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Thoughts on VAT added to price of ebook
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What???I thought the push was to remove tax on e-books?
Bastards.
As far as I understand it, the EU has changed the rules for electronically delivered goods so that you are charged the VAT rate in the country where the buyer lives, instead of where the company that sells them is based. So instead of Amazon charging Luxembourg VAT rates, it now charges UK VAT rates if you live in the UK. And Irish VAT rates for me.
Like David, I received the email, and promptly tried to ignore it until it actually hit. Well yes, it has hit my books now and Gingerlily is right re the rates.David, at the moment I am going to leave the price where it is.
I've lowered mine, for now, so that they reflect the pre-VAT price.Bugger, it's hard enough making money at this game as it is.
I should start claiming all the VAT I spend in this country back. Can't on stuff I buy online, though.
Doesn't really bother me. I'll be leaving the price as it is.
Since I missed your increase, how much more were we looking at? I know its going up like 17% or whatever but in terms of your books that were x price was it a significant increase. Enough to, in your opinion, make people rethink the purchase?
From £2.49 to £2.90, Michelle. Based on the thriller I wrote, most of those close to it in the chart are around £2.50, so I want to keep competitive. If they all go to £2.90ish I suppose it won't matter much.
That is quite a jump however I don't know if I knew about the difference if I would say no to buying the book for 40p. Just a shame it jumped so much. I would imagine there were a fair few rethinking prices lately.It sucks but I suppose it was inevitable given the way talk was over the last year about pricing, tax etc.
Michael wrote: "Doesn't really bother me. I'll be leaving the price as it is."I only noticed when I went to check after reading David's comment.
I'm just leaving the prices as they are. If you're not careful the Treasury will be making more money out of the book than you will, especially with the lower priced ones :-(
Gingerlily - Elephant Philosopher wrote: "As far as I understand it, the EU has changed the rules for electronically delivered goods so that you are charged the VAT rate in the country where the buyer lives, instead of where the company th..."And as is typical of the kneejerk reactionary laws so loved by politicians, the megacorps that the law was "supposed" to hit (ie Amazon) are entirely unaffected, but thousands of one-man web businesses are being forced to close because of this braindead legislation.
"But that doesn't affect me", you say. However, what if you wanted to sell your ebooks from your own web site? Not that unreasonable - lots of authors do it.
Under the new laws, EVERY ebook you sell to a customer in the EU is now liable for VAT.
But isn't there a VAT threshold of £81,000?
Yes, but only on physical goods. There is now NO VAT threshold on electronic services. Thus you now have to charge and be accountable for VAT and the different rates in different countries. Which means you have to determine what country the purchaser is in (and possibly change the price as a result). There's no software that does that (unless you're a big boy like Amazon), and the costs associated with doing it have already forced lots of companies to just give up.
Meanwhile Amazon are laughing all the way to the bank.
Bloody Europillocks (stronger words may be substituted). I'm speaking here as somebody that had a software business until yesterday.
Didn't really think much about this when I got the note from Amazon, and didn't figure it would affect the 1 or 2 books I sell per year in the EU. But having read Tim's note, I am horrified to realize it's yet another case of government screwing the little guy. That sucks, Tim.
Standard operating procedure to be honest. Sorry to hear about it Tim, its bluidy tough.To everybody else, remember that actually this is just par for the course. Wait until the EU decides it wants to run your industry in the way they try and run agriculture. :-(
Nigel Farage must be rubbing his hands with glee.Still, there's always a job at sainsbury's...
Perhaps there is an opportunity here - suppose you had an agent outside the EEC . . . . . e.g Australia where our GST is 10% BUT GST is not charged on exports (which this product would be) - what (if any) is the GST thresh-hold for online goods in to the UK ?Currently we in Oz can import goods with a value of less than $1000 (AUD) tax free (retailers are currently lobbying to have this reduced).
We have GST on all printed matter i.e books, magazines etc so I buy books from Book Depository, because they are much cheaper than the same book locally. I don't mind a few days wait.
Use the rules to your advantage - this is not illegal. :-o)
If not Oz for the agency, what about the Channel Islands or India, Isle of Man?? In a previous life I did exactly what I am talking about for postal items - I'm sure you have heard of Mailfast ?? which upset the global post offices (it was all legal), but now they do exactly the same.
Looks an interesting option Geoff, you offering the service?(And I'm not attempting to be sarcastic or negative here, strikes me as a genuine opening.)
I'm pretty sure that won't work as a loophole - it's exactly the kind of thing the new law was designed to stop.
Jim & Tim,I am throwing in a few suggestions, not particularly looking for an agency - but to take it a step further.
If I understand the new system correctly the seller is responsible for levying the VAT percentage of the destination country. The problem for the Brussels mob is that they have to rely on the seller to collect the tax. BUT if the seller doesn't live in the EEC he is not under any obligation to collect any tax. If Brussels want to tax the recipient they have the cost & responsibility of tracking the buyer down. The cost of doing this will make them look more idiotic than ever. The cost to track the tax on a £0.99 e-book would be huge, which is why they have made this part the responsibility of the seller (Amazon etc) who are too big to ignore Brussels. If you Tim, purchases Jim's book how will Brussels know? What happens if the book is free and Jim asks for a donation to keep his web site going? The item is free so is not available to tax.
As for selling books form outside the EEC (as I have done with my own) do they expect me to tax you for buying my book?
You don't have to have any qualifications or brains to become a politician - Common sense might come in handy sometimes. :-o)
Yes, I knew about this particular bit of EU wisdom a while ago.See:
http://www.telegraph.co.uk/technology....
"Even worse, they intend to expand the scheme to cover all online shopping, even for physical goods, by January 1st 2016; so this might be one of the last Christmases where you can shop at micro businesses online."Although by then Farage might have got us out of Europe (he must be wringing his hands with glee at this mess!)
Actually it is going to have an impact on author's plans.Now then, I'd planned a series of Benor 'shorts'. The idea is that one would come out every two months on the dot. The aim was to pitch them at 99p for between 15-20k words. The idea is that each one is a stand alone 'detective story'
Now for conventional published, getting that 99p spot is tricky, Amazon seem to go out of their way to make if difficult for them.
So I was pondering doing it as Kindle only (but only pondering)
As far as I can make out, if I still want to hit 99p, I've actually got to charge 82.5p (If my maths is correct)
This means that I earn just under 29p, Amazon earns 53.5p and the government takes 16.5p
If I go through a publisher, then I'll get about 20.5p, the publiser will get 20.5p (but provide the cover, put it on every electronic format known to man, and Amazon get 41.5p. Government still get 16.5p
Suddenly (and providing I can convince the publisher to do it and to be suitably punctual) going with them looks more worthwhile, as I've getting all that stuff they do for me and only at 8.5p a copy
Dunno.
Perhaps it's time to look at our membership of Europe, but frankly does our civil service want to have to worry about micro-businesses?
They might not have got round to it, it took time for them to do all mine
They have something like 15 million prices to update. That's gonna take a while...
I'm wondering how this is gonna affect the book order we did at school.I hope the order went through before this took effect or its gonna get bounced cuz we ordered right down to the penny of our allowance.
This is absolute rubbish on so many levels.
I just got another note from Amazon explaining some incredibly complicated calculation of VAT for Italy having something to do with whether the ebook has an ISBN. I expect soon to find out that VAT rates are contingent upon the average reviewer rating of the book as well. Or perhaps they're going to link VAT to the number of times CERN spots a Higgs Boson. This really has me concerned. Oh, wait, I've never sold a book in Italy. Never mind.
Just received the full blurb from Amazon re various VAT - plus a ps at the bottom - quoted below. I see you get a discount for buying an e-book in Italy with an ISBN, but only if the e-book is purchased through Amazon . . . . do Sony have the same system ??If I lived in Europe I'd be investigating how to reclaim the VAT on items purchased to produce the book in the first place i.e computer, printer, ISP charges, etc
The author has collected taxes (via Amazon, on behalf of Brussels) so the author has become a business, and as such is entitled to claim VAT back on producing the product that has been sold.
I am sure Amazon will claim VAT for all their outgoings, if so, you, as the author are entitled to claim VAT refund because you created the item in the first place, which has VAT levied and paid by the reader.
Think about it - if your product is taxable, then you must have the right to claim expenses to create the product - they can't have it both ways.
The fly in the ointment might be that you have to have a certain amount of tax paid before you can claim expenses. Perhaps as GR is full of European writers they start a newspaper campaign to get exemption for low sales - perhaps a minimum of £1000.00 VAT before the author has to be registered or what ever it is called in Europe.
Are UK authors allowed to claim expenses against their other income, for creating a salable item called an e-book ??
cheers
Geoff
.............................................
*Italy note: Due to country-specific legislation in Italy, a lower VAT rate of 4% will apply to eBooks with ISBNs purchased on the amazon.it Kindle store to customers in Italy. A higher VAT rate of 22% will apply to eBooks without ISBNs. Kindle Digital Publishing (KDP) doesn’t require ISBNs for eBooks, but having an ISBN will ensure a lower VAT rate for sales of your eBook to customers in Italy.
Important: Do not use an ISBN from a print edition for your digital edition. If you want to include an ISBN for the digital version of your book, it must be a unique ISBN. You can purchase an ISBN from multiple sources on the Web, including the official ISBN body.
Vat registration is interesting (As a farm that business is registered)With VAT, if you are 'registered' you can claim back VAT on business purchases but must charge VAT on stuff you sell.
For a farm that's easy, pretty well everything we sell is zero rates or doesn't have VAT at all.
As an business seller of ebooks, I'd have to fill the form in (quarterly or monthly depending on turnover if my memory is correct) and on the form I'd have to enter what I'd sold, what I'd sold that involves me collecting VAT for the government and the amount of money I therefore owe them.
Then I'd have to put in the amount I'd spent (as a business) the amount I'd spent that involved me paying VAT and the amount of money they therefore owe me.
I deduct one from the other and either pay them and they pay me.
Registering?
http://webarchive.nationalarchives.go...
When you can register for VAT
You can generally register for VAT if you are in business. HM Revenue & Customs (HMRC) generally defines a 'business' as a continuing activity involving getting paid for providing goods or services - in money or another form of payment such as in-kind or barter.
When you are in business
You are in business when, for example:
you earn an income by carrying on a trade, vocation or profession; whether by being self-employed or through another entity such as a limited company
you provide membership benefits as a club, association or similar body in return for a subscription or other form of payment
you provide certain other activities as a club or other recreational body, charity or other non-profit making body
when you charge admission to a premises
To be in business, these activities must have a degree of frequency and scale and be continued over a period of time.
When you are not in business
Even if your activities have some or all the characteristics of a business, they may not be considered a business for VAT purposes if they are essentially a recreation or hobby, or an isolated transaction. The one off or infrequent sale of your personal belongings, for example, would fall into this category.
Top
When you must register for VAT
If you are in business, you must register for VAT if your turnover for the previous 12 months is above £67,000. This is known as the VAT registration threshold. It changes regularly, so you should regularly check your turnover against the current threshold.
You must also register for VAT if:
you think your turnover may go over the threshold in the next 30 days
you take over a VAT registered business as a going concern
you are selling goods into the UK from another country in the EU and exceed the 'distance selling threshold' - see the section below on registration and international trading
you acquire goods from other countries in the EU totalling more than £67,000 in a year - see the section below on registration and international trading
My kindle is registered in the UK, VAT rate 20%. I live in Italy. VAT rate 22%. I seriously hope they don't make me switch accounts since I've bought all those books I'm still yet to read and I seriously don't want to lose them!I really REALLY wonder if Amazon will actually pay all those VAT fees to the respective countries in the end, or if it will find some kind of loophole so it can keep the extra dosh?
I'm in two minds about this one. On the one hand, it's a fiddle and a faff. It's an extra level of complication that I could well do without. It is taking money away from me and my customers. It could drive some small companies out of business.
On the other hand, it applies equally to all writers so we still have a level playing field. The money doesn't disappear. It goes to the exchequer which in turn means that it gets spent on us.
And it stops some of the loopholes that the larger corporations have been using to evade tax.
And we have a spending deficit of unprecedented levels.
So, yeah, the medicine tastes pretty unpleasant. But it is medicine.
But by screwing up small businesses like Tim who cannot afford to use the sort of software Amazon can install they're actually cutting both their actual income, and their potential income if Tim and others are successful. At the same time they're driving the business into the hands of the larger corporations who're the ones most likely to find the next generation of loopholes.
Another thing to remember is the effect this will have on writers.Look back at the figures I quoted for how much a writer will earn for a 99p book
Yes, 29p
Now for that readers expect a quality cover. If I spend £30 on a cover, I need to sell 104 of them before I get any money, up until then the money is going to the artist.
If you're getting 30 pence to the pound, I'm not sure where the problem lies in that example.
When I signed up, the way I understood the whole Amazon royalty program, even if you price your book at $2.99 for 70% royalty rate, atleast 30%-40% of that 70% profit is already being taken away by Amazon for taxation under U.S. law. So frankly, I don't see how VAT screws up the system further! I don't think a general author can make money off Amazon unless one is selling 400 units per day for atleast 2-3 months. Normal e-books sell on an average 1-2 books per week or even a month - atleast that's what I've noticed by studying the fluctuations in the 'amazon bestseller rank'. So, VAT or no VAT, selling a book is one thing, making a profit on it is still a far-off thing.
Jim - you could equally wonder why ebooks haven't attracted VAT up to now. VAT is payable on goods and services. An ebook is a good or a service.And while we are all very good at grumbling about taxes when we have to pay them, we have high expectations about the things that taxes are spent on, such as the NHS. We can't have a service that is free at the point of use unless we have an income stream to pay for it.
Will wrote: "Jim - you could equally wonder why ebooks haven't attracted VAT up to now. VAT is payable on goods and services. An ebook is a good or a service.And while we are all very good at grumbling about taxes when we have to pay them, we have high expectations about the things that taxes are spent on, such as the NHS. We can't have a service that is free at the point of use unless we have an income stream to pay for it. ..."
So are paperbacks, so are children's clothes, the decision as to what to tax and at what rate is a purely arbitrary political decision
Remember with taxation that, to quote Louis XIV’S finance minister, Jean-Baptiste Colbert, “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
The less fuss you make, the more likely government will dip its sticky paws in your pocket.
Remember government has no money. It merely spends other peoples' and sometimes it spends it on what people want and sometimes it spends it on what vested interests in power regard as suiting their best interests.
It's well known that tax can distort an economy and damage it and the people who make up that economy. Sometimes the goose is right to hiss, for everybody's good
Will wrote: "Jim - you could equally wonder why ebooks haven't attracted VAT up to now. VAT is payable on goods and services. An ebook is a good or a service."VAT has been payable on ebooks since 2008. The issue is that we've only been paying 3% because Amazon were based in Luxembourg, and now we pay 20% because we're based in the UK. (or 22% if you're based in Italy, or 5% if you're based in Italy and the ebook has an ISBN...)
Now as to whether ebooks should be reclassified as books instead of software (and hence be zero rated) is a whole nother matter.
Jim - the vast majority of the money raised by taxes goes to various forms of social support: the NHS, pensions, social services. The Government doesn't put its sticky paws in our pocket and take money for its own ends.The Government - any Government - takes our money and then spends it on us. Yes, there are some things that they spend money on that we might quibble about. But by far the biggest areas of spend is the welfare state.
Yes, tax can distort an economy. Right now we are spending far more than we are raising in taxes. Each year we spend somewhere between £100 billion and £120 billion more than we have raise in taxes. And around £30 billion a year in interest repayments. The National Debt is more than £1.4 trillion.
And with an ageing economy, it is going to get progressively worse.
Unless we sort this out, we will get to a crunch point where we can't afford the NHS, state pensions, state education. All the main political parties know this, and that's why their election promises are all going to be more or less the same as each other. Because there really is no alternative.
The hissing we ought to be making is for higher taxes, lower public spending and more modest lifestyles. Otherwise we are simply making a bigger problem for our kids and grandkids.
The other way to look at it is to regard it as a group of vested interests who are doing OK and paying out just enough to the 'poor' to keep the thing decent.Someone posted a campaign meme on facebook saying that there was major privatization planned for the NHS.
I checked it out, yes, government was going to privatize HR, software and data processing.
But of course this was an 'attack on the NHS' and of course this means that its a cut on A&E and nurses jobs!
Sorry but the purpose of the NHS is not to provide nice jobs for nice middle class people who want to be in HR but don't want to soil their hands in the private sector.
We cannot afford to provide nice jobs for nice people in nice offices.
We're disappearing into a bureaucratic loop. First we have bureaucracy. The bureaucracy expands to take all the money to provide for the bureaucracy (because no bureaucrat will meaningfully cut the bureaucracy, they merely sideline them into 'agencies'
Then eventually there isn't actually enough money left to pay for the things the bureaucracy is there to administer, because everything is going into salaries etc.
(Plot the rise in the number of administrative staff as opposed to medical staff in the NHS)
So at this point we have 'big society' or whatever, where volunteers are called in to actually deliver the service the bureaucracy can no longer afford to deliver.
Which means you can have another round of bureaucrats employed to monitor and supervise the volunteers and ensure that things are done to the level the bureaucracy expect
Problems then come because the volunteers just fade away because they cannot be bothered any more.
As far as I can tell the only programme that produced a long term drop in the bureaucracy is the fall of the Roman Empire in the west.Looking round I'm not sure I can think of any other example.
:-(
Have you noticed an increase in the price of your ebooks? And, what will you do about it: keep the increase and make the same profit, or reduce the price to what is was previously and make less profit?
My worry is that keeping the increased price, readers will not realise it's VAT, and think I've just got greedy and decided to increase my profit margin.