paypal and Patreon to collect donations.
I've read up about it before, and where Paypal used to place the onus on the vendor/seller/supplier to sort out the VAT from their EU customers. I heard rumours that they now take charge of that and do it on behalf of the seller. According to this article, Patreon, however, seems to have washed its hands regarding VATMOSS and has placed the responsibility on the sellers to sort all that out.
To those who don't know what VATMOSS is, the nutshell version is that the EU has put a new legislature in place which is meant to combat tax evasion, but it's screwing over small businesses, especially individuals. The point of the regulation is that instead of dealing with VAT of the country where the company is based, VAT now has to be dealt with from the side of the buyer/client's country. This is to prevent companies from setting up shop in countries where the VAT laws are more lenient and the rates are cheaper, and exploiting those. (If I'm understanding/interpreting the laws wrong, please correct me, but this is how I've come to understand it so far)
The problem is that they want EVERYBODY to comply to this, not just EU businesses. ANYONE, no matter where on earth they're based, who sells digital products to ANYONE from the EU, is meant to collect the following from each and every client, for every instance of sale:
So by now you can already see that it is actually a pretty ridiculous, especially if you're an individual dealing with a few hundred $1-$5 donations, several times a month. (I wish we had that many donors! But you get what I'm saying). As I understand it, the seller has to register for VAT with the buyer's country, then pay VAT on their behalf, and invoice them. For every. Single. Sale.
My question to you guys is, how is VATMOSS affecting you? Do any of you use Patreon or Patreon-like services to collect money, and if so, how are you dealing with EU customers? And what can we do to avoid accidentally breaking laws and getting in trouble for it?
So, today I was reading up about VATMOSS, because I create digital content (a webcomic called Cottonstar, more specifically) and use sites like Paypal and Patreon to collect donations.
I've read up about it before, and where Paypal used to place the onus on the vendor/seller/supplier to sort out the VAT from their EU customers. I heard rumours that they now take charge of that and do it on behalf of the seller. According to this article, Patreon, however, seems to have washed its hands regarding VATMOSS and has placed the responsibility on the sellers to sort all that out.
To those who don't know what VATMOSS is, the nutshell version is that the EU has put a new legislature in place which is meant to combat tax evasion, but it's screwing over small businesses, especially individuals. The point of the regulation is that instead of dealing with VAT of the country where the company is based, VAT now has to be dealt with from the side of the buyer/client's country. This is to prevent companies from setting up shop in countries where the VAT laws are more lenient and the rates are cheaper, and exploiting those. (If I'm understanding/interpreting the laws wrong, please correct me, but this is how I've come to understand it so far)
The problem is that they want EVERYBODY to comply to this, not just EU businesses. ANYONE, no matter where on earth they're based, who sells digital products to ANYONE from the EU, is meant to collect the following from each and every client, for every instance of sale:
That quote is from this useful article about VATMOSS and small businesses.-the billing address of the customer
-the Internet Protocol (IP) address of the device used by the customer
-location of the bank
-the country code of SIM card used by the customer
-the location of the customer’s fixed land line through which the service is supplied to him
-other commercially relevant information (for example, product coding information which electronically links the sale to a particular jurisdiction)
Furthermore, sellers are required to retain all of this information for ten years. This is four years more than the VAT requirements for non-digital sales.
So by now you can already see that it is actually a pretty ridiculous, especially if you're an individual dealing with a few hundred $1-$5 donations, several times a month. (I wish we had that many donors! But you get what I'm saying). As I understand it, the seller has to register for VAT with the buyer's country, then pay VAT on their behalf, and invoice them. For every. Single. Sale.
My question to you guys is, how is VATMOSS affecting you? Do any of you use Patreon or Patreon-like services to collect money, and if so, how are you dealing with EU customers? And what can we do to avoid accidentally breaking laws and getting in trouble for it?
Comments
So as far as it matters to game developers: it doesn't really since we generally don't sell to customers directly.
That said the whole VATMOSS system is completely backward since it force people to aggregate and use big company's instead or trying out new market routes and bringing competition to the market.
Haven't read the article (since I'm already painfully familiar with the mess) but what most places don't mention is that there are laws around storing personal data, and the country verification data as you can guess falls under those laws. So it's even more of a pain in the arse than anything else.
Do you know if Kickstarter does the VAT for people as well?
Like most people will say the law is pretty fucked up and when it comes to small scale businesses it does the opposite of what its supposed intention is.
tl;dr not sure what the case with kickstarter is.
Say I sell a game with Humble Widget or Itch.io (and they didn't handle the vat for me) for $10 and the buyer tips an additional $5. Would I be paying VAT on the $10 or $15?