

E-book prices may rise as VAT law kicks in - user_235711
http://thebookseller.com/news/e-book-prices-may-rise-vat-law-kicks

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thibaut_barrere
One consequence of that same (afaik) law is that it's becoming increasingly
fun to run a SaaS from EU.

Hand-picked links:

\-
[http://ec.europa.eu/taxation_customs/resources/documents/tax...](http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf)

\- [https://docs.recurly.com/eu-vat-2015](https://docs.recurly.com/eu-
vat-2015)

\- [http://theaccountancycloud.co.uk/vat-rules-on-digital-
servic...](http://theaccountancycloud.co.uk/vat-rules-on-digital-service-
businesses/)

~~~
adwf
Yep, it's a mess that's going to backfire. I'm taking the step of blocking all
non-UK EU countries from purchasing. It sucks, but it's the only way I can
keep my tiny little bootstrapped company afloat without having a heck of a lot
of extra paperwork and filings to do (with commensurate fines if I screw it
up).

~~~
thibaut_barrere
For my SaaS ([https://www.wisecashhq.com](https://www.wisecashhq.com)) I plan
to handle it as well as I can (I'm based in France). The plan is first to get
to fully understand what needs to be done from my country, then try to sign
for a "MOSS" (mini one stop shop).

I agree this looks like a major PITA, but luckily Recurly (which I picked for
my billing code) seems to have this supported (did not test yet, though).

That said I do feel your pain. I feel a bit of fatigue with regards to the
increasing challenges that bootstrappers (amongst others) face (eg: cookie
law, vat).

~~~
adwf
Yeah, I don't know whether France has a similar exemption, but in the UK
currently I do not have to track or even charge VAT until the company has £81k
in revenue. I don't even have to register for it. This is really handy for
turning a side-project into a small company, as I can just try out various
revenue streams without too much bureaucracy.

Once I hit £81k of course, I can probably afford to throw money at accountants
to take care of it for me! But that critical first bootstrapping stage has
become just that little bit more difficult. It's either block the rest of the
EU, or get ready to do some paperwork. Or I guess I could become a zero-
revenue startup! ;)

~~~
phillc73
You need to take a view regarding the type of expenses your company will have
too. I run a small, one man, UK Limited company and was for a time VAT
registered. This is because when I first started the company I spent a few
thousand Pounds on equipment. All the VAT I paid on this equipment was able to
be offset against any VAT I collected through invoicing. For a while I was
ahead and it helped my cash flow, even factoring in the accountancy bills each
quarter (which weren't really all that much). I made this move on advice from
my accountant, and at the appropriate time, when I was no longer "ahead" on
VAT, I was advised to de-register for VAT. My revenues still aren't £81k.

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ruairinewman
This is definitely a retrograde step, especially in countries such as the
Republic of Ireland, where paper books are generally ascribed a 0% VAT rate.
That doesn't protect us in regard to e-books however, as the specific
legislative text refers to "printed matter", and defines some criteria that
prevent e-books from taking advantage of this provision. There is also a
clause in the relevant legislation that deals more specifically with "printed
matter" that is purchased and downloaded via the internet, and states that it
is "considered to be a service" and therefore liable to VAT at the standard
rate.

Ref: [http://www.revenue.ie/en/tax/vat/leaflets/printing-and-
print...](http://www.revenue.ie/en/tax/vat/leaflets/printing-and-printed-
matter.html)

I've written the usual letters to government ministers and to members of the
European Parliament, but have been completely ignored in all cases, not
unexpectedly. Unfortunately, I feel that this is going to be another measure
pushed through the EP without any public consultation.

~~~
hackerboos
It's up to member states to pass laws that exempt e-books from VAT.

Frankly Amazon, Google and the like have taken the piss by using Luxembourg as
a tax haven for too long. It's right that VAT is charged in the consumers
country.

~~~
vixen99
So legally minimizing a tax bill by selecting an optimum location and passing
some of that advantage onto customers (one of the reasons Amazon is popular)
is 'taking the piss'?

~~~
hackerboos
Shipping from warehouses in the UK to UK consumers whilst completely
sidestepping UK VAT charges is taking the piss.

~~~
Shivetya
is the full VAT tax displayed on the bill for all items purchased? Not being a
member of EU or related I do not know how the amount of taxation is conveyed
to the buyer so I am a bit curious

~~~
Symbiote
Advertised prices include VAT for all goods and services aimed at people. The
price without VAT isn't usually shown. Goods and services aimed at businesses
show prices excluding VAT (since the business doesn't pay it), but they make
this clear. International shoppers might see the no-VAT prices on websites,
I'm not sure.

This applies to websites and shops. Europeans will often be surprised in
American shops that the tax is added on afterwards — I've had the exact change
ready and been caught by this.

The line before "Total" on a receipt shows the amount of VAT paid. Many shops
will "*" any items had different rates (things like basic food).

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cstross
This is _really_ screwing with the independent publishing sector in the UK
right now: go on twitter and look for #VATMOSS. The TL:DR version is that
ebooks are VATable and if you sell direct to customers the VAT regs mean that
just _one_ ebook sale in _one_ EU country puts you in a world of bookkeeping
pain.

A lot of small publishers are basically getting ready to fold their UK-based
ebook operations completely at the end of the month. When you sell 10-50
products a month for £2-5 a pop it just isn't worth the hassle. And these are
people who refuse to go via Amazon because monopsony. It is to weep.

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Someone1234
Only if publishers CHOOSE to raise them.

Let's look at the facts:

\- Most paper books are already subject to VAT (90%+).

\- The margins on ebooks are already much higher than paper books (due to
reduces production, distribution, storage, returns, and tax costs).

\- The only reason ebooks cost as much as they do is due to lack of
competition and the publishers wanting to continue to sell paper books.

So while publishers might try to exploit this opportunity to raise prices on
something which already costs too much, let's not pretend that the VAT (which
is effectively already built into the price, since they're 1:1 with paper
books which DO pay VAT) has anything to do with it.

~~~
speeq
> paper books which DO pay VAT

The article mentions that paper books in the UK are VAT exempt?

~~~
ruairinewman
Part of the problem is that there is no uniform provision across the EU for
VAT exemption for books. Some countries charge VAT on paper books, or on
e-books, or on both.

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orasis
Forgive my ignorance, but do we pay VAT on anything in the U.S.? Hell, we
don't even have sales tax in my state. Why do Europeans put up with it?

~~~
rasz_pl
free healtcare, maintained infrastructure, cheap internet and cops that do not
murder people help a lot

~~~
influx
It's not free if you are taxed for it. We can debate whether a society is
better off with it or not, but please don't claim that it is free.

~~~
petercooper
Though the point is somewhat moot because _US government_ spends more per
capita on public healthcare than the British government does, bizarrely. So
while it's not "free" in the UK, Americans get charged twice via taxes _and_
insurance.

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Havoc
ugh that sucks. They're barely cheaper than dead-tree copies as is.

