The New EU VAT Law And Small/Digital Publishers

 Here is an update on the situation.  Please read and do what you feel you need to. This is NOT the end for "micro-publishers!  http://euvataction.org/2014/12/18/its-not-all-ears-its-action-too-in-the-european-commission-on-eu-vat/

It’s Not ‘All Ears’, It’s Action Too In The European Commission On EU VAT

by Clare Josa

On December 17th our team had a long conversation with a Cabinet Member from Andrus Ansip’s (European Commission Vice-President) office. These are the people responsible for the digital economy in the EU, so they’re the decision-makers and the ones who can help us to create the changes that are so desperately needed.

Here’s a summary of where we’re up to:

1. Andrus Ansip is now fully aware of the impact that the EU VAT rules are having on the smallest businesses.
2. He is taking action on your behalf, both writing to and meeting with senior people across the EU, in the last few days before Christmas, to try to find solutions that will allow everyone to keep trading.
3. They are looking at short-term solutions and medium-term solutions.
   4. They are open to ideas from YOU as to what those solutions could reasonably be. They do not pretend to have all the answers.
   5. There are no promises, but there IS hope.

You ARE being heard.

Those in Andrus Ansip’s team now understand that:

• Most of the smallest businesses cannot comply with the legislation because they can’t collect the required 3 pieces of location evidence. 90% are using basic PayPal buttons and the most they will be able to get is the customer’s account address – one piece of not-completely-reliable data.
• Most can’t display the correct price on their sales pages because they don’t know where the customer is until after they have purchased, so have no way of applying the correct VAT rate during the purchase process.
• Even if they could code the VAT rates into their payment solution, most platforms offer just one rate of VAT per country. It is very likely that some transactions will require two rates, for different kinds of products. This is not possible for the smallest businesses to manage during the checkout.
• These businesses don’t get any of the data until after the transaction, so it creates a massive administrative burden of manually checking each transaction and then going back to a customer if the data looks incorrect, then analysing and storing the data to complete their VAT-MOSS return.
• Our case studies show that each EU Member State’s interpretation of what is a ‘digitally-delivered service’ is different. Even if you comply with your own Member State’s interpretation, you could still be prosecuted by another Member State if the interpretations differ.
• The legislative assumption was that most businesses sell through 3rd party platforms (our quantitative study shows it’s only 40%). The Commission now understands that most of the 3rd party platforms only heard about the new EU VAT rules in November 2014 and will be unable to comply by January 1st.

What We Are Campaigning For:

Given all of this, most businesses have a choice at the end of this month either to break the law or close or remove digitally-delivered services. How can we make sure they can keep trading?

1. Emergency exception to allow the implementation to be suspended for micro businesses and sole traders for 1 year, whilst workable solutions are found.

2. If this cannot be agreed before January 1st, then an emergency exemption to allow acceptance of the customer’s self-declared address as proof of place of supply for micro businesses and sole traders who don’t have access to the required 3 pieces of evidence (the 3rd being needed for the cases where the first two conflict).

What Andrus Ansip’s team needs from you:
Keep going with today’s Wednesday Action Challenge (writing to Andrus, Pierre Moscovici and Donato Raponi). Copy in your national MP and your MEPs.

PLUS lobby your equivalent to the Treasury (those who represent you on the EU Fiscal Attache) – we are compiling a list.

The reason the Commission needs you to lobby your representative on the EU Fiscal Attache is because if we want to get a legislative change, it is much more likely to be passed in a short timeframe if the Member States push for it, than if the EU suggests it. *** Your representative needs to lobby Pierre Moscovici. ***

So PLEASE do the Wednesday Action Challenge. And PLEASE also send your email to the Fiscal Attache member (we’re compiling a list) for your country, asking them to lobby for a sensible exemption threshold for micro businesses and sole traders.

And please have a quick look at the discussion thread for ‘how can we stay in business while we buy time for EU negotiations’ thread. (https://www.facebook.com/groups/DigitalVAT2015/permalink/1512635875680390/)

And please share your inspiration on the thread for potential short-term and long-term solutions:
https://www.facebook.com/groups/DigitalVAT2015/permalink/1512628389014472/

As I said, it’s not promises, but it IS hope. And, for me, it feels miraculous.
Thank you all for the part each of you has played.

We are making progress.
Clare & the EU VAT Action Team