We supply paid downloads to over 100 countries. From January 2015 to 31 December 2018 we were not able to supply downloads to countries in the EU.
New EU VAT legislation was introduced in 2015 to stop companies such as Amazon, Apple and Google from taking advantage of tax loopholes. The new rules created huge problems for small software businesses. VAT on digital services must now be paid in the customer’s country, at the rate applicable in that country, not the supplier’s country. Suppliers of digital goods must now determine the correct country of supply, charge one of 81 different rates of VAT (which constantly change), obtain 2 or 3 separate pieces of customer location evidence and resolve any discrepancies between them, and then account for VAT using the complex VAT-MOSS system.
The EU have agreed that it is impossible for small companies to comply with these rules.
They are working on a solution: Proposed Threshold & Simplifications For EU VAT [1 December 2016]
But for now, small businesses like ours cannot legally supply electronic downloads to EU countries.
Except for sales to the UK, where the small-business VAT threshold applies.
Manual Emails Are Allowed
The new rules only apply to "e-services" that are "electronically supplied". Goods that are manually emailed by the seller are specifically excluded. So for sales to the EU, we now deliver orders manually by email. This is very difficult and time-consuming for us, and far from ideal for you. Too many of our emails with attached software end up in your spam folders, or are not delivered at all. We can only apologise and ask for your patience and understanding. We work hard to deliver your software, and we always succeed in the end.
We aim to email EU orders within a few hours, but we do need to sleep sometimes. You can check our Order Status page at any time to see if your order has been dispatched yet. Please don't hesitate to contact us if you'd like us to re-send your order, or try a different email address. And if you need an updated version within the upgrade period that you have purchased, just just drop us an email and we will send you the latest version.
It's not all bad news. We like talking to our customers, even if it's just to say thanks, and have a nice day!
Proposed Threshold & Simplifications For EU VAT [1 December 2016]
It’s happening: the EU has announced VATMOSS reforms [1 December 2016]
VATMOSS and Brexit: what now? [1 July 2016]
EU VAT 'reboot' proposals light on details [14th April 2016]
A Small Extract From The Rules
There's a UK government web page here that explains some of the rules. Here's a small extract:
To try to simplify the rules for some supplies of digital services the supplier can make a "presumption" about the place where the supply is to be taxed... Types of supplies covered by the presumption rule include where the digital service is supplied:
- through a telephone box, a telephone kiosk, a wi-fi hot spot, an internet café, a restaurant or a hotel lobby, VAT will be due in the member state where those places are actually located - so if a German tourist makes a call from a telephone box in France, VAT will be due in France.
- on board transport travelling between different countries in the EU - VAT will be due in the member state of departure eg, if a ferry operator provides a wi-fi hotspot on board ship which is available to passengers for a fee, VAT will be due in the member state of departure and won’t depend on a passenger’s place of residence.
- through a consumer’s telephone landline, VAT is due in the member state where the consumer’s landline is located. Through a mobile phone, the consumer location will be the member state country code of the SIM card - so if a French resident downloads an app to their smartphone while on holiday in Italy, VAT will be due in France.
- in the member state for the postal address where the decoder is located or the viewing card is sent - if a UK resident has a satellite television system in their Spanish holiday home, VAT will be due in Spain.
It is clearly impossible to determine these factors without making exhaustive and intrusive enquiries, which would be even more damaging to business than dealing with manual email deliveries.
For the time being, we continue to make software deliveries to the EU by manual email. However, things are finally changing:
Good News in 2018
The new rules were officially adopted in late 2017, but do not take effect yet. Here's the proposal document:
Digital Single Market - Modernising VAT for cross border e-Commerce [5 December 2017]
The official press release says that "These measures will enter into force by 1 January 2019":
In the linked Fact Sheet, there is a section "How will businesses be informed of the new rules?":
Modernising VAT for e-commerce: Question and Answer [5 December 2017]
The answer states that "a portal which provides information to traders and tax administrations already exists" ... "The Commission is improving this portal and an updated version will go live during the first quarter of 2018". It finally appeared in July 2018:
Guide to the VAT mini One Stop Shop (MOSS) [31 July 2018]
*** BETTER NEWS FOR 2019 ***
In November 2018, this link appeared on the portal:
What changes on 1 January 2019? [18 October 2018]
This is what we have been waiting for. It confirms that, from the 1st of January 2019, small businesses like ours can apply the VAT rules of their own country to EU sales. For us that means that we can go back to supplying download links for EU sales, without having to get involved in the nightmare of EU VAT.
There is no information about what to do for customers who purchased subscriptions before the change. But unless we find a reason not to, on the 1st of January we will also enable downloads for existing customers. If you are an existing customer, you already have the link, or you can recover it on the Lost Downloads page. From the 1st of January, your download page will include real links that you can download from.