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The European Union (EU) is introducing some horrible new tax regulations for digital sellers. But we’re on it and we’re going to give you the tools to make it as painless as possible.
What’s the problem?

The European Union, in their infinite wisdom, have decided that starting a digital business and working 18-hour days whilst holding down a second job, creating innovative products, building your audience and loving your customers is just way too easy, and what you really need to invest your copious spare time in is some wholly impractical and mind-crushingly complex red-tape.

So they invented VAT MOSS…

From January 1st, 2015, all digital goods sold to EU consumers will incur a sales tax (Value Added Tax or VAT) based not on the seller’s location but on the customer’s location.

There are some truly genius innovations in this “wardrobe malfunction” of legislation. For instance, it applies to digital goods sellers (eBooks, courses, video tutorials, etc) even if they are not based in the EU. There is also no minimum threshold for digital sellers, so if you are based in the US and you sell one eBook for $1.00 to a guy in Greece, a tax will be payable. By you. To someone in Greece.

This article is a good overview if you want to read more about the changes.

The EU VAT requirements in summary

As of 1st Jan 2015, to comply with the changes, digital sellers will need to:

Identify the location of their customers
Calculate the correct VAT rates (28 countries in the EU, 75 rates of VAT)
Submit a quarterly EU MOSS VAT return
Store evidence for 10 years

To ease the potential admin created by the new EU VAT changes (that’s the EU’s language – they actually used the word “potential”) the EU has created the optional Mini One-Stop Shop (MOSS) scheme. MOSS will allow sellers to register with one EU member state and submit a single VAT quarterly return and payment covering all the digital sales across the 28 EU states.

Here’s a more detailed explanation of VAT MOSS

What Selz is doing about EU VAT

Starting next week, we’ll be rolling out a series of feature updates that will make it easy for you to deal with this new legislation in a simple and efficient way.

These new laws are complex. We’re all about making selling simple. So we’ve been hard at work on new features that will help you meet your requirements under the new EU VAT laws.

EU VAT Reporting

The first feature we will release is EU VAT Reporting, This will allow you to simply meet the reporting part of your obligations under the EU VAT laws.

The EU VAT Reporting feature will:

Automatically identify the country of your customer based on the billing address, IP address and location of their credit card issuer
Calculate the estimated VAT liability for each of your sales across the 28 EU states (you can use our automatic pre-set values or input your own)
Allow you to export your order list, showing these details and the EU VAT liability for each sale.

Pricing and Invoicing
The next feature we will release will be Pricing and Invoicing. This feature will allow you to simply set different tax rules for different regions and to automatically provide matching invoices to your customers.

The Pricing and Invoicing feature will:

Allow you to set inclusive or exclusive pricing
Automatically issue the correct tax invoice to buyers.

Talk to us

We’re here to help you sell more, and all the features we develop are driven by your needs and our conversations with you.

So reach out and tell us what you want in a comment below. If you like what we’re doing, tell a friend or tweet this post

Warning: seriously dry legal stuff
Here is the normal legalese. You shouldn’t take anything written here as advice. It’s merely our understanding based on reading through the information available. You should seek professional advice about your own personal liability and regulatory compliance.

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About the author

Martin Rushe

Martin Rushe is the CEO and founder of Selz.

32 comments

  1. Choices Stories You Play hack

    Having read this I believed it was really informative.

    I appreciate you taking the time and energy to put this information together.
    I once again find myself spending a significant amount of time both reading and commenting.

    But so what, it was still worth it!

    1. Kristen DeCosta

      Woohoo! I am so glad you find our content so helpful, that’s our goal! We love seeing comments, so keep them coming! Love hearing from you :)

  2. Gavin

    Personally think it’s great to see the proactive approach to this new law being taken – nice work Selz!

    I hope it’s ok to post that there’s a twitter ‘storm’ tomorrow designed to raise awareness of the effects this new law may have on your business – so check out this Change.org petition and get tweeting at 11am CET / 10am GMT tomorrow using the details they’ve laid out: particularly using the hashtag #EUVAT

  3. Gustavo Reis

    Poor European people won’t have anymore ebooks. EU seems to want to deprive them of the knowledge. I’m not a seller of digital books at Selz, but I would like to understand how how to calculate that damned EU VAT tax.

    If I’m in Brazil and I sell an ebook for 2 euros to a guy in France, then 2,00€+20%= 2,40€?

    1. Geoff

      Hi Gustavo, depends if you are calculating it inclusive of VAT. For example, if you sell an eBook for 5 Euros to someone in the UK (VAT rate of 20%), then the VAT liability would be 1 Euro.

  4. Hertzel

    Wait, does this mean that Selz will not handle the new EU VAT tax and will leave the shop owners for responsible and they will have to deal with the real mess such as tax reporting to EU countries?
    From what I have understand so far from these rules, if you sell digital files through a third party platform, then the rule changes don’t apply to you but to the platform in question.
    Isn’t Selz considered as a 3rd party platform?
    Have I missed something?

    1. Geoff

      Hi Hertzel, thanks for your comment.

      When you sell something through a marketplace (e.g. Amazon) they keep the customer relationship. They decide what taxes and fees to apply. They re-market to the customer. They decide what other products to sell them. So it’s your product that’s sold to the customer, but it’s very definitely their customer. Selz is the opposite of that; we connect you directly with the customer and you own the customer relationship. You alone decide what taxes and fees to apply. The sale contract is made between you and your customer. Our service is to give you all the tools to do that as simply as possible. The new EU legislation doesn’t change that dynamic nor would we want it to. Selz is about all the pluses of a marketplace (ease and automation) without the negatives (loss of the customer relationship and high commissions).

      Selz already helps sellers manage the taxes for tens of thousands of digital items every day. We handle interstate sales taxes in the US. We handle basic VAT in Europe. We do this by giving our sellers the tools they need to charge, collect and report those taxes as simply as possible. But paying the tax is up to our sellers. It’s their money and it’s their decision. From our perspective, the new EU legislation doesn’t change this – it just means the tools we provide need to be expanded to deal with the EU’s new requirements.

      Our objective is simple: to make selling digital products in the EU and meeting the tax requirements as simple as possible. We’re confident we can do that in an automated and efficient way. We see a near future where, using our simple tools, our sellers are automatically charging, billing and collecting EU VAT, and then filing automated reports and payments for it – if they want to do that. They are in control.

      We’re starting the roll-out of these new features this week.

  5. Liviu

    What about VAT tax exemption for the companies that pay VAT? Usually the companies that pay VAT within EU are exempted. Would you apply this rule? There is a EU registry http://ec.europa.eu/taxation_customs/vies/ where this can be checked.

  6. Angela Alcorn

    Thanks. This looks like it has the *potential* to be a serious problem.

  7. David

    Amazon’s solution is to auto change the selling price (+20%) to the EU buyer. Then, presumably, Amazon pays the tax and pays the seller the original pre-VAT price (less applicable handling fees).

  8. Dave

    Can we all just reroute EU customers through a Cuban IP address? ;)

    Do you think it would be possibly on Selz to offer hardcopy products with digital backups for EU customers?

    1. Liviu

      You are right here, the border is based on IP, the address of the credit card or the address where you receive the goods?

    2. Geoff

      Hi Dave, I don’t think a Cuban IP would help :) but thanks for the suggestion
      As you know you can sell physical goods through Selz now. but I’m not sure whether your suggestion would help you. But glad to see you being so creative.

  9. Jawad Khan

    Don’t know who makes these laws, but they certainly don’t know that hard work that goes into digital selling.

    Thanks for the timely post Geoff. Selz has certainly taken the lead on this issue.

    1. Geoff

      Thanks Jawad, we’ve got our team working hard on building as simple a solution as we can to the changing requirements.

  10. Guy Windsor

    Excellent work! I was about to close my Selz store due to this nonsensical legislation, but I should have known that your amazing team would sort it out for us. Thanks.

  11. Katrina Collier

    Wow, thank you so much for being on the ball and seeking out a painless solution for us all. I’ve not even heard from my Accountant so I’m incredible impressed.

    1. Geoff

      Hi Katrina, we’re trying to make this as painless as possible. I hope your accountant has some good news for you.

  12. Chris

    Guys, great blog and superbly written. Expresses some of the frustration on this side of the pond in dealing with multiple tax jurisdictions. Looking forward to seeing the tools you’re rolling out.

    1. Geoff

      Hey Chris, thanks for your comment. We’re let you know when the new tools are released via the blog, email and social media.

  13. Sophie Lizard

    This is good news! From Selz, I mean, not from the damn EU VAT morons.

    Thank you, thank you, thank you. :)

  14. Segia

    Way to get ahead of some properly out of touch legislation, guys. Amazing job.

  15. Roy Baldwin

    Selz – laudable you are providing features to at least identify VAT MOSS compliance data but this is only a small part of the requirement. If you are a seller within the EU VAT group of 28 countries (such as the UK) you will have to register for VAT first before you can even use VAT MOSS. Most small and micro businesses in the UK are not registered unless you have a threshold turnover above 81K GDP (when you have to) and don’t want to voluntarily because of the cost, time and resources needed for the bureaucracy of accurate VAT record keeping, which is not just sales but also purchases. This new EU regulation for digital products to consumers only (not relevant for B2B)removes thresholds – there is none. So you either register for VAT, or pull your direct sales digital products or sell through a platform that will take care of the VAT directly and pay it on your behalf. ALL EU sellers, especially in the UK, MUST get proper, professional advice and read relevant blogs on this dramatic and far-reaching issue for small digital businesses before deciding what is best for them.

    1. Geoff

      Hi Roy. Thanks for your comments. We completely agree with you – that sellers who want to address the +500,000,000 potential buyers in the EU should seek advice. Meanwhile, we’re focused on releasing features (starting this week) which will ease the admin burden for our sellers. The specific issue you raise about VAT registration is a thorny one. We think it’s totally nuts that compliance for the EU VAT should require digital entrepreneurs to register for general VAT. But there could be some hope here; it seems the UK HMRC are looking at that very issue: take a look at this article: http://www.ft.com/cms/s/0/65eca2c2-7bcd-11e4-b6ab-00144feabdc0.html#axzz3LLYPX0t9 . As soon as any clarification on this issue arises we’ll be the first to shout about it. What I would say, though, is the first filing for EU VAT is not due until April 2015, so the UK HMRC has a bit of time to change their mind if they see sense.

  16. Sharon

    Do you have the option to block sales from specific countries? My target market is UK and I really don’t want to have to do VATMOSS paperwork so would like to be able to restrict to UK sales only within the EU.

    1. Geoff

      Hi Sharon, in response to the EU VAT rule changes we do plan on releasing a new feature in the next few weeks that will give you the choice of blocking specific countries or regions. This new feature will allow you to restrict sales to only the UK if you wish.

  17. Ric

    Will you guys roll out an option to block sales to the EU for those of us that are not going to register for vat or vat moss madness? We should have the right and ability to block sales to the EU on our Sellz shop settings.

    1. Geoff

      Hi Ric, thanks for the question, great minds think alike. We plan to provide sellers with the option to block specific countries or a region like the EU as part of the new features being rolled out in the next few weeks. But really, we’d like to think that we’ve made the EU VAT reporting sufficiently painless that you don’t have to miss out on any potential sales by blocking the EU.

  18. Ric

    Will you guys roll out an option to block sales to the EU for those of us that are not going to register for vat at all because of low sales?

Comments are closed.