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Old 03-19-2010, 12:14 PM   #16
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Originally Posted by DawnFalcon View Post
.

The tax issue is a separate question, but given Australian law, I doubt it's an issue. In the UK, yes, it is an issue but. The but is that VAT is only payable on "consignments over £18*". Customs duty doesn't kick in until £135.
An eBook is not a "consignment"; VAT is payable on a purchase of an eBook of any price. If you buy an eBook from Mobipocket, Waterstones, BooksOnBoard, or any other site which charges VAT to EU residents, you'll pay the VAT no matter how low the value of your purchase.
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Old 03-19-2010, 01:29 PM   #17
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The VAT shouldn't be that much of an issue for e-books. If you buy software online for download, there is (or used to be - haven't done so lately) a system in place where you pay VAT for downloaded software based on the billing address for the credit card you use for payment.

I used to run into this all the time because I live in France, but prefer to have my software (and my computer) speak to me in English. Back in the old days, there was one shop in Paris that stocked popular software in English version - but they used to claim that you had to show a foreign passport to buy software in any language other than French.

There's no reason they couldn't set up a similar system for e-books - once they change the distribution agreements to allow publishers to distribute books based on language or some other criteria other than physical location.
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Old 03-19-2010, 03:14 PM   #18
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Old 03-19-2010, 03:29 PM   #19
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Quote:
Originally Posted by HarryT View Post
An eBook is not a "consignment"; VAT is payable on a purchase of an eBook of any price. If you buy an eBook from Mobipocket, Waterstones, BooksOnBoard, or any other site which charges VAT to EU residents, you'll pay the VAT no matter how low the value of your purchase.
Okay, firstly something is either a consignment or a gift. You are not liable for reporting and paying VAT on items under £18. See here. This does not mean that companies within the EU (and others, by treaty*) do not have to charge you VAT, but that VAT has to be included within the price of the purchase in those cases.

However - If you purchase ebooks from, say, an American website - where no VAT is paid - then you are under no obligation to report the purchase and pay VAT unless the payment is over £18!

(*"Channel Islands, Hong Kong, Singapore and New Zealand")

Last edited by DawnFalcon; 03-19-2010 at 03:36 PM.
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Old 03-19-2010, 08:33 PM   #20
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Quote:
Originally Posted by Lemurion View Post
Disclaimer: I am not a lawyer, and this is not intended as legal advice.

As I understand it, that situation is peculiar to Australia and doesn't apply to most geographic restrictions anyway.

Amazon.com or any other ebook site is legally allowed to sell to almost anyone anywhere in the world (Cuba and North Korea being notable exceptions). The general problem is contractual.

Amazon's sales contract basically states that they can only sell an ebook to people in territories where the publisher has the rights to distribute that book. They can still sell to those people in general, but they have signed a contract saying they won't sell these products to them. That's why you can still order a pbook from Amazon to Australia even when you can't buy the Kindle edition of the same book from the same publisher. The contracts allow one but not the other.

It's the contracts that are the killer here.
I agree that's part of the problem is contractual, but by no means all of it. B&N restrict sale of my book to US residents. This is their decision and has absolutely nothing to do with any contractual obligations. The book is available elsewhere else DRM-free and without restriction of any kind.
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Old 03-19-2010, 08:41 PM   #21
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Quote:
Originally Posted by alvico View Post
I agree that's part of the problem is contractual, but by no means all of it. B&N restrict sale of my book to US residents. This is their decision and has absolutely nothing to do with any contractual obligations. The book is available elsewhere else DRM-free and without restriction of any kind.
Thanks for that info.

Graham Sharp Paul is an Aussie SF author based in Melbourne (IIRC) whose publisher is Random House. I had to go through hoops to buy his book due to GR.

So even if the author is an Aussie, does not mean the ebook is available for Aussies to buy easily
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Old 03-19-2010, 08:57 PM   #22
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Originally Posted by Ben Thornton View Post
They ask what law one is breaking - it's payment of local taxes that would concern me. If I tell Amazon.com that I'm in the US, I don't pay VAT, and I suspect that it isn't legal to lie to a retailer so as to avoid VAT payment.
In the US (don't know how this applies to the UK), sales tax is paid by the retailer--and they're allowed, not required, to demand customers pay them for it. Businesses regularly run "we pay the tax!" sales, which work out to a 5-10% discount depending on what state they're in. (There are states with lower sales taxes, and a couple with none, but they don't run "we pay the tax" as promotional sales methods.)

Is the customer *required* to pay VAT, or is the retailer required to pay it, and permitted to pass the cost along to the customer? (Also, is the customer required to pay it, or import fees, for purchases made out of the country & brought home later?)
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Old 03-19-2010, 09:08 PM   #23
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Originally Posted by Elfwreck View Post
In the US (don't know how this applies to the UK), sales tax is paid by the retailer--and they're allowed, not required, to demand customers pay them for it.
I'm not really sure why you think this. It is not technically correct. Sales tax is "collected" by the retailer and they remit it to the state. It is technically a consumption tax levied by the state on the end consumer of the goods. There is no tax burden on the retailer... however there is a burden on them to remit collected tax.

Of course, they can choose not to "collect" the tax... but they still have to pay a percentage of taxable sales.

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Old 03-19-2010, 11:47 PM   #24
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Originally Posted by Elfwreck View Post
Is the customer *required* to pay VAT, or is the retailer required to pay it, and permitted to pass the cost along to the customer? (Also, is the customer required to pay it, or import fees, for purchases made out of the country & brought home later?)
VAT is basically always charged, but businesses can later claim it back. If you're selling to the public, you have to price your product including VAT. If you're only selling to businesses (at least in theory), you can advertise the price without VAT (as long as you note that).

Basically, you see one price as a consumer which includes VAT. What you see is what you pay.

If you buy something from within the EU, same rules apply - VAT's been paid. If you import anything from outside (except for a few cases where treaties apply VAT), then if the item value is over a given margin VAT (over £18 in the UK) and import duty (over £130 in the UK, and if the duty is £9 or more), then you get to pay.

(Plus some extras for alcohol, tobacco and so on)

Of course, it's amazing how many people don't pay when they purchase and download something which costs over £18 from, say, America. Which is technically tax fraud.

Last edited by DawnFalcon; 03-19-2010 at 11:53 PM.
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Old 03-20-2010, 01:45 AM   #25
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I don't know all the ins and outs, but my initial guesses are:

• As already mentioned, there are all kinds of contractual obligations and taxation issues.
• I'm not sure that purchasing and downloading an electronic item qualifies as a "parallel import."
• Not many big retailers are willing to sell grey market goods anyway.
• Even if it is 100% legal, it would tick off pretty much every local publisher, as they'd see their American counterparts collect revenues that normally would go to the local. E.g. if the US has wider availability and cheaper prices (due to a lack of VAT for example), Aussie and British publishers would climb the walls due to lost revenue.


Quote:
Originally Posted by alvico View Post
B&N restrict sale of my book to US residents. This is their decision and has absolutely nothing to do with any contractual obligations. The book is available elsewhere else DRM-free and without restriction of any kind.
Sure, but in addition to all of the above, their ebook service also isn't set up for any international sales afaik. They can't set up an entire international business just for a handful of titles.

I assume that once B&N starts doing ebook business abroad, they'll make all the Smashwords stuff available internationally.
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Old 03-20-2010, 04:23 AM   #26
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not ALL books are geographically restricted, according to FW it's only affects fewer than ten percent of their titles. In most cases the restrictions are for European countries or Australia, but in some cases the restrictions can be quite complicated and affect many different regions. The eBook's description page will list any restrictions.

the fact that it only affects some books/authors makes the tax argument a little superfluous. In the series by Tad Williams "Memory, Sorrow, and Thorn"; books 1&2 are available for me to purchase as a UK resident, but books 3&4 are restricted geographically. [2 of the books are only available in ePub...]
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Old 03-20-2010, 04:51 AM   #27
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Quote:
Originally Posted by Elfwreck View Post
In the US (don't know how this applies to the UK), sales tax is paid by the retailer--and they're allowed, not required, to demand customers pay them for it. Businesses regularly run "we pay the tax!" sales, which work out to a 5-10% discount depending on what state they're in. (There are states with lower sales taxes, and a couple with none, but they don't run "we pay the tax" as promotional sales methods.)

Is the customer *required* to pay VAT, or is the retailer required to pay it, and permitted to pass the cost along to the customer? (Also, is the customer required to pay it, or import fees, for purchases made out of the country & brought home later?)
Actually, in the US, most states (including California) have a "sales and use" tax. Technically, you're supposed to declare all out of state purchases on which you have not paid any sales tax and pay your state government - usually along with your state income taxes. Individuals rarely do this, but with the current financial crisis, don't be surprised if states suddenly "remember" this little feature of their tax laws.

In Europe, goods coming in from outside the EU have to pay their VAT, which usually means that the recipient gets the bill. (There is no exemption for a "gift" - we've wound up paying VAT on gifts our American friends carefully marked as such.) In France, each incoming shipment for FedEx or UPS or any of the other big shippers is tallied up and an invoice for the VAT is sent out to the recipient. Usually arrives 3 to 5 days after the package does.

Basically, that's the operating principle for how they assess the appropriate VAT on software you purchase online for download. If your credit card billing address is in France, you get hit for French VAT. There's an allowance for stuff you bring back with you from trips overseas, but it's not much. Just that they rarely check your bags unless it's patently obvious you went on a buying spree in Hong Kong or someplace known for the good shopping.
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Old 03-20-2010, 04:57 AM   #28
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Quote:
Originally Posted by GeoffC View Post
not ALL books are geographically restricted, according to FW it's only affects fewer than ten percent of their titles. In most cases the restrictions are for European countries or Australia, but in some cases the restrictions can be quite complicated and affect many different regions. The eBook's description page will list any restrictions.

the fact that it only affects some books/authors makes the tax argument a little superfluous. In the series by Tad Williams "Memory, Sorrow, and Thorn"; books 1&2 are available for me to purchase as a UK resident, but books 3&4 are restricted geographically. [2 of the books are only available in ePub...]
Exactly!
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Old 03-20-2010, 05:37 AM   #29
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Originally Posted by GeoffC View Post
not ALL books are geographically restricted, according to FW it's only affects fewer than ten percent of their titles. In most cases the restrictions are for European countries or Australia, but in some cases the restrictions can be quite complicated and affect many different regions. The eBook's description page will list any restrictions.
Fictionwise's 10% probably apply to Americans.. In Australia the figure is more than likely 90%
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Old 03-20-2010, 05:40 AM   #30
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the fact that it only affects some books/authors makes the tax argument a little superfluous. In the series by Tad Williams "Memory, Sorrow, and Thorn"; books 1&2 are available for me to purchase as a UK resident, but books 3&4 are restricted geographically. [2 of the books are only available in ePub...]
The point about tax is not that geo restrictions are justified by some quirk of taxation, but rather that once such restrictions have been applied, circumventing them might avoid paying tax which you should pay according to local laws. So the case you cite is annoying, and seems unjustified, but if you pretend to be in the US to circumvent the geo restriction, the side-effect that VAT is not paid could be a problem.
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