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Sunday 11 January 2015

... January Moon and New EU laws regarding digitals


Evening Folks! This pic is of the first full moon of the new year, 2015. The first full moon of the new year, traditionally called the Wolf Moon and was associated with the hungry winter months still to come and takes it's name from the howls of packs of hungry wolves stalking the edges of villages.... One reason to be glad I live in Ireland/UK.... not many wolves here... unless of course you consider the tax man...

The EU have just introduced a new law governing the collection of VAT tax from folks who sell digital items via the internet...that would be me, and possibly you, if you sell even so much as one knitting pattern/.svg cutting file/digital scrapbook files to anyone living in the EU. And nope, it does not matter where YOU live, if you reside on planet earth and are selling digital downloads to anyone in EU, you need to know about this. Google EU VAT and you will be sure to come across the info.

In their wisdom, the EU have decided that VAT must now be paid to the country that the purchaser resides in, rather than in the country where the item is being sold, as was the case previously. There are about a million reasons why I believe this is not a good idea, but the one most important to you and me is this - Instead of sending in a couple of tax returns each year to HMRC (the tax folks in UK), If I want to continue selling Digital downloads, I am now expected to complete and submit 4 VAT returns per year to EACH of the 28 odd EU countries, over a possible 75 levels of VAT.

Now, WMS is a small company, a tiny company in fact. I made the decision to stay small so that I could manage it while I raise my children. I do everything myself, I design the stamps, I design and produce the packaging, I handle orders and customer queries, I handle all the site graphics, I manage all of the stock. I have a US shipper who manages the US orders, but I handle the rest of the world. I do this partly because I wanted to be able to control my output, but also because I wanted to keep costs down as much as possible so that I could someday make a living from this and contribute to my family financially. Thing is, I buy only the best USA polymer, I use only the best USA manufacturers and I have all those goodies shipped all the way over here from USA, so my costs are already high compared to large corporations that can purchase in bulk at better prices from far overseas.

Now the EU and government have decided that I, and thousands of small companies like me, should take time out to submit over 100 tax returns per year...ok...sure...I don't actually need to sleep anyway....

You will see, very soon, that thousands of small digitally based companies will have to close. Thousands of small mom and pop independents, just like me, will not be able to afford the accountancy costs. Folks like me who were hoping to expand their digital businesses will have to shut up shop, or supply through third party sites such as amazon, where prices will no doubt rise to cover the extra costs.

Soon, when you go looking for cutting files and knitting patterns, scrapbook files and crochet patterns etc, you are not going to have the same wealth of choice that you did before - especially if you live in EU. I know of many, many stores who are currently, as we speak, having their sites reconfigured to block all EU customers. I now of many, many folks raising their prices to try to help and offset the costs of all the extra admin and accountancy.

Well I'm not quitting. I am working a way around this. I have been working on this all over Christmas and New Year, I spent the entire night of New Year's eve and into the next day taking all the saleable digitals down off my website so that I would not be breaking any laws when they came into force on the 1st January.

I am working on new settings for digitals at the store and once I have fixed this I will be relaunching all of our cutting files which match stamps as FREEBIES. All templates and other files will be available in the same formats as before, but instead of an instant download, we will now be required to email them to our customers. This will keep us compliant in 2015.

The really horrendous information is that they intend to apply this new VAT law to all physical goods from 1 January 2016. So anyone, anywhere, who is selling stamps, inkpads, farmers wellies, sausages...you name it, will have to register and pay taxes in the EU countries that they are selling to.

At this time I have an outline plan of how we are going to handle this nightmare when it comes, but I will be evaluating other ideas and trying to get the best possible solution into place before the deadline.

I just wanted to let you know what's going on and why WMS has not yet begun our 2015 release program. Like many companies we only heard about this in the couple of weeks leading up to Christmas. In my opinion HMRC did not communicate this new law in either a timely or effective manner and many folks were caught out and either closed their stores completely before January 1st, or have already blocked EU buyers. Many Etsy stores are still on Vacation mode while this is being grappled with.

I want to thank you all for patiently waiting for us to manage this curve ball and get back into our scheduled routine.

Sale - advance notice


Our next release will be in February, but before that we will be having a sale at the store. I am going to clear out some inventory so that when I come to rejig the store settings to cope with this new law, I won't have so many products to wade through. Thank you for your patience.






27 comments:

  1. Claire - thanks for letting us know. I think this new law is absolutely awful. So many small businesses are going to close - I do hope that you manage to sort your way through all the red tape. Take care xx

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  2. I am really sorry to read this. Small businesses are the economy's lifeblood. AACCK for you and others.

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  3. Goodness, it all sounds so complicated! Thanks for the information, so much extra work for you!

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  4. Oh, that's awful! And ridiculous! I'm sorry this is causing you so much extra work. I actually think this new law is impossible to administer as well as impossible to comply with. With the number of small companies and small Etsy-like shops around, who is going to be able to keep up with it all? Those EU country tax agencies are going to find themselves in a world of trouble trying to keep a track of it all (on the bright side, there will be new jobs available...).

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  5. Claire i am so sorry to hear that the government is dipping in and causing such a nightmare of a headache for all of you.. and eventually everyone. My dh says its all greed..that is referring to here in the US.. I'm glad you have been able to find a way around things for now.. So sorry you had to spend your holidays to accomplish it! Move here.. your costs will go down for shipping and supplies.. I'm kidding as i'm sure you do not want to leave your home.. Thank you for updating us. HUGS

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  6. Thank you for letting us know. I really love your stamps, Claire, and use them all the time. Best of luck in wading through this new red tape.

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  7. This is quite honestly the most ridiculous thing those EU muppets have ever done Claire - what an absolute nightmare. It seems to me the powers that be have no common sense whatsoever - how on earth does this encourage new business adventures? It would be enough to put anyone off! Hope you find a way through the minefield with as little hassle as possible Claire!

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  8. So sorry! Less government is always better! Sorry you have to deal with all this ...sorry( crap)!!!!! It used to be a ........oh I better just stop talking.
    Happy New year!

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  9. Aghhhh as if it's not hard enough already......Poor you Claire.Thanks for the clear explanation and good luck working your way through it :)

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  10. Thanks for taking time to explain this. I can only hope that some miracle will occur and have this law reversed. Sending happy thoughts to you!

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  11. I think its absolutely dreadful and yet another example of the EU sticking their nose where it doesn't belong. I wonder if anyone has thought of a petition, do they know the effect this has had on so many small businesses? Good luck with your sorting out - what a nightmare! Susan x

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  12. This sounds like a nightmare, Claire. I had heard about it but didn't really understand all of the implications for small independent businesses. It sounds like it will generate more admin costs than the value of the additional VAT income it will bring in. With all of the lobbying that is going on perhaps sense will prevail and they will review their approach? I hope so! In the meantime, keep smiling....

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  13. Geesh. Not good news and certainly not fun. What happened to the "union" part of EU I wonder???

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  14. It's so much worse than I realised- it just doesn't make sense. I can't imagine how much time and effort you must have spent on it already. Really sorry and let's hope that you can work things out well for the next horrendous round of tax law.
    Hugs, Keren x

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  15. This new EU ruling is ludicrous. Did they not consider or care that many small companies will be going to the wall because they cannot afford the overheads of a large accountancy team. Britain is part of the EU, surely member states of the EU should be exempt from this - else what's the point of a European "UNION".
    SO sorry this gave you such a headache over the holidays - looking forward to the next release.

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  16. Thanks for the information Claire. Best of luck working through this.

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  17. Thank you so much for taking the time to explain the difficulty you are having with filing for VAT. Living in Canada, I had not heard of this craziness but anything that makes business more challenging affects everyone. Unfortunately, I could see it taking a while (several years) before the "powers that be" realize that they won't recover the administrative costs of this idea.

    I'm sorry for the frustration for you and the time it's taken but I appreciate being kept in the loop.

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  18. They don't make it easy do they. Praying you'll work it all out.

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  19. Claire- God bless you as you pursue all that needs to be done! We so appreciate all you do! Blessings!

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  20. Oh Claire! I am so sorry that you are wading through this quagmire of utter nonsense. Stick to your guns my dear ... we are all behind you. Looking forward to seeing the designs your fertile little brain has cooked up for us. Best of luck. Fingers crossed.

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  21. Ugh, Claire--what a pain! It seems like paperwork sucks creativity time and energy dry. So sorry that you are having to scramble to make changes now. . . {{{Hugs!}}}

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  22. It's an abomination designed to drive you up the wall. Goodness only knows how any small business is meant to cope with this impending doom. I daren't even think of the possible implications of this when it's fully imposed next year. It's going to be hard enough as it stands, but God help everybody when it really does kick in...

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  23. This law is the most asinine thing I've heard in a long time (and I live in the US where our government enjoys coming up with creative ways to stick it to the little guy). I'm so sorry you are going through this. I hope eventually this law will be seen for the nightmare it is and be reversed. Good luck!

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  24. Hey sweetie, so sorry you are having to deal with this. Funny you mentioned knitting patterns, because I heard about this first on the knitting forum where I go to get patterns. There are many who will close shop rather than have to deal with this nightmare. Best wishes.

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  25. So sorry for the hassle Claire! That is why there is a Tea Party/Conservative movement in the US. If the government isn't kept small it will drive companies out of business (as this new law is doing in the EU). Want to move to the US? We'd LOVE to have you and your family here!!! :-) Hugs, and good luck with all the figuring you have to do!! H in Healdsburg

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  26. oh forever more. I hope you are in vigorous contact with your MP or is it the EUMP? This regulation/law is complete overreach. I wonder what the true intent of it is and why it came about. I hope you weather this storm and that this ridiculous legislation gets voided.

    I'm going to share your blog post on my FB because I have many crafting and artist friends who are completely unaware of this.

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  27. BTW this has completely confused me. For example for Christmas I bought some handcrafted items from crafters and artisans in England to send to relatives in England but as I am in the US then I would pay my tax on them to the US and not English VAT? Is that right?

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Thanks for taking the time to comment, :) I read them all and I appreciate you taking time to visit!