From 1st of Janaury 2015, everyone who sells digital downloads of their music from either bandcamp or their own websites will be subject to the new EU VAT Tax law that comes into force.
If you are a UK seller and say someone in Germany buys your track or album, the buyer in Germany will have to pay their rate of VAT ie 19% on top of the download, while seller in the UK will have to submit a VAT Tax Return.
There has been an update from bandcamp, but read link 3 for further details.
Does Bandcamp handle European Union VAT (Value Added Tax) for digital goods?
If you’ve seen the recent news of changes to EU tax law, you may be wondering how this affects you as an artist or label selling on Bandcamp. The good news is that for digital sales, there is no need for you to register for VAT, submit quarterly reports, and so on. We will take care of all of that for you.
I am not sure… but I would like to know as well…
and yes, had the same thought of making everything free-downloadable if I think its iffy or selling gets me in trouble with the taxes…
There’s an update in that link at the start though suggesting it is sorted:
dated 12/30/14 1:30 PM PST: Within the past hour, Bandcamp has changed their policy. Bandcamp will now handle all VAT payments and reporting, and the additional steps that they said users would need to take are no longer needed.
I’m a lazy CA so haven’t read up on the ins and outs of these new rules but won’t the VAT thresholds still be a factor? Been a while since I did personal tax but the threshold was, what, £60k odd of sales. One benefit of registering for vat would be claiming vat back on expenses (new synths!)!
Also, just a thought, I’m not surprised Bandcamp are handling this. I don’t necessarily believe that this is some 100%genuine nice gesture. I’d imagine there will be some sort of tax/vat benefits if they were to handle vat for everyone.
A business, is a business… so I cant really blame them there, if they can pull that off…
Personally, I don’t like forms, and register stuff and all that bladidabla… not sure if I like to keep records of the odd sale here and there… for me, the annual trip to the macdonalds from my gains are a happy finishline…
so, I don’t really care if bandcamp does it for me, for an appropriate fee (not to much, not to little, just right).
be difrent, if I actually sold enough stuff to use the vat to get discount on my synths (the whole vat benefits story).
So a choice : Yes I wanna do it myself, for the bigboys.
and a “No, please do it for me” would be great.
Baddcr drew my attention to this a few months back & having looked into it, it’ strikes me as a very odd move indeed!
Bottom line if you can’t be bothered going through all the bumf is this.
It’s a zero threshold!!! Unlike practically everything else that has a sensible threshold, you will be liable to charge & return vat even if you only sell one unit for £1.00 (€ or whatever). In this scenerio you’d charge £1.20, file a return & give the government 20 pence.
There are 2 types of sale to my knowledge, business to business (B2B) & business to consumer (B2C).
B2B sales are not liable for vat however only B2C.
My personal take on this is that if you want to sell directly to your fans then you’re liable for vat.
If however you sell to another business who in turn sell on your behalf then you’re not, they are!
I would have thought/hoped selling through Bandcamp/iTunes etc. would fall into the latter category.
Either way it does nothing to fan the flames of creativity, undoes its fly, whips out its todger & pisses all over it really!
this liability is what scares me a bit.
I don’t want to go to jail because I sold 10 mp3’s…
my wife says I look very cute… not the type that wants to go to the slammer.
The zero threshold doesn’t ring true with me. It goes against the grain of pretty much the rest of the UK vat system.
I’d be amazed if any government had the resources to chase Joe Bloggs who made, for example, a few hundred euros of vatable sales in any one country. It’ll cost EU countries a fortune to govern this in a way that captures everyone.
For the hobbyists/small timers I can understand the concern but my gut feel is that they will have to amend this one pretty swiftly if they want it to work for everyone. International vat treatment is a baw ache at the moment without this nonsense!
In a hopelessly geeky way, it’s actually quite interesting having my professional world impact on my hobby.
I’m exactly the opposite- if I were to have to make myself VAT registered it has wider implications I could do without. My biggest worry is that is would also mean my instruments were no longer covered on my contents insurance, given they are generating a reportable income. It’s all a hassle I can do without.
I guess a short term alternative, until the dust settles for implications on all but the big guys this is meant to capture, would be to stream your tunes for free and offer physical purchases only. Not such an issue with Bandcamp claiming they’ll hand,e everything but I’d read through their inevitable amended T’s & C’s carefully.
I can see a lot of bands/artists selling T.shirts with a ‘free’ bonus music download if you meet some arbitrary condition. Order before June 2020 & receive our new album free etc…
if you call it a “hobby” this may be a way to skirt around any issues… at least in the states that’s how it works. also, if you aren’t making your living from it… or it your income from it is under a certain amount then it’s not a thing to worry about. … at least in the states… i suspect there are similar “fine print” details in the tax code that you just need to be aware of.
hopefully this VAT rule for downloads doesn’t screw things up for people
I’m going to chat with my tax mate to see what he says to all of this. Like I say, it’s piqued my interest but I’ve been too long out of the personal tax game (probably 5 years since I last did a return for anyone!) to offer any helpful advice!
I can understand the reasoning behind wanting to clamp down on your Google’s, Amazon’s, etc, etc but in a strange way, if they were to truly enforce this and, like Baddcr says, force us to do a dozen vat returns (possibly quarterly too) for minuscule amounts then it will only drive people into alternative distribution methods or, disappointingly, to sign up and sell music only through sites that will manage the VAT implications (like Bandcamp claim they will do). The latter concerns me a tad in that I can envisage people being charged a small fee/%age to avoid the hassle of self assessment with these VAT rules.
