New Year’s and a new tax

So it’s a new year, and time to make new resolutions I’ll promptly break in a few days’ time. But for now, let’s pretend I’ll update this blog on a regular basis, shall we?

When I posted on Christmas for advice on what to write about here, I had the best of intentions to actually follow through with sitting down and writing about my daily minutiae that I’m sure no one really cares to read about. But then I found out about the new European Union Value Added Tax (VAT) laws that went into effect with the new year and I had to scramble to find a way to make my JMS Books website compliant.

Sure, they probably announced the changes months ago, but why would I bother paying attention to something that happens in Europe? I’m sure I wasn’t the only American small business owner caught off-guard. And, like most of them, my first reaction was why should I even worry about it? I mean, seriously? How could a European country enact a law they hope to enforce on U.S. soil? I sell online. The internet is full of illegal shit.

Then I thought well no, that isn’t fair. I want to be a law-abiding company, and I work with a lot of European authors, who may decide not to continue publishing with me if I don’t take the laws of their countries seriously. But I didn’t see myself registering to pay taxes in 28 different countries, particularly as that would mean coding my site to calculate and collect the taxes accurately, filling out quarterly reports, and filing them in a timely manner.

It was this last I really knew I’d never be able to do. I mean, sure, I could probably find a plugin to help me with the coding, because my site runs on Zen Cart and they have an awesome support forum. But I already collect sales tax for the state of Virginia, and at least twice a year I have to pay a $10 penalty because I forget to file the damn sales tax reports. What makes it worse is when I have to pay the penalty on the quarters when I don’t even have to pay tax, simply because some dumbass (read: me) forgot to file. So I already know I’d be paying penalties in all 28 EU countries for the same reason.

Plus, and here’s the kicker, most of our sales don’t come through my site. They come from distributors like Amazon or Smashwords or ARe. Who will be collecting VAT on their own, so I don’t have to worry about it. I would estimate that the total VAT I would have to pay on an annual basis would be much less than whatever penalties I’d be hit with for forgetting to file the reports.

So, what to do?

Well, apparently the issue lies in what I sell, which are e-books. More specifically, digital downloads, which the European Union describes as a file purchased and downloaded automatically without human intervention. Therein lay the key to my salvation. If you can buy a book and download it immediately, it’s taxable. But if you buy it and someone has to physically attach the book to a message and e-mail it to you, then it isn’t.

Yes, this creates more work for me. But not a whole lot, because on average our site doesn’t get a large volume of orders (unless we’re having a sale, or it’s Sunday when our new books come out). I can keep selling to my customers in the European Union without having to tax them up the wazoo (or incurring penalties for not paying said tax promptly), and the bulk of our sales through our larger distributors will still be taxed, since Amazon et al. are handling that on their end.

And really this is a long-winded way of saying I’ve spent most of this week fiddling with my website bookstore to make it compliant with the new EU VAT law and really, really need to get back to working on my current story because it’s a new year and the holiday’s over.

2 thoughts on “New Year’s and a new tax”

  1. Hi J M
    I’m from the UK so now we have to pay 20% more for any e-books we buy now I can’t understand why stupid European Union!! They are really taxing reading don’t you think?

  2. Hi Shirley,

    Well, we Yanks went to war with the Brits over taxes, so that pretty much sums up where we stand on the matter. The general consensus I found online from American small business owners was pssh, who cares what the EU does because it won’t affect me! But I’d rather be safe than sorry, and this “human intervention” thing seems to be the best workaround for now.

    It’s a bit of an inconvenience, I admit — for readers having to wait a day for me to email them the books, and for me to actually have to send out the emails — but at least the prices on our site will still be VAT-exclusive! I just hope Amazon doesn’t start price-matching with our rinky-dink little site (though I seriously don’t see that happening).

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