10 ms·

E-book prices may rise as VAT law kicks in

39 points by user_235711 12y ago

orasis 12y ago
Forgive my ignorance, but do we pay VAT on anything in the U.S.? Hell, we don't even have sales tax in my state. Why do Europeans put up with it?
- rasz_pl 12y ago
  free healtcare, maintained infrastructure, cheap internet and cops that do not murder people help a lot
  - influx 12y ago
    It's not free if you are taxed for it. We can debate whether a society is better off with it or not, but please don't claim that it is free.
    - petercooper 12y ago
      Though the point is somewhat moot because US government spends more per capita on public healthcare than the British government does, bizarrely. So while it's not "free" in the UK, Americans get charged twice via taxes and insurance.
    - meepmorp 12y ago
      Nothing is free, at all, in the sense you apparently mean. The costs may be hidden, but they always exist. So what people are using here is a colloquial sense of the word free. When you walk into the doctor's office to have something checked out, you don't run the risk of having a large bill just for the privilege of seeing a doctor. If you get hospitalized, you don't run the risk of being bankrupted just because your job is too shitty to provide you with health insurance. Free in the sense of not a huge amount out of pocket at time of service and not going to financially cripple you to make extensive use of.
    - deleted 12y ago
      [deleted]
Someone1234 12y ago
Only if publishers CHOOSE to raise them. Let's look at the facts: - Most paper books are already subject to VAT (90%+). - The margins on ebooks are already much higher than paper books (due to reduces production, distribution, storage, returns, and tax costs). - The only reason ebooks cost as much as they do is due to lack of competition and the publishers wanting to continue to sell paper books. So while publishers might try to exploit this opportunity to raise prices on something which already costs too much, let's not pretend that the VAT (which is effectively already built into the price, since they're 1:1 with paper books which DO pay VAT) has anything to do with it.
- speeq 12y ago
  > paper books which DO pay VAT The article mentions that paper books in the UK are VAT exempt?
  - ruairinewman 12y ago
    Part of the problem is that there is no uniform provision across the EU for VAT exemption for books. Some countries charge VAT on paper books, or on e-books, or on both.
- ghaff 12y ago
  > The margins on ebooks are already much higher than paper books (due to reduces production, distribution, storage, returns, and tax costs). The costs associated with creating and distributing a physical book are probably a smaller % of the price than you assume. This piece http://www.theguardian.com/books/booksblog/2011/aug/04/price-publishing-ebooks http://www.theguardian.com/books/booksblog/2011/aug/04/price... gives a figure of $3.50 for a hardcover which, as I recall, is similar to other breakdowns that I've seen.
ruairinewman 12y ago
This is definitely a retrograde step, especially in countries such as the Republic of Ireland, where paper books are generally ascribed a 0% VAT rate. That doesn't protect us in regard to e-books however, as the specific legislative text refers to "printed matter", and defines some criteria that prevent e-books from taking advantage of this provision. There is also a clause in the relevant legislation that deals more specifically with "printed matter" that is purchased and downloaded via the internet, and states that it is "considered to be a service" and therefore liable to VAT at the standard rate. Ref: http://www.revenue.ie/en/tax/vat/leaflets/printing-and-printed-matter.html http://www.revenue.ie/en/tax/vat/leaflets/printing-and-print... I've written the usual letters to government ministers and to members of the European Parliament, but have been completely ignored in all cases, not unexpectedly. Unfortunately, I feel that this is going to be another measure pushed through the EP without any public consultation.
- hackerboos 12y ago
  It's up to member states to pass laws that exempt e-books from VAT. Frankly Amazon, Google and the like have taken the piss by using Luxembourg as a tax haven for too long. It's right that VAT is charged in the consumers country.
  - vixen99 12y ago
    So legally minimizing a tax bill by selecting an optimum location and passing some of that advantage onto customers (one of the reasons Amazon is popular) is 'taking the piss'?
    - hackerboos 12y ago
      Shipping from warehouses in the UK to UK consumers whilst completely sidestepping UK VAT charges is taking the piss.
      - PeterisP 12y ago
        Shipping books from UK warehouses to UK customers means that they're paying the 0% VAT that UK is currently requiring for physical books. The only question is about e-books, which are sent to UK customers by a USA company from datacenters most likely in Ireland or Germany. You could argue that UK VAT should be paid whenever an UK customer buys a digital item from abroad, but it's a bit different argument than your post is making now.
thibaut_barrere 12y ago
One consequence of that same (afaik) law is that it's becoming increasingly fun to run a SaaS from EU. Hand-picked links: - http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf http://ec.europa.eu/taxation_customs/resources/documents/tax... - https://docs.recurly.com/eu-vat-2015 https://docs.recurly.com/eu-vat-2015 - http://theaccountancycloud.co.uk/vat-rules-on-digital-service-businesses/ http://theaccountancycloud.co.uk/vat-rules-on-digital-servic...
- adwf 12y ago
  Yep, it's a mess that's going to backfire. I'm taking the step of blocking all non-UK EU countries from purchasing. It sucks, but it's the only way I can keep my tiny little bootstrapped company afloat without having a heck of a lot of extra paperwork and filings to do (with commensurate fines if I screw it up).
  - thibaut_barrere 12y ago
    For my SaaS (https://www.wisecashhq.com https://www.wisecashhq.com) I plan to handle it as well as I can (I'm based in France). The plan is first to get to fully understand what needs to be done from my country, then try to sign for a "MOSS" (mini one stop shop). I agree this looks like a major PITA, but luckily Recurly (which I picked for my billing code) seems to have this supported (did not test yet, though). That said I do feel your pain. I feel a bit of fatigue with regards to the increasing challenges that bootstrappers (amongst others) face (eg: cookie law, vat).
    - adwf 12y ago
      Yeah, I don't know whether France has a similar exemption, but in the UK currently I do not have to track or even charge VAT until the company has £81k in revenue. I don't even have to register for it. This is really handy for turning a side-project into a small company, as I can just try out various revenue streams without too much bureaucracy. Once I hit £81k of course, I can probably afford to throw money at accountants to take care of it for me! But that critical first bootstrapping stage has become just that little bit more difficult. It's either block the rest of the EU, or get ready to do some paperwork. Or I guess I could become a zero-revenue startup! ;)
Havoc 12y ago
ugh that sucks. They're barely cheaper than dead-tree copies as is.
cstross 12y ago
This is really screwing with the independent publishing sector in the UK right now: go on twitter and look for #VATMOSS. The TL:DR version is that ebooks are VATable and if you sell direct to customers the VAT regs mean that just one ebook sale in one EU country puts you in a world of bookkeeping pain. A lot of small publishers are basically getting ready to fold their UK-based ebook operations completely at the end of the month. When you sell 10-50 products a month for £2-5 a pop it just isn't worth the hassle. And these are people who refuse to go via Amazon because monopsony. It is to weep.

39 points by user_235711 12y ago

Forgive my ignorance, but do we pay VAT on anything in the U.S.? Hell, we don't even have sales tax in my state. Why do Europeans put up with it?

rasz_pl 12y ago
free healtcare, maintained infrastructure, cheap internet and cops that do not murder people help a lot
- influx 12y ago
  It's not free if you are taxed for it. We can debate whether a society is better off with it or not, but please don't claim that it is free.
  - petercooper 12y ago
    Though the point is somewhat moot because US government spends more per capita on public healthcare than the British government does, bizarrely. So while it's not "free" in the UK, Americans get charged twice via taxes and insurance.
  - meepmorp 12y ago
    Nothing is free, at all, in the sense you apparently mean. The costs may be hidden, but they always exist. So what people are using here is a colloquial sense of the word free. When you walk into the doctor's office to have something checked out, you don't run the risk of having a large bill just for the privilege of seeing a doctor. If you get hospitalized, you don't run the risk of being bankrupted just because your job is too shitty to provide you with health insurance. Free in the sense of not a huge amount out of pocket at time of service and not going to financially cripple you to make extensive use of.
  - deleted 12y ago
    [deleted]

Someone1234 12y ago

Only if publishers CHOOSE to raise them. Let's look at the facts: - Most paper books are already subject to VAT (90%+). - The margins on ebooks are already much higher than paper books (due to reduces production, distribution, storage, returns, and tax costs). - The only reason ebooks cost as much as they do is due to lack of competition and the publishers wanting to continue to sell paper books. So while publishers might try to exploit this opportunity to raise prices on something which already costs too much, let's not pretend that the VAT (which is effectively already built into the price, since they're 1:1 with paper books which DO pay VAT) has anything to do with it.

speeq 12y ago
> paper books which DO pay VAT The article mentions that paper books in the UK are VAT exempt?
- ruairinewman 12y ago
  Part of the problem is that there is no uniform provision across the EU for VAT exemption for books. Some countries charge VAT on paper books, or on e-books, or on both.
ghaff 12y ago
> The margins on ebooks are already much higher than paper books (due to reduces production, distribution, storage, returns, and tax costs). The costs associated with creating and distributing a physical book are probably a smaller % of the price than you assume. This piece http://www.theguardian.com/books/booksblog/2011/aug/04/price-publishing-ebooks http://www.theguardian.com/books/booksblog/2011/aug/04/price... gives a figure of $3.50 for a hardcover which, as I recall, is similar to other breakdowns that I've seen.

ruairinewman 12y ago

This is definitely a retrograde step, especially in countries such as the Republic of Ireland, where paper books are generally ascribed a 0% VAT rate. That doesn't protect us in regard to e-books however, as the specific legislative text refers to "printed matter", and defines some criteria that prevent e-books from taking advantage of this provision. There is also a clause in the relevant legislation that deals more specifically with "printed matter" that is purchased and downloaded via the internet, and states that it is "considered to be a service" and therefore liable to VAT at the standard rate. Ref: http://www.revenue.ie/en/tax/vat/leaflets/printing-and-printed-matter.html http://www.revenue.ie/en/tax/vat/leaflets/printing-and-print... I've written the usual letters to government ministers and to members of the European Parliament, but have been completely ignored in all cases, not unexpectedly. Unfortunately, I feel that this is going to be another measure pushed through the EP without any public consultation.

hackerboos 12y ago
It's up to member states to pass laws that exempt e-books from VAT. Frankly Amazon, Google and the like have taken the piss by using Luxembourg as a tax haven for too long. It's right that VAT is charged in the consumers country.
- vixen99 12y ago
  So legally minimizing a tax bill by selecting an optimum location and passing some of that advantage onto customers (one of the reasons Amazon is popular) is 'taking the piss'?
  - hackerboos 12y ago
    Shipping from warehouses in the UK to UK consumers whilst completely sidestepping UK VAT charges is taking the piss.
    - PeterisP 12y ago
      Shipping books from UK warehouses to UK customers means that they're paying the 0% VAT that UK is currently requiring for physical books. The only question is about e-books, which are sent to UK customers by a USA company from datacenters most likely in Ireland or Germany. You could argue that UK VAT should be paid whenever an UK customer buys a digital item from abroad, but it's a bit different argument than your post is making now.

thibaut_barrere 12y ago

One consequence of that same (afaik) law is that it's becoming increasingly fun to run a SaaS from EU. Hand-picked links: - http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/telecom/explanatory_notes_2015_en.pdf http://ec.europa.eu/taxation_customs/resources/documents/tax... - https://docs.recurly.com/eu-vat-2015 https://docs.recurly.com/eu-vat-2015 - http://theaccountancycloud.co.uk/vat-rules-on-digital-service-businesses/ http://theaccountancycloud.co.uk/vat-rules-on-digital-servic...

adwf 12y ago
Yep, it's a mess that's going to backfire. I'm taking the step of blocking all non-UK EU countries from purchasing. It sucks, but it's the only way I can keep my tiny little bootstrapped company afloat without having a heck of a lot of extra paperwork and filings to do (with commensurate fines if I screw it up).
- thibaut_barrere 12y ago
  For my SaaS (https://www.wisecashhq.com https://www.wisecashhq.com) I plan to handle it as well as I can (I'm based in France). The plan is first to get to fully understand what needs to be done from my country, then try to sign for a "MOSS" (mini one stop shop). I agree this looks like a major PITA, but luckily Recurly (which I picked for my billing code) seems to have this supported (did not test yet, though). That said I do feel your pain. I feel a bit of fatigue with regards to the increasing challenges that bootstrappers (amongst others) face (eg: cookie law, vat).
  - adwf 12y ago
    Yeah, I don't know whether France has a similar exemption, but in the UK currently I do not have to track or even charge VAT until the company has £81k in revenue. I don't even have to register for it. This is really handy for turning a side-project into a small company, as I can just try out various revenue streams without too much bureaucracy. Once I hit £81k of course, I can probably afford to throw money at accountants to take care of it for me! But that critical first bootstrapping stage has become just that little bit more difficult. It's either block the rest of the EU, or get ready to do some paperwork. Or I guess I could become a zero-revenue startup! ;)

Havoc 12y ago

ugh that sucks. They're barely cheaper than dead-tree copies as is.

cstross 12y ago

This is really screwing with the independent publishing sector in the UK right now: go on twitter and look for #VATMOSS. The TL:DR version is that ebooks are VATable and if you sell direct to customers the VAT regs mean that just one ebook sale in one EU country puts you in a world of bookkeeping pain. A lot of small publishers are basically getting ready to fold their UK-based ebook operations completely at the end of the month. When you sell 10-50 products a month for £2-5 a pop it just isn't worth the hassle. And these are people who refuse to go via Amazon because monopsony. It is to weep.