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 New EU VAT Regulations for Digital Downloads

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Maff
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PostPosted: Mon Dec 29, 2014 5:03 pm    New EU VAT Regulations for Digital Downloads Reply with quoteBack to top

If there's an album on Bandcamp you haven't gotten around to buying, you might want to grab it while you can, because it looks like an awful lot of artists may have to shut up shop by the end of the year.

http://www.twitlonger.com/show/n_1sji42f

It looks like Arcane and 36 are about to disappear from Bandcamp. I wonder how this will affect DiN and everyone else.

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PostPosted: Mon Dec 29, 2014 8:45 pm    (No subject) Reply with quoteBack to top

As if I needed another reason for not liking the EU...

Honestly, this legislation is simply ridiculous. Like so many other 'benefits' we already got from our friends in Brussels.

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REWO Records
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PostPosted: Mon Dec 29, 2014 11:00 pm    (No subject) Reply with quoteBack to top

Please note that the Bandcamp page is in the USA so people buy it from there. I think there is more noise about this situation than understanding. People in Holland can not get VAT numbers of other countries (at least that is what I know).

and:

"If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer."

(thanks to John Sherwood for looking it up)

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PostPosted: Tue Dec 30, 2014 12:35 am    (No subject) Reply with quoteBack to top

I think the problems mentioned apply for UK residents in the first place -- asking for a VAT number or business validation is common practice when selling through the internet (that's why eBay wants to know whether you are a commercial seller or not). Paypal does that as well once your annual payments through Paypal are exceeding a limit of 2,500 Euros -- you need to verify your personal details and supply them with a tax number (which I suppose you have, being a diligent and obedient tax-payer). Which is ridiculous as they a) are no authority and b) are located in Luxembourg in order to pay just minimum taxes themselves (thanks Mr. Juncker).

Less chance of earning some extra money outside revenue, I guess.

In the end, it's all up to the voters -- and even they just seem to be nothing but decoration within EU democracy (or the illusion thereof). This entire EU thing has got a tad out of control, I reckon.

Stephen

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PostPosted: Tue Dec 30, 2014 12:59 am    (No subject) Reply with quoteBack to top

Changes in EU law mean anyone selling music downloads from their own site now have to pay tax.

From January 1, 2015, all sales of digital downloads in the EU will be subject to VAT. As well as applying to videos and e-books, the sellers most likely to be affected by the new rules are musicians and small labels offering their music online – particularly the burgeoning community of artists on Bandcamp. So if you’re one of the thousands of acts making a bit of pocket money through digital downloads, make sure you’re up on the changes.

In short, anyone who sells digital downloads is affected. As musician Steve Lawson has pointed out in a helpful blog post on the issue, the VAT charge is determined by the country the customer is in, not where the seller is based. This means you need to be registered for VAT no matter how much you’re earning from downloads, even if you’re selling music direct from your website. It would seem that the rule is intended to clamp down on tax-dodging heavyweights like Amazon, but it’s likely to have an adverse affects on thousands of small-time sellers too.

Initially it was feared that sellers would have to jump through lots of tricky hoops, including the chore of filing quarterly VAT returns, in order to comply with the new rules (the Daily Telegraph has detailed the many drawbacks to the changes). However, an update from Bandcamp has clarified that the site will be doing most of the legwork for sellers.

Bandcamp will automatically determine if the buyer is based in an EU country, and if they are, it will calculate the proper VAT amount and add it to the order total. From March 1, 2015, a downloadable VAT report will be available on sellers’ Tools page.

To report and pay tax for sales in which VAT was charged, EU-based artists and labels can register for MOSS (or ‘Mini One-Stop Shop’, a website used to report and pay cross-border VAT) in their country. In some countries this might mean becoming VAT registered first. Each quarter, sellers can submit a VAT return using MOSS and pay the tax owed. The Bandcamp VAT report includes all the information needed for the return, including total taxable sales broken down by country, as well as the evidence used to determine the buyer’s location for each sale.

“Under our current system, in which buyers pay you directly, the above is the easiest we can make it for sellers to meet their VAT obligations,” notes Bandcamp. “In the first half of 2015, we plan to make payments for digital transactions flow through Bandcamp. Among other advantages, this will allow us to take care of everything related to digital VAT, including tax reporting and payment.”

Bandcamp says that if you know you fall below your country’s VAT exemption threshold (£81,000 in the UK), a setting on your Profile page will allow you to disable VAT collection for domestic purchases. This seems logical, and many labels and artists will fall below the threshold. But as the Telegraph reports, the new rule actually means that all tax thresholds have been removed for online businesses – so even selling one item for £1 means you have to register and keep records for VAT.

Additionally, UK HMRC has published a flow chart which suggests that downloads sold through a third party marketplace are not eligible for VAT. Their guidance states that “if the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer.” This seems to potentially contradict Bandcamp’s advice, so more clarity is obviously needed here.

If you think this affects your Bandcamp enterprise, be sure to read the full update, where you can also find the link for UK MOSS. You should also check out this detailed explanation from Business Matters, which covers methods of claiming your tax back. (Hat tip to @Gacougnol for flagging that up.)

The rule change is a blow to Bandcamp, which has become one of the biggest and most artist-friendly music sites around over the past couple of years.

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PostPosted: Tue Dec 30, 2014 1:02 am    (No subject) Reply with quoteBack to top

Taken from Bandcamp today

What about taxes?
It is your responsibility and solely your responsibility to remit the appropriate taxes (income, sales, VAT, property, estate or otherwise) to the appropriate taxing agency. We recommend that you consult your personal tax advisor regarding the best approach. For physical items, whether to charge tax through Bandcamp, and at what rate, is up to you. You can control this in the "Physical Goods" section of your artist Profile page. If you’re in the U.S., we help by looking at the location specified on your Profile page and comparing it to the buyer’s location. If taxes apply (e.g., you’re both in the same state), we dynamically pull in the up-to-the-minute tax rate for the buyer’s city/county.

Does Bandcamp handle European Union VAT (Value Added Tax)?
Effective January 1, 2015, Bandcamp helps artists and labels collect and pay VAT on digital album and track purchases in the following ways:

For each purchase that includes a digital item, Bandcamp automatically determines if the buyer is based in an EU country.
If they are, we calculate the proper VAT amount and add it to the order total. As usual, the proceeds from these transactions flow directly to you (see Pricing for more details about how that works).
If you know you fall below your country's VAT exemption threshold, a setting on your Profile page allows you to disable VAT collection for domestic purchases.
Effective March 1, 2015, a downloadable VAT report will be available on your Tools page. This report, organized by calendar quarter, will include the data necessary to submit a VAT return for your Bandcamp sales.
To report and pay tax for sales in which VAT was charged, EU-based artists and labels:

Register for MOSS (or "Mini One-Stop Shop," a website used to report and pay cross-border VAT) in your country. UK MOSS sign up is here. In some countries this might involve becoming "VAT registered" first. See your country's MOSS site for details.
Each quarter, submit a VAT return using MOSS and pay the tax owed. Your Bandcamp VAT report includes all the information needed for the return, including your total taxable sales broken down by country, as well as the evidence used to determine the buyer's location for each sale.
Under our current system, in which buyers pay you directly, the above is the easiest we can make it for sellers to meet their VAT obligations. In the first half of 2015, we plan to make payments for digital transactions flow through Bandcamp. Among other advantages, this will allow us to take care of everything related to digital VAT, including tax reporting and payment.

Common questions about EU VAT for digital goods:

I've heard I need to keep lots of information about my customers for 10 years. Is this true? Bandcamp automatically determines your buyer's location using several pieces of evidence, including their PayPal country, their Bandcamp location preferences, and IP geolocation. Your downloadable Bandcamp VAT report includes the evidence we used for each purchase. All you need to do is store this report. The report includes no personally-identifiable information about your customers.
I sell merch with digital included. Does digital VAT apply to these items? No, it does not. These items are covered by the existing tax settings in the "Physical Goods" section of your artist Profile page.
Useful links:

UK overview of VAT for digital services
European Union overview of 2015 VAT changes

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PostPosted: Tue Dec 30, 2014 1:13 am    (No subject) Reply with quoteBack to top

For our Dutch members:

Taken from the Belastingdienst.nl

Vanaf 1 januari 2015 veranderen de regels voor telecommunicatie-, omroep- en elektronische diensten (digitale diensten). Deze diensten worden dan belast in het land waar uw klant woont of is gevestigd. Het maakt niet uit of uw klant een particulier of ondernemer is.

Om te voorkomen dat u zich in elke EU-lidstaat waar u digitale diensten levert moet registreren, wordt vanaf 1 januari 2015 de mini One Stop Shop-regeling (MOSS) ingevoerd. Met deze regeling kunnen ondernemers die digitale diensten leveren aan particulieren de btw over deze diensten aangeven via één lidstaat van de EU.

Wijzigingen plaats digitale diensten vanaf 1 januari 2015

Tot 1 januari 2015 worden digitale diensten aan particulieren belast op de plaats waar uw onderneming gevestigd is. Vanaf 1 januari 2015 worden digitale diensten die u aan particulieren levert, belast in het land waar de klant woont. Dit heet binnen de EU de lidstaat van verbruik.

Om welke digitale diensten gaat het?

Elektronische diensten.
Dit zijn diensten die over het internet of een digitaal netwerk worden geleverd. Ze zijn grotendeels geautomatiseerd en kunnen niet zonder informatietechnologie worden geleverd.

Voorbeelden:
onlineverkeersinformatie en -weerberichten, onlinedagbladen en –tijdschriften, onlinegegevensopslag, toegang tot of downloaden van software, gebruik van zoekmachines en onlinespelen.

Telecommunicatiediensten.
Deze diensten gaan over de transmissie, uitzending of ontvangst van signalen, tekst, beelden, geluiden of informatie via draad, radiogolven, optische of andere elektromagnetische systemen. Daarbij horen ook de overdracht en het verlenen van het recht om gebruik te maken van capaciteit voor een dergelijke transmissie, uitzending of ontvangst.

Voorbeelden:
telefonie, sms, toegang tot internet en voicemail.

Radio- en televisieomroepdiensten.
Dit zijn diensten met audio- en audiovisuele inhoud, zoals radio- of televisieprogramma’s die door en onder de redactionele verantwoordelijkheid van een aanbieder van mediadiensten op basis van een programmaschema via communicatienetwerken aan het grote publiek worden aangeboden voor het gelijktijdig beluisteren of bekijken.

Hoe bepaalt u de plaats van levering van de digitale diensten?

Het uitgangspunt is dat digitale diensten aan particulieren belast worden in het land waar uw klant woont.

Voor bepaalde digitale diensten bepaalt u de plaats van dienst op basis van:

de fysieke locatie
Dit geldt als u de dienst levert op een bepaalde locatie zoals een WiFi-hotspot, telefooncel, internetcafé, restaurant of hotellobby.
de plaats van vertrek van het personenvervoer
Dit geldt als u de dienst levert aan boord van een schip, vliegtuig of trein, bij personenvervoer binnen de EU.
de plaats waar de vaste lijn van de particulier is geïnstalleerd
Dit geldt als u de dienst via een vaste lijn levert.
de landencode van de simkaart van de particulier
Dit geldt als u de dienst via een mobiele telefoon levert.
de plek waar de decoder is, of de plaats waar de viewing card naar toe is gestuurd
Dit geldt als voor de dienst een decoder of viewing card is vereist.
Om uw administratieve lasten te beperken kunt u bovenstaande richtlijnen toepassen, zonder dat u andere informatie bij uw klant hoeft op te vragen.

Als u wilt afwijken van deze richtlijnen, dan kunt u de plaats waar uw klant woont zelf bepalen. U hebt hiervoor dan 3 niet-tegenstrijdige bewijsmiddelen nodig, zoals het factuuradres, bankgegevens, het internetprotocoladres (IP-adres) of andere zakelijke gegevens. Als u andere digitale diensten levert dan die hierboven worden genoemd, hebt u 2 niet-tegenstrijdige zakelijke bewijsmiddelen nodig om de plaats waar uw klant woont vast te stellen.

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PostPosted: Tue Dec 30, 2014 1:16 am    (No subject) Reply with quoteBack to top

Thanks for sharing it here, René...

Well, I've read it all in the morning on FB and got a bit tired of the topic by now... Rolling Eyes

I will - just to make sure - modify my Bandcamp page from 1st of January on, to just either free downloads (some) and CDrs (most) and hide the download option for a while. But anyone who would like to have a download only still can contact me directly. No problem to arrange something... Wink

My guess is the dust will settle soon, and it won't be as dramatic as it seems at the moment.

Annoying it is, of course. The aim at the big one's (or at least so they say) and hit the small one's. Us...

.

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PostPosted: Tue Dec 30, 2014 1:19 am    (No subject) Reply with quoteBack to top

...oh, before I forget:

There's a petition going on - not sure if one has to be on Facebook to see and sign it, but anyway, here's the link:

https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products?recruiter=41562820&utm_source=share_petition&utm_medium=facebook&utm_campaign=autopublish&utm_term=des-lg-no_src-no_msg&utm_content=rp_petition_fb_share_desc%3Acontrol

.

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softroom
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PostPosted: Tue Dec 30, 2014 2:00 pm    (No subject) Reply with quoteBack to top

I think Bandcamp is mistaken, at least if you read the flowchart on the government webpage. Specifically this part:
"Do you only sell your e services through a third party platform or marketplace? (For
example not through your own website?)"

If the answer is Yes, which it is for me, then the rules do not apply.

Apologies to anyone I've panicked into buying my stuff this last few days, hope you enjoy it anyway. Had an amazing burst of sales of my albums, JIC, Headshock and even Ideation (which I thought nobody knew existed based on previous sales). Now I feel guilty for some reason...

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Last edited by softroom on Tue Dec 30, 2014 1:02 pm; edited 1 time in total

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PostPosted: Tue Dec 30, 2014 2:01 pm    (No subject) Reply with quoteBack to top

Here's the link, if anyone wants to check for themselves
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

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REWO Records
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PostPosted: Tue Dec 30, 2014 2:15 pm    (No subject) Reply with quoteBack to top

I already have a VAT number so I don't worry. I have to look into that MOSS more the coming days.
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PostPosted: Tue Dec 30, 2014 6:32 pm    (No subject) Reply with quoteBack to top

« BruecknerAmbient » wrote:
But anyone who would like to have a download only still can contact me directly. No problem to arrange something... Wink

wouldn't offering this option be considered as tax evasion mr brueckner ?

for us UK bandcampers, the only option would be to block EU buyers from purchasing downloads. but i doubt taxcamp would offer such an option.

some US sellers are already blocking EU buyers so i have read.

thank you EUSSR, you will kill the digital download with this one.


looks like i will have to deal with going back to Syngate records again for any new releases and there are 2 albums to come, i cannot be arsed dealing with VAT paperwork thru taxcamp from 1st Jan.

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PostPosted: Tue Dec 30, 2014 7:26 pm    (No subject) Reply with quoteBack to top

« Syn » wrote:
looks like i will have to deal with going back to Syngate records again for any new releases and there are 2 albums to come, i cannot be arsed dealing with VAT paperwork thru taxcamp from 1st Jan.


I am sure a lot of people who will appreciate that move, Sir.

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PostPosted: Tue Dec 30, 2014 10:39 pm    (No subject) Reply with quoteBack to top

Illegal uploads! :)

anyway still there: http://vonhaulshoven.bandcamp.com/album/jan-stroosma-memorial

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