The rule is about place of supply, so any Patreon user receiving donations from people in the EU is presumably also supposed to register with VATMOSS and collect and pay VAT. Arguably Patreon aren't only abandoning users based in the EU, but users everywhere in the world with patrons there.
I say "arguably" because of course I've no idea how that borderline-crazy rule is supposed to be enforced. (And I may be misunderstanding it too.)
I'm based in the EU (in London) and I recently registered my business for VAT because of this regulation. Now I get to raise an eyebrow, metaphorical or literal, every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem.
(Edit: I hope.)
(Further edit: Thinking about it again, if a Patreon patron really doesn't receive a digital good in return, surely they don't have a case to answer after all?)
every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem.
Except that as soon as you became a VAT registered business it legally became your problem ;-) You have to "reverse charge" the VAT for those non-EU supplies and include them on your VAT return: https://www.gov.uk/vat-imports-acquisitions-and-purchases-fr...
Nearly all of my own purchases are subject to this and it's a bit of a pain in terms of admin overhead, but the good news is in many - but not all - cases the net financial position is the same as if you hadn't paid, since you can reclaim the reverse charged VAT.
The reverse charge as described there is for services rather than goods, though. How does it work with goods, and specifically digital goods like downloads of the sort that VATMOSS applies to? I'm quite sure sellers of such goods from outside the EU to within it are expected to use VATMOSS, does that mean there is no corresponding expectation to reverse charge?
VATMOSS has no relevance to B2B transactions (luckily!) but international businesses providing digital services to EU customers above a certain amount have been technically required to register since around 2003 - see http://www.taxamo.com/european-vat-on-e-services/ - this is why some US Web hosting providers will charge you VAT, but most (about 1% allegedly!) don't (and, I personally feel, they shouldn't).
The other issue is I don't believe there's any such thing as digital goods - they're considered electronically supplied services. Things like Web hosting are included in this. I'm not sure what purchases you're making from the US, but in my case things like Web hosting, Mailchimp, Pluralsight, videos, etc. all of these are e-services that I have to reverse charge.
Mmm yes, seems even the VATMOSS docs on gov.uk refer to services where I might think of goods. By goods I had in mind things like software licences, rather than hosting etc, but it seems those are services too.
(I am basically a relatively high-functioning example of the sort of idiot HMRC are going to have to deal with now -- clueless and fumbling but determined to do the proper thing thoroughly, and without an accountant because I'm only likely to be filing for a few quid a quarter anyway)
I know how you feel, I've been there :-) Annoyingly, I enjoy reading laws and laundry lists of arcane rules, so have a "reasonable" understanding of VAT law now and, yes, it's HORRIBLE and frequently contradicts itself (as does HMRC generally).
The other annoying thing is many accountants are not familiar with the nuances of Internet based or digital businesses, particularly those that deal with overseas customers, so knowing the basics yourself is essential unless you get lucky (I've realized it's sorta like asking a back-end C developer a front-end JavaScript question - they have the skills to try and look it up, but it's not necessarily going to be the best advice).
I say "arguably" because of course I've no idea how that borderline-crazy rule is supposed to be enforced. (And I may be misunderstanding it too.)
I'm based in the EU (in London) and I recently registered my business for VAT because of this regulation. Now I get to raise an eyebrow, metaphorical or literal, every time I account for a digital purchase I make from a US company and mark it down as "zero-rated" for VAT. It's not zero-rated as far as my government is concerned; the seller just didn't bother to charge the VAT and as the buyer it's not my problem.
(Edit: I hope.)
(Further edit: Thinking about it again, if a Patreon patron really doesn't receive a digital good in return, surely they don't have a case to answer after all?)