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VAT MOSS: Will I be affected by the EU VAT changes? Here are the facts for designers and artists

Rob Carney | Dec. 1, 2014
With the new EU VAT regulations, designers and artist who sell digital products online are faced with a world of tax confusion and seemingly unnecessary bureaucracy. We cut through the red tape.

From 1 January 2015, a new regulation will come into place where VAT on digital products sold in the EU will be chargeable in the place of purchase rather than the place of supply. VAT MOSS — or VAT Mini One Stop Shop to give it its full name — is being introduced to stop big corporations such as Amazon diverting sales through low-VAT countries such as Luxembourg. But it affects smaller companies and sole traders — who have significantly less resource for such tasks — on a larger scale.

It's fair to say that #VATMOSS has sparked panic on social media amongst creatives. After all, as design, motion, illustration or web professionals we deal in digital delivery. Our work is sent digitally across the EU and indeed the globe to our clients. Unless you are a very successful freelancer, the issue of VAT has probably never come into play. And the good news is, it may still not.

You see, VAT MOSS only applies to digital products being sold to consumers in the EU. A good way to think of it is like this: if you design a logo for a client then you are offering a service to a business, and you needn't change anything. If you're simply a freelance illustrator or designer, VAT MOSS does not affect you. However, if you are also selling logo templates and so on through your own website — that are marketed to consumers — you're possibly going to have a whole load of paperwork to do. A crippling amount, in fact.

It's important to reiterate that the VAT MOSS regulation applies to digital products only. So that means prints, tees, books and the like are not affected. But if you're selling ebooks, downloadable training, tutorials, images, PSDs, games, WordPress or motion templates or typefaces, you need to comply with the regulation. Which, perhaps unsurprisingly, is not at all easy (although HMRC has issued a flowchart to try and help you make sense of it all).

There are, essentially, two ways of complying. You can either register for VAT in each of the EU Member States where you have customers (there are 28 EU countries with 75 different rates of VAT!) or voluntarily register for VAT in the UK and then submit a VAT MOSS return online — and then HMRC will divvy out the payment to each relevant country's tax authority. The most worrying fact though is that if you sell a digital product to anyone in Europe — even if it's just a $10 font, say — you have to be VAT registered, meaning you have to charge VAT on all of your goods or services offered. Unlike standard VAT registration, where there's an £81,000 turnover threshold, there is no minimum amount you have to sell to comply with the VAT MOSS law.


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