EU VAT on digital downloads - possible changes coming up

[DementedMagpie]

There's something I found in various discussions about the Draft Finance Bill that some people here may need/want to know:

There is a change coming up in the treatment of sales of "telecommunications, broadcasting and e-services" for consumers in the EU buying downloads. From 1 January 2015, these services will be subject to VAT in the EU country in which the consumer is located. For example, if you're in the UK, and you buy a download from a VAT-registered business somewhere else in the EU, you'll pay VAT on it at the UK rate.

The most obvious implication for most people is that the price you pay for music and e-books and such may change.

I don't know the details, but I'm sharing this in case there's anyone here who sells downloadable tutorials and is VAT registered, in which case you may need to keep an eye on where your customers are. You've got a year to figure out if there's anything you'll need to do differently.

I expect those of you who are not VAT-registered don't have to worry about this.

[Magpie]

If you buy e books on kindle from amazon they tell you that there is already vat on those.

Will it make a difference if we buy tutorials on etsy from someone who isn't vat registered? Will it mean we pay 20% more or that the people who sell it get charged the 20% in their tax bill? How would it work if we buy from someone in the states? Vat man won't be able to go after them?

Sorry, not having a go at you, but unless they decide to word it specifically it'll be a nightmare deciding who pays.

[DementedMagpie]

As I said, I don't know the specifics, just thought I'd give a heads-up to EU-based sellers here that this may be a thing that's going to happen. I definitely don't think anyone should worry yet - we've got a whole year until this comes into effect. The government only announced it a few days ago - I'd be surprised if they know the details themselves yet.
At some point in the next few months HMRC should figure out how this is actually going to work in practice, and then publish some guidance. Given that VAT rules are weird at the best of times, this could be, errrm, fun...

What I think this might mean is:

If you're selling a download, this only matters if you're registered for VAT (The article I read says that if you're in the UK, and you're selling to the EU, it will work just like you're selling to the UK, only the VAT rate is different). Otherwise, you carry on as normal.

If you're buying something, any changes are for the seller to worry about. I expect the seller will have to include it in the selling price and pay the authorities (not like importing physical goods).

No idea what happens if the seller is outside the EU. Quite possibly nothing different from now.

I'll try to keep an eye on this (this might crop up at work) and update if I find out any more.

[Shirley]

Printed books don't have VAT on them. Maybe ebooks won't either....

[MeadMoon]

As Helen said, eBooks are already subject to VAT.