Quids and Quills

accountancy for authors

EU VAT response – All Romance Ebooks

SELLERS! THEY WILL HANDLE ALL THE VAT REQUIREMENTS.
EU BUYERS! THEY WILL QUOTE A NET LIST PRICE THEN ADD VAT AT CHECKOUT.
AUTHORS! YOUR ROYALTIES WILL STILL BE CALCULATED ON LISTED PRICE.

24.12.14

VAT Publisher Briefing 

Summary of the 2015 VAT changes for digital goods.

The European Union (EU) has changed the current tax scheme as it applies to the sale of digital goods, including eBooks, effecting January 1, 2015. The change will mean that retailers that provide online digital services will have to track where their buyers are, and then charge, at the point of sale, the appropriate VAT rate of the country for each consumer. The appropriate VAT then has to be paid quarterly to each of the 28 EU countries through the filing of a special VAT return. In addition, detailed records of related transactions need to be maintained for up to ten years for audit purposes.

Which retailers will be impacted by this change?

Anyone who sells eBooks to residents of the EU is expected to be in compliance.

Will this impact my royalty or commissions on All Romance eBooks, LLC sites?

There will be no change to the current commission structure. Publisher’s commissions will still be based on the sale price they specify. It’s that price in U.S. dollars (and non-inclusive of VAT) that will display on our book detail pages. VAT will be added on to the receipt prior to checkout when appropriate.

Do I need to increase prices on All Romance eBooks, LLC sites to cover VAT?

There is no reason to raise the base price of your books on ARe.

Amazon is going to do a one-time price increase to cover VAT. Will the fact that you are not increasing result in Amazon lowering prices again to match yours?

Amazon is doing a one-time increase on pricing in the EU. On their site, the consumer-facing pricing varies within the different EU nations and is inclusive of VAT. Our consumer-facing pricing is always in USD and exclusive of VAT. Since VAT isn’t affecting pricing of books in the US and Amazon won’t be changing pricing of your books in the US, we anticipate no inconsistencies. 

Contact your tax or legal advisor for further information about these changes and how they might impact your business.

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26.12.14

Thanks for the publisher briefing, but please may I have some clarification?

* do I assume from this that ARe will not be responsible for reporting and paying the VAT to HMRC for EU sales?

No, as a retailer of eBooks who sell to consumers in the EU, we MUST report.

The main message of the FAQ is that we will be in compliance and you don’t have to raise prices to include VAT because it will be added.
* how will ARe be able to apply the relevant VAT rate to all sales at checkout, when customers may be in many different EU countries?
The HMRC has published guidelines as to what elements a company can use to identify appropriate location. Our ID mechanisms are in accordance with those guidelines.

 

* will ARe provide full reporting details for the publisher, including the customer country for each sale plus the VAT amount charged? We will need this to fulfill the VAT requirements.

You don’t need to do the reporting, ARe will be filing quarterly returns in each of the 28 EU countries. We will, of course, maintain the reporting details as required for 10 years.

I hope you can answer these queries as soon as possible, as I and many other self-publishing authors may not be able to find a way forward in selling through ARe in 2015.
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