UK e-book prices to rise from 1st January 2015

[Rizla]

Originally Posted by HarryT

Companies don't have to concern themselves with VAT unless they reach the "VAT threshold" for sales within the EU, which is quite a large amount of money. Eg, a company doesn't have to register for VAT for sales into the UK unless it sells more than £70,000 (over $100,000) worth of goods in the UK each year. Small companies shouldn't, therefore, be affected.

That's good news if it's true. This article seems to suggest otherwise:

http://www.thepassivevoice.com/11/20...ll-businesses/

[shalym]

edit--never mind...apparently the "threshold" no longer exists.

Shari

[HarryT]

Originally Posted by Rizla

That's good news if it's true. This article seems to suggest otherwise:

http://www.thepassivevoice.com/11/20...ll-businesses/

What I described is the way things are now. I don't know if the rules are going to change. They may well be.

[Pablo]

Originally Posted by HarryT

Tax evasion is a serious criminal offence, Jon. That really wouldn't be a terribly good idea.

On the subject of tax evasion, let's remember some U.K. controlled tax havens like Jersey, Guernsey, Isle of Man, the British Virgin Islands, Bermuda and the Cayman Islands.

[fjtorres]

Originally Posted by HarryT

I hadn't heard that before. If it's true then it is, as you say, an onerous burden on small business.

Ya think?


Here is one of many reports:
http://www.huffingtonpost.co.uk/sooz...b_6177222.html

There are several issues with the logistics of this - especially for micro businesses (a business being run by a single person) using the most basic sales software.

1. It is not always possible to know where a buyer is when they buy your product - PayPal, for instance, just doesn't always provide sellers with this information.

2. In order to charge VAT on a product in the country where your buyer is you have to be registered for VAT in that country. Given there are 28 countries in the EU with 75 rates of VAT, a seller of digital products would need to be registered in every country where someone buys their products - even if it's only one customer buying one product for, say, £5.

3. There is an option to use the 'Mini One Stop Shop' (VAT MOSS) by registering for VAT in the UK (this will distribute the money to the EU making it unnecessary to register for VAT in other countries individually). The requirement threshold for registering is usually a turnover of £81k a year, but the threshold has been effectively scrapped for (and only for) businesses selling digital products.

This will make it necessary for a micro business who may only be doing, say, £800 a year to register for VAT (and all the extra administrative burden that brings) if they sell a £5 ebook to a single person in Spain. (Even if that person is a Brit who happens to be on holiday there when they buy it.)

If it sounds a bit confusing so far, take a moment to enjoy this example from a City AM article from last month:

"On board transport travelling between different countries in the EU (for example, by boat or train), the consumer location will be the place of departure for the consumer's journey."

This means a French person travelling from London to Paris by train, having passed through the Channel Tunnel, could purchase an online subscription, connecting to the French mobile network, with a French IP address, and using a French credit card, but it would be correct for VAT purposes to show this as a UK customer. Getting this wrong risks an unlimited fine, even though the VAT rate in both countries is 20 per cent.

So, absolute opaque clarity aside, there are many more issues of course, but let's just sail straight on to why these rules are wildly unfair and discriminatory.

This only applies to digital products, so it won't affect businesses delivering physical products or live services. Which means digital businesses get penalised while other types of small businesses are completely unaffected.

More at the source.
Bolded text mine.

Basically, the law was thoroughly crafted to target Amazon's Kindle business but since specific companies can't be singled out they simply substituted digital products for "amazon" and carpet bombed entire industries. Because it isn't just ebooks impacted.

[tompe]

Originally Posted by HarryT

Companies don't have to concern themselves with VAT unless they reach the "VAT threshold" for sales within the EU, which is quite a large amount of money. Eg, a company doesn't have to register for VAT for sales into the UK unless it sells more than £70,000 (over $100,000) worth of goods in the UK each year. Small companies shouldn't, therefore, be affected.

The VAT threshold is for goods. The threshold for services (ebooks is a service) is 0.

[HarryT]

Originally Posted by fjtorres

Basically, the law was thoroughly crafted to target Amazon's Kindle business but since specific companies can't be singled out they simply substituted digital products for "amazon" and carpet bombed entire industries.

Actually the EU VAT directive which made ebooks liable for VAT in the first place was aimed at music downloads (ie Apple, not Amazon). Ebooks just happen to get caught in it as a by-product.

[pdurrant]

Originally Posted by HarryT

Actually the EU VAT directive which made ebooks liable for VAT in the first place was aimed at music downloads (ie Apple, not Amazon). Ebooks just happen to get caught in it as a by-product.

Ebooks have always been liable for VAT. The question was the rate that should be charged. The EU classified ebooks as a service (standard rate) and not a book (reduced rate) because ebooks weren't really considered at the time that electronic downloads were being classified.

And yes, it seems that this new regulation has no minimum level - any automated EU sale of electronic services requires registering in that EU country, or in your home EU country.

The EU really does seem to have dropped the ball in a big way on this one.

[fjtorres]

Originally Posted by HarryT

Actually the EU VAT directive which made ebooks liable for VAT in the first place was aimed at music downloads (ie Apple, not Amazon). Ebooks just happen to get caught in it as a by-product.

The original directive.
The actual implementation, though, reads like a cruise missile gone astray.

Consider Duane's situation:

She has a few dozen books tradpub reverted to her because they weren't interested in selling them. So she arranged a simple sale system where people pay through paypal and get a DRM-free download. Paypal gets a small cut, she gets almost all the sale price and prices the books lower. And she controls the price and customer relationship, adding to her mailing list of fans. She may only make a few thousand dollars a year but money is money and she gets the mailing list on the side. She won't get that going through an aggregator.

Facing unlimited fines, even if somebody spoofs the IP address, she may end up closing the ebook store. So everybody loses, globally.

Amazon, however, gets 30% off her KDP-ed ebook sales and possibly new customers.
And like Baen, she'll have to raise the price to account for Amazon's cut and the rolled in VAT, resulting in much higher prices for her EU readers and probably lower sales because of it.

Multiply by thousands of authors and bands globally.

[Rizla]

Originally Posted by Pablo

On the subject of tax evasion, let's remember some U.K. controlled tax havens like Jersey, Guernsey, Isle of Man, the British Virgin Islands, Bermuda and the Cayman Islands.

I saw a UK program a couple of years ago, Panorama I think, in which the investigators pretended to be very wealthy individuals seeking to evade tax by using one of these of these dodgy tax havens. The abuses were rife. The program sent the information to the IR who did absolutely nothing. It seems the establishment allows the wealthy these abuses, presumably because they are using them too.

[Rizla]

In the years following WW2, the upper band of taxes was around 80%. It began to really go down as a result of Reagan's policies. The good old Gipper! Shame his wife was a...well, google it. Can we really say society is a better, more equal place as a result of the lower taxation on the rich.

I think when Thatcher talked about "trickle-down", she wasn't talking about money, or even water

[HarryT]

Originally Posted by Rizla

In the years following WW2, the upper band of taxes was around 80%.

It actually peaked at 96%, but that has absolutely nothing to do with the subject-matter of this thread, and would be better discussed in the P&R forum.

[CommonReader]

I read somewhere that Amazon was forcing the publishers to price their books as if Amazon had to levy the rate of VAT in the UK and other places for quite a while already.
In places with fixed book prices like Germany Amazon was selling the books at the same price as other retailers. You are kindly invited to guess who was pocketing the difference between 19% VAT in Germany and 3% VAT in Luxembourg.
This regulation was well overdue to stop sweetheart deals as Amazon did with Luxembourg.

[auspex]

Originally Posted by Quexos

Always increasing taxes are a crime against the rights of the individuals.

Right. Advising people to use a VPN may be a bad idea. But opposing regressive taxation is not.

[auspex]

Originally Posted by HarryT

It actually peaked at 96%, but that has absolutely nothing to do with the subject-matter of this thread, and would be better discussed in the P&R forum.

You're both right. Rizla would appear to be talking about the US, while you seem to be talking about the UK.