Monday, 1 December 2014

Changes to EU VAT Law and What It Means For My Knitting Patterns

You may have noticed my regular tweets in recent days about my stopping to sell digital knitting patterns soon. This is due to upcoming changes to VAT law in the EU that greatly impact on sole traders selling digital goods and services. Instead of trying to explain exactly what is involved, I would like to direct you to Ysolda Teague's website where you will find an excellent summary of the changes and how they affect people like me who sell digital goods and services. If you are in the EU and sell digital downloads of any kind, I highly recommend you read the post because the new law affects us all. Of course you can also search for information from the EU itself and HMRC, if you are in the UK.

What's happening?

The new rules are complicated and sometimes unclear in crucial parts. HMRC are working on further clarification as we speak. Since the changes take effect on January 1, 2015, everyone affected by the new rules is currently scrambling to find a good solution quickly. Many micro businesses and sole traders like myself who are under the VAT registration threshold and sell too few digital downloads to make registration worthwhile are concerned we may have to stop selling patterns online altogether. If you have been following #VATMOSS and #VATmess on Twitter, you know how much activity there has been around the topic. It has helped greatly to make HMRC realise exactly how many small businesses are affected - they had no idea.

What about my knitting patterns?

I may have to stop selling my patterns as digital downloads for a short while as I get things set up. Ravelry announced on 26 November that they are partnering with Love Knitting so that those of us who can't or don't want to register for VAT can still sell their patterns. Love Knitting will remit VAT to the EU so unregistered designers don't have to worry about it. That is fantastic news! Ravelry has worked very hard to find a solution and the outcome is so much better than I expected. I just registered with Love Knitting the day before the announcement so as to move my patterns there instead. From 1 January 2015 (or shortly after, depending on what needs to be done to activate the changes) I will be able to continue offering my patterns to you on Ravelry where they've always been and they will also appear on Love Knitting.

2 comments:

  1. It's really sad that the changes in law supposed to do good for business hasn't considered all the smaller online businesses. I hope that you move to love knitting will go smoothly

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    1. Thank you. I expect there will be changes as the people responsible realise how difficult it is for small businesses to comply. What I find interesting is that few countries are actually making any changes. Only yesterday I heard that the UK is the only country rushing to put everything into place so that businesses who do not qualify to register for VAT at the moment can/must do so in the New Year. Other countries are assuming small businesses below the VAT threshold will be exempt. Obviously, there is lots of confusion and I wonder how all this will go.

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