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Author Topic: Changes to VAT, how it's collected etc.  (Read 2872 times)

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« on: December 12, 2014, 06:10 »
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Here's something to keep you occupied for a few hours....

Envato is making a few changes to comply with the recent VAT rules.  I haven't quite got my head around what it means for authors for past and future sales however.  Here is the thread on Envato
http://photodune.net/forums/thread/preparing-for-upcoming-vat-changes/151408?message_id=1175934&page=18#1175934

A simpler thing happening for Google Play devlopers
https://support.google.com/googleplay/android-developer/answer/138000?hl=en

And the official announcement
http://marketblog.envato.com/news/2015-eu-vat-changes/


« Reply #1 on: December 12, 2014, 06:20 »
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Am I right in thinking that the Envato businesses have a very different model vs most of the stock photo sites ? i.e. that they effectively connect sellers (authors) and buyers and then add a fee ?

The point being - that (as with Google Play) it would then be significant where the author is. Because the interaction takes place between the author and the buyer and is simply hosted by the marketplace. Where as at most stock sites the interaction takes place between the stock site and the buyer.
« Last Edit: December 12, 2014, 06:27 by bunhill »

« Reply #2 on: December 15, 2014, 20:26 »
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Another author contacted me via my own site suggesting that I look at this thread - it's massive already, and I think this is a follow up to a now closed one.

The person who contacted me suggested that by saying that the seller in every Envato transaction is us, the authors, not Envato the company operating the marketplace, we might owe taxes because we had only declared our net royalty amounts, not the total of the sale minus the expenses of 70% going to Envato (or whatever the percentage is).

I guess some of the really big sellers are pretty upset as there's some suggestion that this is the way it has always been - not just a change from Jan 2015 (when they'll begin adding VAT to all sales to non-exempt EU buyers) - which might mean back taxes are owed.

I don't have the stamina to read all 54 pages, and I really know nothing about the details of EU tax laws, let alone how they apply to a US seller. However the claim that the authors are the sellers just fails basic logic. We don't know who we're selling to, where they're located and have no access to the money at the time of the sale - as one poster noted, we have to wait 45 days to get paid by Envato.

Given the relatively modest monthly amounts from PhotoDune, if it looks like there's going to be nasty tax implications of selling there I will just leave, but I can't imagine that they can really operate so differently from every other microstock agency out there. It's just ridiculous to think that they're different just because they let buyers e-mail authors (iStock used to do that and in its own quirky way, dreamstime does too).

Is this something Envato is doing to reduce their own tax liabilities?

« Reply #3 on: December 15, 2014, 20:48 »
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http://photodune.net/forums/thread/authors-vat-and-a-global-marketplace/148034?message_id=1175215&page=49#1175215

This post seems to cover the key thing - regardless of what Envato chooses to say, if the authors do not have information about the buyer, they aren't the seller and do not owe VAT.

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Am I right in thinking that the Envato businesses have a very different model vs most of the stock photo sites ? i.e. that they effectively connect sellers (authors) and buyers and then add a fee ?


Some time earlier this year they restructured how they handled payments to authors, increasing the nominal royalty rate but deducting a buyer fee. That didn't change anything about where the money went (to Envato) or who set the terms and prices (Envato) or who approved what's for sale (Envato).

« Reply #4 on: December 16, 2014, 03:13 »
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Hi guys, some broad answers to a few of the comments:

I think the main point here is that authors wont receive or have responsibility over the VAT paid. In the transaction chain, for VAT purposes, Envato will step in as the supplier and manage the compliance.

If youre concerned about a specific situation, please dont hesitate to email taxinfo@envato.com. Ive been on the phone with ThemePunch (wish we were talking for a more fun reason, but really cool to speak to them!). We are committed to our community and work with authors on specific situations.


http://photodune.net/forums/thread/authors-vat-and-a-global-marketplace/148034?page=2

« Reply #5 on: December 16, 2014, 03:27 »
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Guys, for everyone who doesnt understand what the VAT changes are, here is a link to the upcoming VAT changes in January 2015 in the EU (UK government): https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop

Which had a very interesting paragraph:

Supplies via internet portals, gateways or marketplaces:
If you supply digital services to consumers through an online portal, gateway or marketplace then its important to determine whether youre making the supply to the customer or to the platform operator. Where the platform operator sets the general terms and conditions, authorises payment or delivery, or doesnt clearly state the name of the supplier on the receipt or invoice issued to the consumer, then theyll be seen as making the B2C supply even if theyre contractually only an agent.


http://photodune.net/forums/thread/authors-vat-and-a-global-marketplace/148034?page=7

« Reply #6 on: December 16, 2014, 03:59 »
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Honestly I think this is all part of a bigger plan by envato. They want just sit back and collect massive commissions while not really providing any service apart from the platform. Copyright infringement has always been rampant on there. I imagine they have been hit by a few legal issues and have decided that it is easier to distance themselves than police their marketplace. This way they can claim they aren't the actual seller so it's nothing to do with them. That and this is probably saves them accounting fees or avoids some tax. Whatever, they clearly don't have to do it as no one else is.

« Reply #7 on: December 16, 2014, 05:04 »
+1
I really know nothing about the details of EU tax laws, let alone how they apply to a US seller.

It will be broadly the same as you have to do with eg Symbiostock sites. There have been some recent changes and clarifications but the requirement to add TVA is not new. The EU based client needs an invoice which shows that the proper taxes have been paid. Effectively the same as with any other import duty.


 

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