Tuesday, December 30, 2014

Because, You Know, the VATMOSS Thing

So the new year is two days away and I've suddenly remembered that I need to discuss the EU VAT situation as it relates to ikatbag pdf pattern sales.

If you sell pdf patterns online, this will probably be old - and very annoying - news to you. Actually, it is a debacle. But, in the spirt of the new year, let's not go into details. The gist, as I understand it: if you, as a vendor, sell e-goods to buyers in the EU (excluding UK), regardless of how much or little they cost, those buyers have to pay the VAT of their respective European country and you have to charge for it - and they're all different rates for different countries - and register yourself and then pay those taxes to some Whosit, which is nightmarish in itself, but then you also have to find a way to collect at least two separate proofs of those buyers' addresses (assuming they're not lying), which you must then keep for x number of years (where, unless I'm misinformed, x = 10). 

The point is not just the petitions that are being signed against this law (which is rumored to eventually extend beyond e-goods to also physical goods), or the impassioned defence of small independent businesses that are marginalized in this move to call the Bigwig Megaconglomerates to account. The point is that, come 1 Jan 2015, these small businesses have to decide what they can do to work with this law. 

And so, it is with much regret and sadness that until we (as in The Whole World) figure out what else can be done with this law, I can no longer sell my pdf patterns to buyers in the EU. What does this mean for everyone?
  1. If you are from anywhere else but the EU countries in question (including the UK), please continue buying my patterns as before. Nothing has changed for you.
  2. If you are from the EU countries in question, do not buy my pdf patterns after Dec 31 2014 (that's tomorrow!!!). If you want my pdf patterns, email me (my email address is in my blog sidebar) and I will do the following:
  • sell you a physical CD containing the pdf pattern you want;
  • list it in my etsy store, plus postage, as a reserved listing for you to buy;
  • upon receiving your payment, also send you a free digital copy of that pdf pattern to your email address as an instant download (so you still get it immediately);
  • post out the CD containing your softcopy to your mailing address.

If the ludicrousness of this does not escape you, let us all shake our heads together. One does what has to be done, after all. Especially when one values one's customers, no matter what country (or planet) they hail from.

Two links FYI on this issue:

This one is very informative and has lots of links to other useful resources.
This one is much needed humor in these uncertain times. 

If you have any ideas or suggestions on how to work with this new law, or any comments, really, feel free to share them in the comments. I'd love to hear your strategies and thoughts. 

And now, let us look ahead to the new year with anticipation and gladness - may yours be full of gracious encounters, enriching relationships, good fabric and even better cardboard. Amen.

P.S. Dart Drafting Part III is on the way!


  1. A few people on the facebook group have been talking about marketplaces who can take care of the VAT. payhip (https://payhip.com/pricing) and digital goods store (http://www.digitalgoodsstore.com/features) both charge a 5% commission (and VAT would have to be charged). It's not great but could cost about the same as posting a CD.

  2. Hi,
    I think you do not know how this works in the European Union. For purchases under 22 euro you do not need ti pay duties or VAT-taxes. From 22-150 Euro you need to pay 21% VAT-taxes, but not duties.
    The only problem is that for purchases more than 22 euro the postservice will charge me with approx 12 euro extra for filling the custom forms for me, which will make: 21% of the real price I paid and the vendor declared plus12 euro.
    For purchases more than 150 euro you have to pay both taxes (duties + VAT) plus 12 euro.
    I do not have any problems with purchases under 22 euro, but I can buy only very few things in the USA for that money. Certainly not all I want and can afford.

    So if you sell patterns for less than 22 euro (approx. $ 26-27), nobody will have a problem in the EU. Especially if you sell downloads pdf and the patterns are purchased one by one (no shipping costs to make the difference).

    On marketplaces or Etsy or another selling place nobody takes care of the VAT-taxes. It is done by the custom authorities in the country of destination. The vendor only informs you that you may be confronted with VAT- taxes or duties.

    Some links about the uniform custom system in the EU (information for Dutch EU-citizens, but it is for the whole EU)

    Carmen in the Netherlands



  3. Some pattern designers are using the services of Samantha from at home with mrs H who just created Patterns to Print. Check if this is an option for you. Here's a link: http://patternstoprint.com/ Christine from ChrisW Designs explains a bit here: http://blog.chriswdesigns.com/2014/12/patterns-to-print-fab-new-pattern-reseller.html

  4. http://www.loveknitting.com/us/ravelry-loveknitting-faqs
    Loveknitting is taking on knitting and crochet patterns, maybe they are also taking sewing patterns?

  5. PlanetJune just made this interesting stance: http://www.planetjune.com/blog/my-eu-vat-position/

    Basically she says, that VAT applies to things that are only digital with minimal customer/seller interaction, but since her patterns come complete with unlimited customer support, the are not digital only purchases, but the digital item is part of a larger service. I don't know enough about the law to know whether this stands up well, but it is an interesting idea.

    1. The VAT applies only to what you already paid. If the customer service is included, the VAT-question is solved, because when you paid, you also paid for possible future services. Law is my job.

  6. I am not sure if this is helpful, taking into account the mechanics of etsy.

    However, according to HMRC (UK tax), PDF's that are manually emailed, as opposed to automatically downloaded, don't count as digital supplies.


  7. wow, I am really out of the loop. First I heard of this. However, I only sell physical goods - phew.

  8. Hi! I'm afraid these changes do include the U.K. too. I think the examples you were looking at are only excluding U.K. sales because they are referring to U.K. to U.K. sales (or any sales within a member state e.g. sales within France or within Germany, but NOT sales between any of these countries, e.g. France to Germany or, France to the U.K. or U.K. to Germany etc.).

    U.K. buyers will have to pay the U.K. VAT rate on instant digital downloads from vendors in any other part of the world, including the U.S.A.

    My understanding is that you can totally avoid this issue when dealing with buyers from any E.U. country, by not having an instant digital download, and instead individually sending customers an email with the digital item (pattern) attached. As Kirstie Jenkins says above, U.K. law at least (and presumably that of all E.U. countries) does not make you liable in this situation.

    You could perhaps put an EU listing in your Etsy shop which doesn't feature the instant automatic download facility, but instead lets you know that someone has bought something from you, and you can then email them the pattern in your own time. I know this provides more work for you, but it would avoid your having to register with a VATMOSS (as the current law stands), and would still enable you to sell to EU customers (who want to buy your patterns without being at risk of having to pay import duties on physical products!).

    You would however have to trust that people told the truth about their location, but I think that most people are understanding of this new law and want to support small businesses through it, so I think the majority of people would act in a way that was compliant.

    P.S. I'm not a lawyer, but much reading has led me to these conclusions!

  9. P.S. There is clarification of what electronic supplies count as "digital services" here, provided by the HMRC (U.K. tax office). Presumably this is E.U. wide?



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