If you’re not aware – and you should be – tax-related DOOM is about to descend upon microbusinesses that sell to Europe from the UK and, it seems, between other EU countries. Microbusinesses used to be VAT exempt so as a sole trader or small business earning under around £80k a year. Not having to deal with VAT saves a great deal of time and while you can’t reclaim VAT on equipment if you skip registering, you also don’t have to wrangle with the whole mess.
From January 2015 however, if you sell to Europe, that is all going to change in relation to electronic goods (software, ebooks etc). Now you’ll have to pay VAT at the rate of the country the purchaser is in. That varies from country to country and in order to deal with this you’re obligated to register for VAT in the UK.
Suddenly you’re liable for keeping all these records, complying with Data Protection, holding those records for ten years and dealing with the whole complex issue.
For very small/micro businesses this isn’t really worth it. Its a lot of time, effort and risk for relatively small returns.
Your options are:
- Stop selling e-products to Europe (physical products are unaffected).
- Register and deal with all the hassle.
- Sell via a third party site that will deal with all the mess for you.
My recommendations and the ones I intend to do with regard to Postmortem are:
- No more direct e-sales, period.
- Channel all sales via 3rd party sites (Amazon, RPGNOW, Drivethrufiction etc).
- Maximise/offset costs of using 3rd party sites with affiliate links etc.
This should be hassle free with the advantage of not losing too much money.
I may have some things wrong, so seek professional advice and consider your own situation, this is just my present understanding of the situation.