It's been quite a while since I posted about the EU VAT madness... and things are developing.

There is, thank goodness, talk about a threshold or maybe even an exemption for small businesses regarding the VATMOSS registration, as hinted at in a recent PR paper from the European Union.

It says there are plans for

Introducing a common EU-wide simplification measure - VAT threshold - to help small start-up e-commerce businesses.

However, right above that it also says

Extending the current single electronic registration and payment mechanism to cross-border online sales of physical goods.

 People. Please. There's been issue after issue after issue with the Digital VAT rules, and lots and lots of small businesses are suffering. I have stopped selling my pdf knitting pattern and have scrapped plans to offer more pdf instructions or patterns in the future - even though there are lots of customers who would prefer a pdf pattern and will not buy the physical version, and offering printed patterns (if you want to do that in an appropriately high quality) means a significant expense, and a need for storage space, and more logistics in getting it to the customer.

There are a few points in that memo that make me scared silly for my future as a small business entrepreneur. This one, for example:

How will the Commission make e-commerce easier?

The Commission will put forward clear contractual rules for online sales of both physical goods like shoes or furniture and digital content, like e-books or apps. It will fill in the existing legislative gap at EU level regarding digital content and will harmonise a key set of rules for physical goods. This will create a level-playing field for businesses, allow them to take full advantage of the Digital Single Market and sell with confidence across borders. At the same time, it will boost consumer trust in online purchases. Consumers will have even more solid and effective rights. For example, if the e-book you just bought is defective, it will be easier for you to obtain a remedy against the trader. Europeans will be able to shop in other EU countries as easily as in their home countries and get the best products at the best price.

I get a twitch when I read "level playing field". Oh you people making up these plans, please be aware that the level you will most easily achieve is that where all the small businesses give up.

I can tell you, from my own experience of having a small business based in Germany that there are already so many rules and regulations to follow, I'm glad if I manage to keep up with all the changes. And I'm one of the people trying hard to do so! I know a good number of colleagues in similar small businesses who do not know about many of the rules, and just ignore them, or have heard about them and still ignore them, hoping for the best. Because trying to conform to them would break their backs with bureaucracy, or would mean hiring help that would cost so much that all their profit goes into conforming with rules. Many of these rules are just stupid, too. Case in point? A while ago, it became obligatory to exchange the text on your "buy now" button in the online shop from "kaufen" (buy) or something similar to things like "zahlungspflichtig bestellen" (order with an obligation to pay). If you don't do that, technically your customer can renege the contract because it is not considered valid. Or some law sharks can serve notice and fine you because you do not conform to law.
When I learned about contracts for buying and selling in school, I got taught that the agreement between two parties is sufficient. How is "buy now" less of an agreement than "order with the obligation to pay"? (I'm waiting for the day when something similar will be required for buying a bread roll from your baker, or a sausage from your butcher. How about a little ritualistic dance after ordering, before paying, such as twirling around your own axis three times, then stomping your right foot thrice while declaring in a sing-song voice "Yes, I spend my money now, yes I buy I buy I buy, here you go, I do declare!" I think that would match the ridiculousness nicely.)

For textile stuff, there are things like a special law on how to mark your skeins of yarn that you sell. Which means, as my dyeing friend tells me, that sometimes you are not allowed to give your customer all the information they might want to have because you may only declare things in this or that way, and if you want to tell them the additional info that might be crucial to them, you have to hide it in the name of the yarn, or tell them (knowing that anything just told, not written on the band, will be forgotten soon).

Then there's so many grey areas, and things where someone tells you one thing and the next guy (professional, mind you!) tells you another one. A few years ago I actually shelled out money for counseling by a lawyer, who instructed me in how I could file the allowance money for any days spent travelling due to job reasons. (There are quite a few days per year for me.) I did that - and received my tax statement back with the allowances cancelled and the explanation that this was not an available option for me. So who was right? The lawyer, specialising in that field? Or the state official who was filing my taxes? And would it have been worth it to contact the lawyer again, and the tax official, to find out who was really right, spending more time (and possibly money) on the issue? (I didn't. I just accepted that and stopped filing allowances.)

And that's just three tiny bits of the current situation, from personal experience or immediate contacts. Don't even get me started on the vaguenesses that you will encounter in book-keeping. (Is it "Werbekosten" or "sonstige Ausgaben"? Is it "computer hardware" or "office supplies"?)

So. Will these "clear contractual rules" REPLACE all the rules that we have now? Is that even possible, for so many countries, so many different structures? Or will I have to keep up with an additional set of rules, themselves as complicated as the domestic rules? There is a point where keeping up with all that stuff is nigh impossible for a single person. This point has already been reached for Germany - if anything more is added, there will be even less compliance. Not because we don't care, or we don't try, but because we just cannot keep up.

There's more, though. Continued in part II.

Towards the end of last year, I blogged several times about the VATMOSS mess, and if you have been wondering whatever became of that issue - there is news.

The Digital Microbusiness Action Group has been busy, and they have gotten the attention of Andrus Ansip and David Cameron, among others. There is discussion now about those rules, and the concerns do reach the EU commission. So there is still hope for that absolutely insane law to be cancelled, or at least transformed into something that small businesses will be able to comply to.

It's still not over, though. At the moment, it's only hitting those who sell digital goods - but if we don't stop the madness, 2016 might see the rules extended to actual physical goods. This will hit you. If you are buying stuff over the internet from outside your own country, it concerns you - because your vendor will have to figure out where you are and how much tax to pay. It will even concern you if your vendor is in the same country... if he or she can't comply with the insane amount of bureaucratic rules imposed by that legislation, the business will have to shut down.

So if you have a business and have not already taken it, please fill out this survey. If you know someone who has a business, pass them the link and ask them to fill it out. Every survey helps.

There has been a preliminary write-up of the survey data, and this is available at the EU VAT Action site. This is brilliant, because if you are a resident of any country outside UK (who are aware of the stuff by now), you can now email your minister of finance and send him or her that report, together with your concerns (contact data is provided in the EU VAT action post). Please do it, if you can, and please spread the word. We need to stop that madness.

The EU VAT Action group has posted an update on their site - they're looking for surveys from European countries that are not the UK. If you haven't taken the survey yet, please help.

If you would like to look at sheep after that, you can see some from the beautiful Lake District here.

It's become quiet over the holidays about the EU VAT and VATMOSS (or WhatMess, as it should be titled, probably). The topic is not off the table yet, though, and if you've been on Ravelry recently, you will have noticed the Notice next to the EU flag.

If you are confused now and would like to have a nice analogous explanation on how the new rules work (or don't work), I recommend Hannah's Banana Story.  Carolyn Jewel blogs about her problems with pricing in the new system, especially regarding ebooks, and Cheryl Morgan has similar problems. (Her final thought? Amazon will profit from this, a lot. Which is exactly what I suspect. Say, wasn't the intention of the new rules something along the lines of curbing the advantage of the Big Players, among them said Big River Store who ships from wherever tax was cheaper? Hmmm....)

The new tax regulations are in force since January 1, and I have no idea how all the single traders selling digital content are handling it - since there has been no change in the legislation yet, as far as I know. Personally, I'm very happy that I only have one digital knitting pattern these days, and since it hasn't seen any sales for a while (which is a pity, but there are plenty of hats around, so I can sort of understand), I've just taken it off Ravelry for the time being. (Should you want one, drop me an email.)

I'm staying tuned to the EUVAT Action site and the Digital Microbusiness Group, but there's not much happening on either at the moment, and I hope that means the groups are in contact with those in charge in the EU, busily trying to solve the problem, and too busy to post news.

If you can, please spread the word about this, or fill out a survey on the EUVAT Action site, or take one of the other actions listed there. The more that speak or write about it, the better!

The EU vat rules have occupied me some more yesterday... and I'm very happy that I only have one pdf knitting pattern to sell, and that should be easily solveable by either continuing to sell it via Ravelry or taking it down come January. If that rule is really going to apply to physical goods in the future, though, things will look differently.

For those of you who enjoy graphic depictions of stuff, here's the comic listing the typical options for small businesses selling digital content:

(Comic by Dave Walker)

January 1 is drawing closer, and with it the VAT madness. I've spent a good while yesterday figuring out things and possible solutions. Well.

For those of you knitting, Ravelry is hard at work together with LoveKnitting to get a solution to the VAT problem, so there is hope that if you live in the EU, you will still be able to get pdf knitting patterns when the new year has come. If you want to be on the safe side, though, you might want to get the pattern(s) on your list now.

In case you have no idea yet whether the new regulations will hurt you or not, you might want to read this. It's rather long, but it is an impressive list of things that will be influenced by the EU VAT regs.

The EU VAT action has also planned a twitterstorm for today, starting in about... five minutes. In case you want to join, here's the official information page.

I'll be off to Twitter some...

Just in case you have not heard about it yet (and I suppose a lot of you haven't): There will be a new regulation regarding taxes when selling digital services within the EU. Before January 1 2015, whatever you sold was taxed according to the rules your business is based in. After January 1, tax will have to be calculated according to the buyer's country rules, and you will have to pay your tax to them.

The intention behind this new rule? Prevent the big players from sitting somewhere in a low-tax country and shipping out oodles of stuff to everywhere else, making a bigger profit because of the lower tax rates. Which is all very nice - but this rule is, madly, going to apply to everybody. It is supposed to "level the playing field".

Can you imagine what that means for small businesses? Right. It means a lot of hassle, plus a lot of additional time investment, plus paperwork, plus costs. Or breaking the law. "Levelling the playing field", in their case, will mean taking them off the playing field entirely.

I learned about that rule change about two months ago, and I was really, really glad that I had opted for physical copies of the Pirate Robert hat to sell. This morning, though, I filled out a survey about the impact of the new rule, and I learned that the EU plans to include physical goods into this madness from 2016 on. WHAT?

This, Friends, Romans and Countrymen, will truly mean the end of many small businesses. Doing the paperwork for taxes is bad enough when you are handling your own country plus the exceptions that come with the "normal" rules. If I have to register for taxes in every country I ship to? And handle that accounting as well? That might kill my business. Together with many, many other small businesses.

The Internet has made it possible to get things from about everywhere, and the new regulations will cut that back to getting things from the big players only. Please help protest against the new regulations, in hopes that we can get better rules for us small players. There is a EU-wide petition for this - please sign, and pass on the information.

If you are a small-business owner yourself, or know one, here is the survey about the impact. Every survey helps. Every vote in the petition helps. Belief in miracles probably won't hurt either.