Tuesday, 17 February 2015

New tax laws for digital downloads sold online.

New tax laws for digital downloads sold online. (EU only)

So it seems Etsy are going to take responsibility for VAT that has to be charged to customers in whichever EU country - at the customers location, not the sellers location.

This is great news for sellers, because basically the whole VAT thing would be a nightmare, but it means that customers will be charged VAT at the point of sale, and the VAT they will pay, will be whatever applies in their EU country.

Etsy are yet to announce how they will do this, but I imagine the VAT will be applied when the customer goes to pay for their digital product. (In my case doll clothes patterns)

Once I find out whats what, I'm planning to try and revise the prices of the patterns to try and take some of the VAT impact off my customers.  I don't think I can absorb it all, but I'll try to absorb something reasonable.

I'll be posting about it once I know.

I don't think this affects anyone outside the EU, as these new rules come directly from the Europen Union.

It bums me out some, because I don't want to put off potential customers off by their having to pay more.

Le sigh.


  1. It only affects your sales to customers in the EE. I believe you can get around it if you don't do an automatic download - ie if you get the order and then email the pattern to the customer - I'm pretty sure I read somewhere that HMRC don't count it as a digital download if you email the pattern. I'd be more than happy to pay £10 or more for one of your patterns - especially considering how detailed the instructions on - I've paid £8 for patterns from the US that just had an A4 sheet of instructions which were as useful as a chocolate teapot - I know which I prefer! x

    1. Ahh right. Etsy forces you to provide instantly downloadable patterns when you list the sale, so I can't just email them to a customer once they've paid. I may look into some way of doing that that, somehow though, maybe on a different site to Etsy.

      I know! I've paid around £8.50 for a sheet of written instructions, badly spelt and not separated into easy-to-read paragraphs. I suffer slight dyslexia, so that's why I though I could provide much clearer instructions to people. I mean there's always spell checker, which seems to escape some of these pattern writers.

    2. There's Folksy - they don't have a instant download feature! I think it's such a shame that a law that was designed to target the big companies that find tax loopholes has had such an impact on the 'little person'. Well I think your instructions are fab - very clear and the pics are a big help - I like visuals lol!

    3. I'll check them out, but after some reading it seems to be any kind of goods that are provided digitally, not just instant downloads. And yeah, all they ever manage to do is screw things up for the little guy.

      I'm glad you think my patterns are good. I didn't want to write just a list of instructions and leave people baffled. I've been sewing for decades and written instructions still puzzle me sometimes!

    4. Trish - I stand corrected! I've just seen this Etsy announcment:

      "Some of you have also asked if the new VAT rules apply to digital items that are delivered to customers by email. At least in the UK, the government has taken the position that PDFs manually emailed by sellers are not covered by the new rules."


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