tl;dr: I will probably have to stop selling PDFs from the Lost Pages shop. This might make the whole enterprise of writing RPGs and selling them on the web kind of not sustainable. If you want PDFs, get them now.
New tax regulations are about to unfold over the EU. From January 1st whoever sells digital products through an automated process to a customer in the EU must pay VAT to the country of purchase and not to the country of supply. This is done to stop shady profit-shifting companies like Amazon and Apple from selling from countries with low VAT (Luxembourg) and dodge taxes, despite having fulfilment operations in the same country as the purchaser.
The issue was partly covered by the Guardian. HMRC in the article mentions they spent effort to “publicise the changes” but I received zero notice from HMRC.
Dave Walker made a funny/grim cartoon about it:
The unintended effect is that this will also kill many small businesses. Possibly including Lost Pages.
Here’s why: the regulation that if I sell you a PDF and are within the EU the following apply:
- I have to apply the correct VAT for ebooks depending on the country where you are in. It’s a mild pain, but doable.
- I have to get two non-conflicting proofs that you actually are in that country. For example, the billing address of your bank account, geolocation of your IP, the country of issue of your SIM card if it’s over mobile. The problem is that these bits of informations are either unreliable (like geolocation) or invalid (if you’re momentarily in the UK but live in France, your bank account billing address conflicts with the rest).
- Payment processor are not allowed to give me the information, even if they had it. Paypal does not seem care.
- I have to keep the collected data for ten years within the EU. Having tiny businesses holding this volume of customer data is a security nightmare waiting to happen.
- I would have to register for VAT and make at least 8 VAT returns per year. It’s a monumental burden for a dude working from a corner of his flat.
The whole rigmarole happens because this new law ignores the VAT threshold for small businesses. Companies ordinarily have to have a minimum turnover before handling VAT, but this law was written to deliberately ignores the threshold.
This means a whole lot of bureaucracy. And being liable in 28 different countries.
A simple way to comply is to start selling ebooks on Amazon. So Amazon pays their taxes with one hand, and immediately takes their tax money from your pocket with the other hand. And this is one of the reasons I try not to buy on Amazon anymore. I suggest you do the same.
A harder way to comply is to find a platform that does this for me (they all have a long list of caveat) or write my own. For example, RPGNow does not pay this tax, despite selling to EU customers. Mind you, the fact that they do not have EU operations does not matter: if the customer is in the EU the EU has the right to apply tax on the transaction, that’s how it works. I contacted RPGNow several times, and they told they would get back to me, but they did not.
Thing is, I don’t mind paying taxes. I mind hoarding your personal data. I mind being liable for unlimited fines in 28 countries.
I mind spending my days filling paperwork instead of writing games.
The outcome: I will probably have to stop selling PDFs as of January 1st 2015. This might make the whole enterprise of writing RPGs and selling them on the web kind of not sustainable. If you want PDFs, get them now.
If you want to help:
- Write about this. Share the comic on social media. Share this on social media.
- Reblog this post hard.
- Write to your MP, MEP, MSP, whatever. They are at times oddly sensitive to people telling them about their problems because it gives them an occasion to show off a bit. And maybe to act on them. Especially if they are in a contested seat.
- There are two petitions you can subscribe, one for the UK and one general for the EU.
Lost Pages 
Reblogged this on A.W. Hendry and commented:
My good friend Paolo explains the utter mess that is the EU’s new VAT rules and how they are going to affect indie artists.
How horrible. Would having a sale point outside the EU (say, in the USA) alleviate that any? E.g. sell the pdfs through Lulu.com?
Probably not. As the poster states, the taxation is determined by the (theoretical and supposed) physical location of the customer, not the seller. Thus, you could sell your pdfs from a company on the moon Titan and still have to charge VAT on a purchase by an EU customer – even if all they buy is a 99 cent pdf.
Couldn’t you keep the shop open and sell to UK and US only? Is the EU a significant customer base for you?
It’s illegal to sell to the UK and not to the EU. As for not selling to the EU, it might be an option if HMRC says so.
NOOOOO!
I had been waiting for your leveless spell system to come out but thanks to an 18mo daughter was woefully behind on my blogs and didn’t see this till now.
Are you sure Lulu isn’t an option? Is there any way I can get a copy? I live in Scotland for what it’s worth.