As the introduction of controversial new rules requiring VAT to be charged on the sale of digital products to non-business customers in each EU country continues to cause controversy among micro-businesses, we're speaking to payment providers and online marketplace owners to find out how they're helping their customers. Here's the latest information we've received. We will update this page with information as we receive it.
For our latest coverage of VAT MOSS, visit this page.
— Ask PayPal (@AskPayPal) December 11, 2014
12/12/14: I questioned why the above link does not include links to the latest UK government guidance and a PayPal UK spokesperson said: "We will look into this for you and provide any communication we have available as soon as possible."
15/12/14: According to the tweet below, PayPal will not support VAT MOSS data. I am still waiting for confirmation from PayPal UK.
Just confirmed on phone to PayPal they will not support #VATMOSS data needs by 1/1/15 but are looking into it
— Ian Chester (@Ciansoft) December 15, 2014
16/12/14: PayPal has sent us this statement: "The VAT MOSS changes only affect businesses that sell telecommunications, broadcasting and electronic services to people in other countries. The vast majority of businesses that use PayPal are not affected.
"All PayPal merchants can receive a Country Code for their customer with every transactions we process. How we send this information depends on how they integrate PayPal with their business."
30/12/14: In a concession to micro-businesses HMRC said companies under the £81,000 VAT threshold may until 30 June 2015 "base their 'customer location' VAT taxation and accounting decisions on information provided to them by their payment service provider. This means the business need not require further information to be supplied by the customer".
We asked PayPal to clarify how users access the country code. The company directed us to this page.
Some business owners have claimed that they cannot access the code because they use PayPal via third parties. PayPal told us: "Shopping cart providers, module providers and third-party integrations with PayPal may not automatically include the country code for transactions as each integration is customized by the provider or partner to meet their needs and the needs of their customers. If a merchant finds that their shopping cart service or integration does not provide the information they require, they are encouraged to contact their shopping cart provider or web developer to make the necessary changes. They are always welcome to reach out to PayPal for support. Our PR team will follow up with you tomorrow if you have any questions."
— Toria @ LittleSquish (@LittleSquishUK) December 12, 2014
— Toria @ LittleSquish (@LittleSquishUK) December 12, 2014
15/12/14: Update from Etsy spokesperson: "We are working hard on this at the moment and I will come back to you with an update as soon as possible."
22/12/14: Etsy has posted on its blog saying it is not responsible for paying VAT on behalf of its sellers: "Historically, Etsy has acted as a venue on which individual entrepreneurs run their businesses, with Etsy sellers responsible for paying appropriate sales taxes for those businesses. We are treating VAT the same way, with sellers expected to collect and pay VAT. We understand that the new regulations will be an added burden for shops that sell digital items and deliver them electronically to EU customers and we're working on a tool that will make the process easier for you. We will be releasing more details in early 2015."
23/12/14: Etsy has posted another update on its blog: "We've heard your concerns about how the new VAT rules on digital items will impact your business. This is a complex issue that we are all navigating together; please know that we are actively working on some solutions to help. We realize that it would be more helpful to provide more specific information on some of the changes we're making related to your concerns: 1) Providing information on buyer countries: Beginning in January, you’ll be able to verify the country of your buyers. 2) Control over where you sell items: We’ve heard from you that you’d like to be able to control the countries in which you sell digital items. We are looking into the feasibility of this and will update you in early 2015."
07/01/15: An Etsy seller has claimed to have received an email from HMRC which states the department believes Etsy is responsible for collecting VAT and not the individual sellers.
The email the seller sent was:
"Assuming Etsy meet the conditions of a marketplace as described above, if they continue to deny responsibility will I be responsible at any point? And also if later on Etsy were to appeal and found not responsible for collecting EU VAT, will I then be responsible for back-dated EU VAT?"
Not On The High Street:
@Dan_Martin Hi Dan, NOTHS and its sellers, do not provide digital services and as such VATMOSS is not applicable to our marketplace.
— notonthehighstreet (@notonthehighst) December 11, 2014
— Julia Sydnor (@PixelFrau) December 11, 2014
16/12/14: Not On The High Street appears to have rethought its position. A spokesperson said: "By and large, Not On The High Street and its sellers do not provide digital services and as such VAT MOSS is not widely applicable to our marketplace. For some of our sellers, VAT MOSS may apply and we are looking into how we can support them appropriately."
19/12/14: Not On The High Street has updated its statement: "By and large NOTHS, and its sellers, do not provide digital services and as such VAT MOSS is not widely applicable to our marketplace. For some of our sellers, VATMOSS may apply and we are contacting these sellers on an individual basis so that we can support them appropriately."
Folksy has published a blog post on its website. It says: "Our stance at Folksy is that VAT MOSS (VAT Mini One Stop Shop) unfairly impacts upon sole traders and micro businesses. Requiring compliance means administrative costs, which will mean many micro and small businesses decide to stop trading in the EU altogether. The situation will only be compounded if and when physical products follow the ruling on trade of digital products."
Despite its protest, Folksy says it will not manage VAT payments on behalf of its clients: "Folksy is a marketplace but the contract is between the buyer and the seller and we are not deemed to be an agent in that transaction and as such the seller is currently liable to comply with VAT MOSS."
We have contacted Folksy for clarification given that some experts have claimed marketplaces are responsible for managing the VAT charges.
15/12/14: Folksy has updated its blog post and said it is meeting with HMRC on 17 December to discuss the changes and define the defition of 'marketplace'.
19/12/14: Folksy has written an exclusive article for BusinessZone offering an insight into its latest position on the new rules and a call that took place between HMRC and online marketplaces.
08/01/14: Folksy has published a new blog post which says:
- After reviewing how the Folksy platform currently operates, HMRC does not consider that our platform is responsible for accounting for the VAT on business to consumer supplies of digital services.
- The definition of whether or not something is a digital service depends on the level of human intervention that occurs in that supply. If a seller receives a sale through Folksy and then prepares a bespoke e-mail for the customer to which they manually attach a PDF, then HMRC does not consider that as a digital supply. If, however, the customer downloads the PDF or other electronic service from another site (for example, from a seller’s own website), then this may be regarded as an e-service as the level of automation is more significant."
"What this means for you as a Folksy seller is that the new rules do not apply to PDF patterns, printables or graphics sold through Folksy and supplied to a customer by attaching a PDF or file to an individually written email. However, if a PDF pattern, printable or graphic is delivered to a customer by automatic download from another site, even if the purchase was made through Folksy, the new legislation does apply and you will need to register for the VAT MOSS scheme."
30/12/14: Bandcamp, a platform for independent artists and music labels, says it will handle VAT processing for its users. Posting on its blog, the company said: "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.
"If you happened to see our earlier help item about this, we planned to roll out a temporary solution where artists submitted the tax themselves. We’ve decided to accelerate the changes to our system such that the interim step is unnecessary."