Epic Plugins and the Impact of VATMOSS

January 11, 2015| Mike Stott

You may have noticed a major rehaul of the Epic Plugins website recently. You may have also noticed that the ways to request updates for your purchased items have changed.  Why?

Due to Amazon mainly, and other BIG corporations that avoided paying 20% VAT (in the UK) by registering their business in places like Luxembourg (Luxembourg has a VAT rate of 3% for books) therefore Amazon was registering there, and selling to places like the UK (where the VAT rate is 20%).

This meant that the UK Government got much less money than they were expecting, from the big players like Amazon, due to the way they setup their business. So they decided it must STOP (and quite rightly). However, what they’ve done to combat this is apply a blanket regulation that anyone selling digital products online to customers in the EU, even if only for $1, must add VAT at the rate of VAT applicable in that country.

There’s no thresholds like in the UK, where you need to be generating a high enough VAT taxable turnover, the first sale you make triggers that you fall under the new rules. Which is why our website has changed.

Are you a “creative” who sells their products online? even if you are based in the USA you will be impacted by the new rules

The rules seem a bit strange, in that even the very small businesses starting up will have to comply, and there’s an online petition to bring thresholds in place (the big boys like Amazon can deal with this, the smaller “kitchen table” type microbusiness will struggle.

So how did Epic Plugins go about this? and how can you get yourself ready for this?

  1. We looked at our existing setup and whether we could maintain operations – unfortunately we couldn’t
  2. We looked for other solutions and came across taxamo which is compatible with WooCommerce
  3. We moved our eCommerce system onto WooCommerce
  4. We updated our theme, our website links and started re-adding our digital product inventory

A little bit about Taxamo

Taxamo is a “SaaS” which integrates with WooCommerce, they charge 0.2 Euros per transaction (if you sell more than 20 products a month) but for that they manage all the tricky parts of the new regulations. If you’re selling through your site I would suggest using WooCommerce (it’s by a mile one of the nicest eCommerce plugins now – it’s been developed massively since the early days) and it’s integrated with the Taxamo service.

How does it impact YOU the customer

Update
Since running WooCommerce and Taxamo there’s a number of “pitfalls” I suppose to be aware of:-

  1. You still need to setup your tax table (you can read more here)
  2. You need to set your digital products to both “digital” and “virtual” otherwise it will ask for you to say you’ve delivered the download (i.e. issued a manual email

What does it mean for you?

If you live in an EU member state, unfortunately it means you’ll be impacted too and have to pay VAT on the products we sell. If you live outside the EU then you will not have to pay any additional tax. It’s out of our control and something that, given it’s wide reaching impact we are joining the crowd to shout about (as you can see in one of our latest tweets)

 

If you have any comments to add around this or any issues with using the new website. Please let us know

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