In the New Year, the EU will be introducing a new regulation which could cause huge problems for European comic-makers, as VAT charges are now going to be placed at the country of origin rather than the country of purchase. However, I should point out immediately this will only apply to digital products – like ebooks, music downloads… and digital comics.
This means digital businesses – ones which have been lauded and encouraged by almost every EU state for the last 5 years – will be penalised, while other types of small businesses shifting around physical goods are completely unaffected.
What this basically means, as far as I can tell, is that people selling digital comics now will be forced to track the location of everybody who buys one of their products – which is next to impossible – so they can correctly mark an added VAT charge on top of the existing cost. They would then need to also be registered for VAT in that particular country, meaning somebody selling digital comics might hypothetically need to fill out paperwork for each of the 28 member states of the EU.
This new law also suggests a number of other problems which might hit those selling digital comics in the UK and in Europe – hypothetically, there’s a chance this now means somebody from the UK could at any time be audited by Italy, for example, and would have to complete an Italian audit process. VAT comes with a huge amount of red tape, and this new regulation appears to wrap that tape around the hands of digital comic creators.
Online marketplaces are exempt from this, it appears, but a small press publisher selling product directly will have to fill out all the paperwork, and be opened up to all the scrutiny of a company like, say, Amazon.
There has obviously been some backlash to the January 2015 introduction of VATMOSS. Digital Arts Online spoke to designer Chris Spooner, who explained his situation thus:
“If a single person from Bulgaria pays $7 for a one month membership on my website, according to this law I must register for VAT in Bulgaria and pay €1.12 in tax. Unless I learn Bulgarian and personally contact the authorities in ????? to register for tax, I must sign up for MOSS here in the UK.
In order to use the MOSS scheme I must be VAT registered, despite being well below the UK threshold. That means I’d then need to submit quarterly returns and lose 20 per cent of my entire income in VAT, even from my design services that aren’t targeted in this EU law. Oh, and don’t forget that I must keep evidence of this person’s address, bank location, IP address or land line telephone number for ten years, which drops me into the laws surrounding data protection for personally identifiable information.”
And over on Twitter, webcomic creator Robin Hoelzemann (of the very good Curia Regis, profiled on here recently) simply said:
That RT on VATMOSS is really important and clear about us being screwed. I won’t be selling digital comics come JAN without a solution.
— Robin Hoelzemann (@RobinPierce) November 28, 2014
A petition decrying the VATMOSS regulation has been set up on Change.org, with over 8000 people already putting their names to the list. I can’t claim to understand VATMOSS entirely, myself, but having spent a week reading as many articles as possible about it (here’s another) it’s become clear that this will be causing some severe problems for digital comic-sellers in the New Year. I’ll be trying to follow this as closely as I can, and see if I can branch further into what this will actively mean for creators in the continent.
Consider this a heads-up, for the time being.