MicrostockGroup
Agency Based Discussion => Envato => Topic started by: r2d2 on February 04, 2015, 15:34
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Envato sees himself only as a platform between the contributor (seller) and buyers.
- This means you are seller and every buyer needs an invoice from the contributor.
- "When you sell on Envato Market, you are selling to the buyer via our platform. Therefore the whole sale is income you should recognize with an expense (our author fee)".
- Envato automatically writes bills on behalf of the contributors to the buyer.
http://codecanyon.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=7 (http://codecanyon.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=7) (Web-Wizards post)
You can read it in the envato forum (post from collis):
http://codecanyon.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20 (http://codecanyon.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20)
I'll probably get off at Envato....
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Seems pretty lazy.
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It makes no sense at all to me. I started late with them and with low sales and weird rejections haven't made a payout so I'm not sure what they report for tax purposes. If they report the whole amount as income then it probably isn't worth bothering with them. Does anybody know how this is handled at tax time?
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Does anybody know how this is handled at tax time?
My guess would be you pay your taxes as normal, they ignore it and get fined because it is easier to chase one big fish rather than a bunch of smaller ones. That's just a guess though. I really have no idea.
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They're in Australia, I'm in the US, so I've never had a report from them for the income there. I use my royalties as my income (not the amount the buyer paid) and I plan to keep doing that regardless of what they are doing with the crazy accounting.
I also sell via Creative Market and they (on site; haven't received anything from them for tax paperwork probably because I'm new to the site and earned so little in 2014) report total revenues and "Your earnings". Perhaps someone who has been there longer would know which numbers they report on 1099s
I think they've got this all wrong, especially with respect to Photo Dune (given that they're acting like an agency with uniform pricing and an approval process).
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What about European contributors? If they are selling directly they are accountable for VAT, not Envato. Will Envato forward the VAT to European contributors?
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Good news is they will be taking a a much smaller percentage as they are only offering a sales platform, not providing services as an agent, right?
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Good news is they will be taking a a much smaller percentage as they are only offering a sales platform, not providing services as an agent, right?
;D
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Good news is they will be taking a a much smaller percentage as they are only offering a sales platform, not providing services as an agent, right?
LOL!
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What about European contributors? If they are selling directly they are accountable for VAT, not Envato. Will Envato forward the VAT to European contributors?
It looks as if Envato pay VAT for authors.
Nevertheless, the constellation is problematic.
With respect to the VAT Envato behaves like a seller.
With respect to the INCOME Envato just wants to be a "platform".
I find it problematic and whether this is possible in the EU i can not imagine
Someone has made a nice schematic showing the problem (post from Cocomero):
http://codecanyon.net/forums/thread/author-information-about-eu-vat-changes/160108?page=11 (http://codecanyon.net/forums/thread/author-information-about-eu-vat-changes/160108?page=11)
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Envato is currently actively breaking the law of most relevant countries. Anyone submitting to photodune may reconsider their relationship with them as it is very possible that they are breaking the law and drag you into legal problems on the long run - this has nothing to do with wether you are from the EU or not. On the below I consciously leave out all the VAT subject.
Ask yourself the following questions:
1. Do you report the full sales price of a image / item (not the commission from Envato) as revenue to your local Tax Authorities? If not you are committing a tax fraud.
Envato currently insists that the complete sales price is YOUR income and you have to deduct later their commission as your expense.
2. If you are obligated to write invoices: Do you write a invoice for each and every photo sale on photodune? If not it is likely that you are violating your local tax law since Envato insists that YOU have to issue a invoice for every sale and indeed acts like this on your behalf.
3. Do invoices in your country have to follow certain guidelines like including certain data, be numbered, be issued by a governmental authority, have a certain formatting etc. ? If so, it is almost for sure that the invoices Envato handles "on your behalf" are invalid and you are violating local regulations. In consequence, you are breaking the law.
To me it is unbelievable how filthy Envato acts here just to escape certain book keeping obligations. I lost all my trust and they cannot be considered anymore a legally operating business if they continue with their current paradigm.
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1. Do you report the full sales price of a image / item (not the commission from Envato) as revenue to your local Tax Authorities? If not you are committing a tax fraud.
Envato currently insists that the complete sales price is YOUR income and you have to deduct later their commission as your expense.
I'm in the US and I'm not a lawyer, but I think that regardless of what Envato calls the money they pay us, I think I have a reasonable case that the money I receive from them (especially as I don't know who the buyer is or have any possibility to influence the price or terms of this "sale" I made to the unnamed buyer) is my income, not the amount the buyer paid Envato.
Just because they call it something doesn't make it so.
There are a number of situations - companies that tried to call hourly workers managers to avoid paying them overtime, for example - where one party tries to change the definition of a transaction so that it contradicts what's actually happening. I think that's what Envato is trying to do.
I will stay for the moment, but if I thought for one second that I'd have any tax issues as a result of them trying to impute income to me beyond my royalties, I'll leave.
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I don't know about other countries, but in the US if you list the full price as income and then deduct off the Envato charges, the amount you will have to worry about paying tax on is the same as if you just listed your net profit from Envato. For the IRS it depends on what Envato lists as income in the appropriate box. If they also provide the amount deducted from that then it will be easy either way at tax time I suppose. I only have a few images online there and haven't got to payout so haven't had to deal with it yet.
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I don't know about other countries, but in the US if you list the full price as income and then deduct off the Envato charges, the amount you will have to worry about paying tax on is the same as if you just listed your net profit from Envato. For the IRS it depends on what Envato lists as income in the appropriate box. If they also provide the amount deducted from that then it will be easy either way at tax time I suppose. I only have a few images online there and haven't got to payout so haven't had to deal with it yet.
Envato says their putting the US tax reporting issue on hold for now and not issuing 1099s. Probably some accountant showed them they don't have US tax law right.
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Again the little man/amateur probably wont have a clue what Envato is up to and they keep submitting etc., but I wonder what the big players, factories and tax savvy contributors will do. No one will accept the fact that the price the buyer paid is their taxable income and no one will accept having to send invoices for every single sale to an unknown buyer.
If Envato is only a platform now, they need to stop reviewing my images and forward me all buyer details for every sale, and cut their fees significantly. There are more platforms out there, they only take between 10-30%, not 50% or more.
I cant see how this is going to benefit Envato. Probably have to cut my loses and leave. In the mean time, I hope Karma does its trick.
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They must be joking. I will not bear such a huge administrative burden with invoices and increased tax base just for couple of pennies from Photodune :-(
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Here are some comments that sum it up pretty nicely
http://photodune.net/forums/thread/envato-market-the-platform/159256?page=4 (http://photodune.net/forums/thread/envato-market-the-platform/159256?page=4)
Seems that what Envato is doing is completely illegal. As Tror pointed out.
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I agree with JoAnne. Claim the total, subject their commission. Or claim the net. Doesn't matter, same both ways. Doesn't matter what they call it. I claim the amount that ends up in my account, period.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
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It is so messy and illegal for EU contributor that I ask if they can put my portfolio offline until they fix those issues. If they can't do that, I think only solution is to close account.
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If they don't issue a 1099 it won't matter - you can report it how you want. However, I think they are required to issue one for anyone making more than $500 and the US government might go after them if they don't. I wouldn't want that if I were them. If they can't deal with the tax laws properly they should shut down until they can.
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If they don't issue a 1099 it won't matter - you can report it how you want. However, I think they are required to issue one for anyone making more than $500 and the US government might go after them if they don't. I wouldn't want that if I were them. If they can't deal with the tax laws properly they should shut down until they can.
I thought non us based companies don't have to issue 1099. Istock never had to until this year when they made Getty in US their home base. Envato says they are not currently issuing 1099s.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
None of the agencies based outside the US have ever issued me a 1099 - Dreamstime has a theoretical HQ in Tennessee even though Serban is in Romania, so I do get one from them because of their US presence.
For all the agencies that don't issue 1099s I have a spreadsheet with my calculation of the total royalties paid me in a year and I give that number to our CPA who prepares the taxes.
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I print out the notice of what they paid me and it is not a problem.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
Not matching numbers is a trigger for auditing for IRS!
Did anyone talk to Envato on this matter?
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Just look at the idiotic sales reporting that now shows up - no prices match anything the buyer sees as the price...
(http://digitalbristles.com/temp/Envato-lunatic-sales-reports.jpg)
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I have uploaded some work to their market places and did okay with it. I never put much up because uploading was a real pain and rejections pretty random. Boy am I glad I never invested the time it would have taken to build a decent sized portfolio on there. What a bunch of clowns.
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I have my portfolio now by email soft rejected.
Either they reconsider her new "platform presentation" or significantly reduce their commision.
60% Commision for a Marketplace is not justified.
if nothing changes, I will terminate Envato.
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Just look at the idiotic sales reporting that now shows up - no prices match anything the buyer sees as the price...
([url]http://digitalbristles.com/temp/Envato-lunatic-sales-reports.jpg[/url])
It is because of buyer fee scam.
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It is because of buyer fee scam.
I know it is, but that doesn't make the reports any more clear.
If I were really the seller, my "invoice" would show all the deductions from what the buyer paid - list price [minus] buyer fee [ minus] author fee [equals] what I actually receive from them. 64% in "fees" is pretty outrageous for a platform, IMO.
I wonder what the chances are that they'll come to their senses and drop this insane fiction now they've actually implemented it?
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Hello everyone, this is David from Envato. I’m going to quickly jump in here to answer a few questions and hopefully help with some of your concerns.
Will Envato report author earnings to EU tax authorities?
No, to remit VAT we don’t report author’s earnings as it is Envato’s responsibility. That said, you should of course keep in mind authorities have broad powers to audit us and our records.
Will Envato forward the VAT liability to European authors?
No, Envato will add the VAT to the list price of purchases by EU non-business buyers and collect it in our name (not our authors). We’ll also lodge the VAT returns and give that money collected to the EU VAT authority. This is due to a recent change in EU VAT laws which made Envato the supplier for VAT purposes.
Is Envato going to issue 1099s?
Envato has plans to issue 1099s, although these are currently on hold while we investigate the double reporting issue a couple of you mentioned. We’re in discussions with PayPal about this now and we’ll loop back to contributors when we know more.
If you have any further questions, feel free to get in touch in our forums or at [email protected]. I also recommend checking out the invoice and statements Q&As (http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252) as well as this forum post on VAT by our CEO, Collis (http://themeforest.net/forums/thread/author-information-about-eu-vat-changes/160108).
I hope this helps! :)
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I hope this helps! :)
No. It does not.
You are still forcing many contributors to violate the law of their countries or to quit business with you. This is not just an accounting detail we are talking about. You are not even allowed to issue invoices in my name without being registered with local authorities and do the adequate paperwork.
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When I started selling my images I decided to use a nickname!
Now PD issue invoices with my real name without my permission!
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The due date for 1099s for 2014 is Feb 28. If you don't make up your mind about that you need to wait til 2015 reporting.
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When I started selling my images I decided to use a nickname!
Now PD issue invoices with my real name without my permission!
Which is in conflict with their own privacy policy.
Very unprofessional behaviour.
David, how about some comment on that?
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It is so messy and illegal for EU contributor that I ask if they can put my portfolio offline until they fix those issues. If they can't do that, I think only solution is to close account.
I sent a query about week ago via [email protected] and still waiting a response.
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Hi guys,
I understand your concern about having your name on the invoices to buyers.
As an author, you are making sales on Envato Market. We therefore issue an invoice as proof of purchase for the sale, and use limited author (and buyer) information to ensure the documents meet buyer needs.
You may find it helpful to know that if you add a name into the business name field, it will be used instead of the first and last name.
We are also in the process of updating our user terms and privacy policy to make this agreement clearer for our authors - see this post (http://themeforest.net/forums/thread/more-on-financial-tools-and-vat/161572) for more.
Cheers
David
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It is so messy and illegal for EU contributor that I ask if they can put my portfolio offline until they fix those issues. If they can't do that, I think only solution is to close account.
I sent a query about week ago via [email protected] and still waiting a response.
Hi jarih, thanks for your patience on this one, I'll touch base with the team.
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You are "in the process of updating" your privacy policy?
And that makes it ok to breach it now?
Are you serious???
And regarding the whole issue of platform vs. re-seller:
You have always acted exactly like an agency (you set the terms, you set the prices, you decide the content we sell via a review process, you process the money flow and we only get our share once a month, you have the contact to the buyer - not us).
No claiming you "always were" a platform is completely ridiculous.
And most important: I have read through many pages of discussions on your forum, but have not found a single explanation of why you are making those changes.
If you really insist on being a "platform" you have to
- stop rejecting images for stupid reasons - essentially no review process
- let us set the price
- let us define the license terms
- reduce your fees - 64% is way too much for a "platform"
If you don't do that, all your claims of being a platform are irrelevant, you are still a re-seller, however you call yourself.
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You are "in the process of updating" your privacy policy?
And that makes it ok to breach it now?
Are you serious???
And regarding the whole issue of platform vs. re-seller:
You have always acted exactly like an agency (you set the terms, you set the prices, you decide the content we sell via a review process, you process the money flow and we only get our share once a month, you have the contact to the buyer - not us).
No claiming you "always were" a platform is completely ridiculous.
And most important: I have read through many pages of discussions on your forum, but have not found a single explanation of why you are making those changes.
If you really insist on being a "platform" you have to
- stop rejecting images for stupid reasons - essentially no review process
- let us set the price
- let us define the license terms
- reduce your fees - 64% is way too much for a "platform"
If you don't do that, all your claims of being a platform are irrelevant, you are still a re-seller, however you call yourself.
Could not agree more +1000
Good post. I am afraid though that they wont give up any slice of the pie. PD went from being one of my favourite agencies to the levels of Deposit and Fotolia. I am not deleting my port as it took me too much heartache to get it up there, but I am not sending any new content.
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You are "in the process of updating" your privacy policy?
And that makes it ok to breach it now?
Are you serious???
And regarding the whole issue of platform vs. re-seller:
You have always acted exactly like an agency (you set the terms, you set the prices, you decide the content we sell via a review process, you process the money flow and we only get our share once a month, you have the contact to the buyer - not us).
No claiming you "always were" a platform is completely ridiculous.
And most important: I have read through many pages of discussions on your forum, but have not found a single explanation of why you are making those changes.
If you really insist on being a "platform" you have to
- stop rejecting images for stupid reasons - essentially no review process
- let us set the price
- let us define the license terms
- reduce your fees - 64% is way too much for a "platform"
If you don't do that, all your claims of being a platform are irrelevant, you are still a re-seller, however you call yourself.
Yep, did you read Cocomero's post and example:
http://themeforest.net/forums/thread/more-on-financial-tools-and-vat/161572?page=3 (http://themeforest.net/forums/thread/more-on-financial-tools-and-vat/161572?page=3)
NON-Exclusive individual in Poland:
Net earnings: $36 – income tax $25,60 – vat on Author Fee $10,12 = $0,28 !!!!!!!!!!!!!!!!!!!!!!!
So, I have a business (VAT) and when I issue invoice.. I must collect VAT and perform to the tax authorities! I can't understand how Envato even can collect my VAT?
If my individual customer live in EU, I must collect customers (country) VAT.. what ever it is. That's why I close my symbiostock, it's so frustrating system.
I don't know what to do with Envato, I like it, but this is also frustrating.. all of this!
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I am not deleting my port as it took me too much heartache to get it up there, but I am not sending any new content.
You can soft reject your portfolio by email. Then you can reactivate the entire portfolio at any time.
I have no other choice.
Tell a european tax authority that Envato paid VAT in you name but without proof...they laugh at you!
@Envato
1. How it is legally possible to pay VAT for another person in the EU?
2. What evidence (for the Envato has paid my VAT) should I submit my tax office?
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We therefore issue an invoice as proof of purchase for the sale, and use limited author (and buyer) information to ensure the documents meet buyer needs.
It would have been valid with Envato information, no need to put author information on it but if you put author information, it can't be limited, some countries require seller TIN on invoices for it to be valid.
If you want to be a platform, do it right.
Apart from what dirkr said:
- Stop the double fee scam because its only purpose is to allow you to say you keep a smaller percentage from the sale but in truth you get two cuts.
- Pay each sale as it happens and then invoice the fee.
- Don' play games with VAT.
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PD bring me 1% of my microstock income.
If they don't change their policy back to what it used to be, I will close my account very easy! I don't need troubles for $50 a month!
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I haven't submitted there, but I buy from them so I feel like I have a right to be a bit invested in this conversation.
what ? (edit - love the auto correct for naughty acronyms :) )
Especially after recent announcements like this: http://www.microstockgroup.com/photodune/envato's-growth-in-2014/ (http://www.microstockgroup.com/photodune/envato's-growth-in-2014/)
They pull in a quarter billion dollars and try to work the system to pay less taxes at the expense of their artists? (edited again - they "paid out" a quarter billion, that means they collected a heck of a lot more than that!)
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Seems very odd for a company to be sending out invoices in my name. Need to dig in to this more some time, but from what I'm reading, it sounds like I need to seriously re-evalate my relationship with Envato. If this works the way I'm imagining it will, Envato will report that I earned the full value of each sale and then I paid them some sort of fee for using their "platform". Which, give the various discounts and other variables involved, will amount to a major headache every year around tax time.
It's been bad enough dealing with their reluctance to set more reasonable prices and royalty rates, and the added hassle of this bizarre invoicing system doesn't help keep me interested in remaining on board.
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...I also sell via Creative Market and they (on site; haven't received anything from them for tax paperwork probably because I'm new to the site and earned so little in 2014) report total revenues and "Your earnings". Perhaps someone who has been there longer would know which numbers they report on 1099s...
CM doesn't issue 1099s (yet). I have no idea why not or how they get away with not doing it, but somehow they don't do it and aren't going to this year. Maybe next year.
When they do, they have stated that the 1099s will reflect our actual earnings, exactly what they paid us. Which is what Envato should be doing, but aren't.
And oddly enough, although Creative Market acts more like an agency than a marketplace, they take a far smaller cut of the money than Envato does.
With the two companies being fairly similar in many ways but being polar opposites in terms of non-exclusive royalty percentages paid and reasonable tax reporting practices, I'm inclined to feel like I'd rather pull the plug on Envato and hope that more and more business goes over to CM.
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I make couple hundred a month on photodune, but if they are going to report I made 60% more then I may have to drop them. I don't need the tax problems. Thats the kind of sh*t that gets you audited! >:(
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...I also sell via Creative Market and they (on site; haven't received anything from them for tax paperwork probably because I'm new to the site and earned so little in 2014) report total revenues and "Your earnings". Perhaps someone who has been there longer would know which numbers they report on 1099s...
CM doesn't issue 1099s (yet). I have no idea why not or how they get away with not doing it, but somehow they don't do it and aren't going to this year. Maybe next year.
Funnily enough I got email from them this morning saying I had to go fill out a tax form to avoid income being withheld at 30%. Not sure if that means the 1099s are coming this year (I already have them from other agencies; generally the end of January is the target for these), but they're clearly looking at tax issues now.
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All I can say to all this is that one of the first things you learn as a lawyer is that just because people say that something is a certain way in a contract does not mean that's how it really is.
Just because your contract has a clause saying "this is freelancing and not employment" does not mean that employment law doesn't apply, no matter how much you want it to. And just because you say it's a marketplace and you don't owe sales tax does not make it so, either.
As a contributor to this "marketplace" I will not worry too much about this. These are people that walk like an agency and talk like an agency. They review the content, they brand it with their watermarks, they set the licenses as well as the prices, they process the payment, and so on and so on... Chances are, any judge and any tax authority will recognize them as an agency.
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As a contributor to this "marketplace" I will not worry too much about this. These are people that walk like an agency and talk like an agency. They review the content, they brand it with their watermarks, they set the licenses as well as the prices, they process the payment, and so on and so on... Chances are, any judge and any tax authority will recognize them as an agency.
Of course you have to worry about. Envato course is ambiguous yes.
But what you tell the tax office which are not understood first?
Thats all just makes too much work and problems.
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double post
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What the h... are you doing Envato? This type of invoice you’ve sent to the buyers are illegal where I live. But it’s not your problem right? You just wrote my name on the invoice and everything is OK for you? So … that’s the wrong way!
BTW: Why is my full name on the Invoice but only the first letter from the buyer?
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Been trying to get my head around this and I just can't seem to figure out how this can work. They're issuing invoices with my name on them, as if me and the buyer had some direct transaction. But then they're going to eventually issue 1099s saying that they paid me the full value of each sale, and then I paid them an author's fee for using their marketplace. It makes no sense. They want to claim the expense of paying me, but not claim that they're the actual seller of the product.
I can't even imagine how the IRS would make any sense of what they're trying to do.
IRS: "So you sell the products on behalf of contributors."
ENVATO: "No, we just set up the marketplace for people to sell their stuff."
IRS: "So you don't pay the contributors, the buyers do."
ENVATO: "No, we pay the contributors and issue 1099s for what we pay them."
IRS: "Then what's with the invoices from contributors to buyers?"
ENVATO: "That's so the buyers can pay the contributors."
IRS: "So the buyers do pay the contributors."
ENVATO: "No, we pay them."
IRS: "Uh...huh..."
On top of that they don't want to be an agency, but they do want to set prices, decide what content is up in the marketplace, and take an agency-size percentage of each sale.
In other words they want everything configured to work best for them and give them every advantage, and the contributor is out of luck when tax time comes around and needs to sort through this mess.
Having a really hard time finding any reason to stick with Envato at this point.
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I just sent Envato a support ticket asking them if they were planning to issue US 1099s for the 2015 tax year, and if so, were they planning to use the fictional earnings number on the invoices versus the actual amounts we get get paid. I noted that I'd have to leave PhotoDune if they were planning to do this as the tax hassle wasn't worth the income.
If they don't plan to issue 1099s, I can continue as I have been, reporting the income they actually pay me.
I understand that the odds of any court anywhere upholding this creative writing assignment they call an invoice are close to zero, but I have no interest in spending time or money litigating this nonsense.
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As a contributor to this "marketplace" I will not worry too much about this. These are people that walk like an agency and talk like an agency. They review the content, they brand it with their watermarks, they set the licenses as well as the prices, they process the payment, and so on and so on... Chances are, any judge and any tax authority will recognize them as an agency.
Of course you have to worry about. Envato course is ambiguous yes.
But what you tell the tax office which are not understood first?
Thats all just makes too much work and problems.
I don't think I do. Envato with their ridiculous, transparent antics doesn't declare my taxes to my European tax authority. They declare theirs, and good luck with that. I as a citizen of a European country declare my own taxes and I will declare what I receive from them on the date that I receive it like I do with any other agency. My tax authority will then tax me on that income. Done. My tax authority will neither know nor care what Envato is trying to pull off.
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As a contributor to this "marketplace" I will not worry too much about this. These are people that walk like an agency and talk like an agency. They review the content, they brand it with their watermarks, they set the licenses as well as the prices, they process the payment, and so on and so on... Chances are, any judge and any tax authority will recognize them as an agency.
Of course you have to worry about. Envato course is ambiguous yes.
But what you tell the tax office which are not understood first?
Thats all just makes too much work and problems.
I don't think I do. Envato with their ridiculous, transparent antics doesn't declare my taxes to my European tax authority. They declare theirs, and good luck with that. I as a citizen of a European country declare my own taxes and I will declare what I receive from them on the date that I receive it like I do with any other agency. My tax authority will then tax me on that income. Done. My tax authority will neither know nor care what Envato is trying to pull off.
of couse that works for the time being but least at a tax audit you will have to explain it...
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As a contributor to this "marketplace" I will not worry too much about this. These are people that walk like an agency and talk like an agency. They review the content, they brand it with their watermarks, they set the licenses as well as the prices, they process the payment, and so on and so on... Chances are, any judge and any tax authority will recognize them as an agency.
Of course you have to worry about. Envato course is ambiguous yes.
But what you tell the tax office which are not understood first?
Thats all just makes too much work and problems.
I don't think I do. Envato with their ridiculous, transparent antics doesn't declare my taxes to my European tax authority. They declare theirs, and good luck with that. I as a citizen of a European country declare my own taxes and I will declare what I receive from them on the date that I receive it like I do with any other agency. My tax authority will then tax me on that income. Done. My tax authority will neither know nor care what Envato is trying to pull off.
of couse that works for the time being but least at a tax audit you will have to explain it...
Why? I report my earnings correctly. I pay my income tax. I owe no sales tax on a sale made by the agency to a third party, and I owe no sales tax on what money I receive from the agency as a foreign entity. I am in the clear.
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Why? I report my earnings correctly. I pay my income tax. I owe no sales tax on a sale made by the agency to a third party, and I owe no sales tax on what money I receive from the agency as a foreign entity. I am in the clear.
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yes we know that. But the tax office thinks perhaps as Envato. And then I do not want to explain why Envato is not a platform.
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I can only attach my paypal income to accounting, only real money what I can see on my account and they are my income for tax account. The Photodune's invoices and scam system are only pile of s..t for my bookkeeper. Of course someone makes a big big tax fraud and I hope it's the Photodune!
- Photodune can't issue my invoices
- invoices are totally wrong formed
Invoices must include:
- invoice number must be consecutively numbered, no missing numbers
- full customer name and address
- customer's VAT number
- author's VAT number
- amount without the VAT 0%
- amount of VAT and VAT % what ever it is in different EU country
- amount with the VAT -> this money will come to the bank account
- I must collect VAT for TAX office once a month
So, if I explain this The Photodune "system" for my bookkeeper and for the tax office they both laugh me out.. I think there is only one way for the EU contributors, say bye bye for the Photodune..
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I can only attach my paypal income to accounting, only real money what I can see on my account and they are my income for tax account. The Photodune's invoices and scam system are only pile of s..t for my bookkeeper. Of course someone makes a big big tax fraud and I hope it's the Photodune!
- Photodune can't issue my invoices
- invoices are totally wrong formed
Invoices must include:
- invoice number must be consecutively numbered, no missing numbers
- full customer name and address
- customer's VAT number
- author's VAT number
- amount without the VAT 0%
- amount of VAT and VAT % what ever it is in different EU country
- amount with the VAT -> this money will come to the bank account
- I must collect VAT for TAX office once a month
So, if I explain this The Photodune "system" for my bookkeeper and for the tax office they both laugh me out.. I think there is only one way for the EU contributors, say bye bye for the Photodune..
I agree with everything but the last sentence. Not that I am vastly opposed to kicking PD to the curb, I just don't think you have to because of tax issues. Everybody here assumes the tax authority knows or cares to know about what Envato thinks they are today -- agent, marketplace, wizard... whatever. I assure you, the tax authority doesn't give a ****. So unless you go to them and explain Envato's craziness, this will never become an issue. Tax authorities don't expect 100% kosher invoices from foreign entities, so they will be fine with the Paypal remittance if they need even that. And you declare that as income. Done.
All this may not be true if you are a giant corporation and make tens of thousands on Envato, of course. But then again, who but maybe the most successful web template designers are?
I don't really wanna keep doing this because it seems like I am defending Envato, which I am not. I am just telling you, as someone who knows the theory and the practice of law and who has a pretty good understanding of bookkeeping and accounting standards for small businesses: this is being blown out of proportion. It won't be an issue.
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give us 100% commission rate and we will proudly pay taxes on that 100% commission! 8)
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I can only attach my paypal income to accounting, only real money what I can see on my account and they are my income for tax account. The Photodune's invoices and scam system are only pile of s..t for my bookkeeper. Of course someone makes a big big tax fraud and I hope it's the Photodune!
- Photodune can't issue my invoices
- invoices are totally wrong formed
Invoices must include:
- invoice number must be consecutively numbered, no missing numbers
- full customer name and address
- customer's VAT number
- author's VAT number
- amount without the VAT 0%
- amount of VAT and VAT % what ever it is in different EU country
- amount with the VAT -> this money will come to the bank account
- I must collect VAT for TAX office once a month
So, if I explain this The Photodune "system" for my bookkeeper and for the tax office they both laugh me out.. I think there is only one way for the EU contributors, say bye bye for the Photodune..
I fully agree.
My accountant told me that under _local_ law their invoices and connected actions as well as their "business model" would be highly illegal and subject to investigations of the (tax) authorities. There are laws against tax evasion, evasion of book keeping requirements, evasion of responsibilities towards customers and connected consumer protection laws etc. I will not mention the stronger assumptions he mentioned in very clear words. But obviously this affects only my local situation and will not have impact on Envato itself, although they might get "blacklisted" locally.
He recommended me to quit any relationship with them and/or file a official complaint against their business practices in order to protect myself.
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I received a reply from Envato support this morning (asking about whether 1099s would be issued for 2015 tax year to US residents, and if the fictional income - royalty plus author fee - would be listed on it). It pointed me to this blog post from October
http://marketblog.envato.com/news/us-authors-tax/ (http://marketblog.envato.com/news/us-authors-tax/)
At the end of the post it says:
"16. What is reported on the 1099?
The income of the US Person is reported on the 1099.
When you sell items on Envato Market as an author, you are making a transaction directly with every buyer who purchases your item. Your income is the gross value of this sale to the buyer. In an immediate follow-on transaction, Envato charges authors an Author Fee which is an expense against your income.
Our fee structure changed on September 1st, 2014 to reflect our services to buyers. Buyers now purchase both an item, and pay a Buyer Fee to Envato. Author income is only the portion of the sale which is for the item (i.e. not the separate Buyer Fee transaction). Again, Envato charges authors an Author Fee against that income.
The Statements page is being updated to provide authors with all the information they need to complete their tax return."
So I think I need to wind up my dealings with Envato; now the only question is if they will pay me the balance owed (which is currently under $50) if I quit today. If not I'll have to hit $50 and then remove images, get paid a month later and then close my account.
It's a shame, but they're such a low earner, they're not worth the hassle.
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It's a shame, but they're such a low earner, they're not worth the hassle.
Thanks for sharing this info, Jo Ann.
I'm going to leave Envato, too. "No pain, no gain" doesn't work in this case. More like "All pain, little gain."
So… adiós, Envato! Looks like you're dead set on driving your business into the ground.
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Wow. So, I'm no tax expert, but this to me means that anyone from EU that has an account with Envato shoud either deactivate their account, or report (and pay) taxes on the income that he/she did not make, losing quite a large chunk of money?
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Could somebody from Europe please explain these changes to me like I'm a five year old?
As far as I know I would personally have to collect and pay VAT from every EU customer if I'm the seller. But apparently Envato is going to do it for me? Is that really legal?
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When a company makes a stupid decision like this I often wonder which type of drugs they take to alter their minds :-[
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I have a few templates marked to purchase on Graphic River, guess I better decide which ones I need the most and buy before everyone pulls their products! I can't find the InDesign ones anywhere else.
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I think I will give them until the end of the month, surely they are going to have to fix this or they might as well close now? Can't quite believe they are so slow reacting to this, a great way to lose buyers, as they are going to be looking for missing images on other sites now.
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I got a reply back to my request to close my account and was told that my message had been forwarded "to the necessary staff for consideration." And maybe I'm reading too much into it but to me, "for consideration" might suggest that they could be reconsidering the implications of this new policy, particularly if contributors are requesting to close their accounts because of it.
So anyone considering closing their account, I'd suggest contacting Envato to let them know that you're even thinking about it. Maybe if enough people express an interest in parting ways with them, they might fix this mess.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
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I got a reply back to my request to close my account and was told that my message had been forwarded "to the necessary staff for consideration." And maybe I'm reading too much into it but to me, "for consideration" might suggest that they could be reconsidering the implications of this new policy, particularly if contributors are requesting to close their accounts because of it.
So anyone considering closing their account, I'd suggest contacting Envato to let them know that you're even thinking about it. Maybe if enough people express an interest in parting ways with them, they might fix this mess.
I did that too, Mike, last night. Here's the response that greeted me this Sunday morning:
Hi Martha
Thanks for getting in touch. I'm Scott an Envato Help Officer and I will be helping you today.
I understand your concerns with our recent changes and will escalate your ticket to the appropriate person to assist you with this.
Thanks for your patience and we will be in touch very soon :)
All the best!
Scott
Envato Help Officer
Mon-Fri 0800 - 1600 GMT
At least Scott acknowledges that their recent changes are a problem. We'll see where it goes from here.
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I am not quite sure that I understand tax implications for US contribution.
Assuming that Envato sends to IRS information on total sales, I see 3 scenarios:
1. I am claiming "author fee" as expenses, but Envato total sales as income pushes my taxable income up, potentially increasing my taxes and practically lowers my commission from Envato.
2. I am claiming net payment from Envato as my income. It puts me into potential troubles with IRS. Unless, I am reporting more income than it is covered by all these forms sent to IRS. It may be not a case any more if IS starts reporting to IRS.
3. I hate Envato and delete my account, but I am getting 2% of my total microstock income from them which is significant number in my budget.
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3. I hate Envato and delete my account, but I am getting 2% of my total microstock income from them which is significant number in my budget.
If your earnings from Envato are a significant part of your income, you should stay there and work through the tax implications.
For people like me, however, who get very little back from my time invested in Envato over the last few years, this just doesn't seem to be worth the hassle.
As always, YMMV.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
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I got a reply back to my request to close my account and was told that my message had been forwarded "to the necessary staff for consideration." And maybe I'm reading too much into it but to me, "for consideration" might suggest that they could be reconsidering the implications of this new policy, particularly if contributors are requesting to close their accounts because of it.
So anyone considering closing their account, I'd suggest contacting Envato to let them know that you're even thinking about it. Maybe if enough people express an interest in parting ways with them, they might fix this mess.
I got back something similar that they were "escalating" and would be in touch shortly.
I'm not fussed either way about the outcome, but I do think it's worthwhile to take the opportunities we can (like with DPC) to make it clear to the agencies that poor treatment of contributors will have consequences.
I can't imagine they can back away from the whole scheme, but I can perhaps imagine that they'll treat PhotoDune differently - because they're acting just like an agency, setting prices and reviewing contributions for inclusion or not.
I don't know about the EU contributors, but I'd be happy if they just issued the 1099 to me for the money they actually paid me, regardless of the convoluted invoice scheme they've cooked up. So I guess that's another possible way out of the conundrum for a subset of contributors.
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What the h... are you doing Envato? This type of invoice you’ve sent to the buyers are illegal where I live. But it’s not your problem right? You just wrote my name on the invoice and everything is OK for you? So … that’s the wrong way!
BTW: Why is my full name on the Invoice but only the first letter from the buyer?
1) if it is illegal in your country, and there is a tax treaty, why not then submit the actual papertrail to IRS of your country, then let IRS go to Envato's IRS for audit???
2) if enough of us do that, Envato will be audited in the country they report their earnings.
Anything else, like Mantis suggest would only make it more complicated for the contributor.
It's best to shift the onus of reporting to Envato.
If they are indeed doing something not kosher in taxation, Envato won't last very long playing this scheme, no matter which country they are responsible to report their earnings.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.
Genuine curiosity: How is it not? It is here in Europe.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.
Genuine curiosity: How is it not? It is here in Europe.
Maybe I'm totally wrong - it also may depend on whether you get income as an individual, LLC or other. I haven't really seen a great explanation of how this works.
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But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.
I don't get 1099'd by Envanto.
Not up to now, but read their license change that JoAnn posted. They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.
I itemize and what I pay taxes on is my net income after expenses. So in the case above I would pay taxes on $1000. So I believe it's a one-to-one issue. I'm meeting with my CPA on Friday (dreaded taxes) and will confirm with him.
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Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net. I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business. So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.
You're not oversimplifying it, but in my case, it makes a whole lot of things complex.
I do stock part time. Given that all the gear and my home office are used for other things as well, I don't write any of it off (keeping track of the proportions, days and hours is just not something I want to do). All the travel we do is family travel, and again, not specifically for stock, and I don't deduct any of it. I don't pay models or rent venues; I have a bucket load of computers for other purposes too.
I probably pay a bit more tax than I owe, but I report what the agencies pay me, as a sole proprietor. I don't want to have to start keeping track of all the expenses to do the books the way you would with a "real" business, but if Envato starts reporting more than they actually pay me, I'm not up for overpaying even more by paying tax on that, and I don't want to deal with the recordkeeping to start a full set of books.
Avoiding the hassle of an audit (I'm not worried about owing money, but the time spent digging up all the paperwork and organizing it) is a priority; I don't see how I can handle claiming expenses from just this one agency without risking raising some audit red flag. For a few hundred a year it's just not worth it to me.
YMMV
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Avoiding the hassle of an audit (I'm not worried about owing money, but the time spent digging up all the paperwork and organizing it) is a priority; I don't see how I can handle claiming expenses from just this one agency without risking raising some audit red flag. For a few hundred a year it's just not worth it to me.
YMMV
but that's exactly what envato is counting on , you don't want an audit so you won't report envato 's illegality of giving you the actual earning . a tax audit to not to penalize you , it is to penalize those who cheat.
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For a few hundred a year it's just not worth it to me.
YMMV
Your situation and mine are almost identical, Jo Ann. I also write and earn money from books. Stock is just one thing I do, and Envato is a tiny portion of that. Just not worth the bother at all.
For others, it may be worth the bother. We all have to make the right call for ourselves, as we did with DPC, the Google deal, the FB deal, the incredible shrinking royalties, and all the other cr*p that's handed down from the agencies on high.
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Hey guys,
I understand it's been pretty confusing with the recent changes to the EU Law. We've answered some of these questions on our forums (http://themeforest.net/forums/thread/envato-market-the-platform/159256), like:
Q: The invoices aren’t valid for VAT. (http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=2&message_id=1202716#1202716)
A: You’re correct, and we have a second VAT rollout that is coming right after this one. (Click for full answer) (http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=9&message_id=1203321#1203321)
Q: Does Envato report the VAT in the author’s name? (http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=3&message_id=1202662#1202662)
A: No, VAT will be collected and remitted under Envato’s MOSS registration. (http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20&message_id=1203318#1203318)
Please check out the forum threads like the New Invoices and Statements (http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252) and Envato Market the platform (http://themeforest.net/forums/thread/envato-market-the-platform/159256) for more extensive information. If you do have further questions, please contact [email protected] as this is actively monitored and will be responded to.
Cheers, and thanks for sharing your concerns.
David
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Hey guys,
I understand it's been pretty confusing with the recent changes to the EU Law. We've answered some of these questions on our forums ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256[/url]), like:
Q: The invoices aren’t valid for VAT. ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=2&message_id=1202716#1202716[/url])
A: You’re correct, and we have a second VAT rollout that is coming right after this one. (Click for full answer) ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=9&message_id=1203321#1203321[/url])
Q: Does Envato report the VAT in the author’s name? ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=3&message_id=1202662#1202662[/url])
A: No, VAT will be collected and remitted under Envato’s MOSS registration. ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20&message_id=1203318#1203318[/url])
Please check out the forum threads like the New Invoices and Statements ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252[/url]) and Envato Market the platform ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256[/url]) for more extensive information. If you do have further questions, please contact [email protected] as this is actively monitored and will be responded to.
Cheers, and thanks for sharing your concerns.
David
David,
you are not answering the open questions.
I would like to read an official statement about why you are doing all these changes.
I have not found a single explanation of why this new setup is beneficial for anyone.
And once more: Who did allow you to give out personal information to third parties (buyers) without first getting our consent - and in direct conflict with your privacy policy?
I am still waiting for an answer.
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Hey guys,
I understand it's been pretty confusing with the recent changes to the EU Law. We've answered some of these questions on our forums ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256[/url]), like:
Q: The invoices aren’t valid for VAT. ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=2&message_id=1202716#1202716[/url])
A: You’re correct, and we have a second VAT rollout that is coming right after this one. (Click for full answer) ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256?page=9&message_id=1203321#1203321[/url])
Q: Does Envato report the VAT in the author’s name? ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=3&message_id=1202662#1202662[/url])
A: No, VAT will be collected and remitted under Envato’s MOSS registration. ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20&message_id=1203318#1203318[/url])
Please check out the forum threads like the New Invoices and Statements ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252[/url]) and Envato Market the platform ([url]http://themeforest.net/forums/thread/envato-market-the-platform/159256[/url]) for more extensive information. If you do have further questions, please contact [email protected] as this is actively monitored and will be responded to.
Cheers, and thanks for sharing your concerns.
David
David,
you are not answering the open questions.
I would like to read an official statement about why you are doing all these changes.
I have not found a single explanation of why this new setup is beneficial for anyone.
And once more: Who did allow you to give out personal information to third parties (buyers) without first getting our consent - and in direct conflict with your privacy policy?
I am still waiting for an answer.
I also wait!
-
The only question that needs to be answered is will Envato go back to being an agency, or I have no option but to leave. I will send an email now.
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Q: Does Envato report the VAT in the author’s name? ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=3&message_id=1202662#1202662[/url])
A: No, VAT will be collected and remitted under Envato’s MOSS registration. ([url]http://themeforest.net/forums/thread/new-statements-invoices-february-1st-2015/159252?page=20&message_id=1203318#1203318[/url])
@David/Envato another question:
Envato pays only in its own name VAT.
Then I do not have to pay (as Eu-contributor) again VAT in my own name (for EU-buyers) on the whole income?
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@David/Envato another question:
Envato pays only in its own name VAT.
Then I do not have to pay (as Eu-contributor) again VAT in my own name (for EU-buyers) on the whole income?
This is the absurd bit. If we are the sellers, as Envato claims, we should collect and pay the VAT in our name. There's no way I can register the full price that the buyer pays to Envato as if it was me setting the price and arranging the transaction, and then deduct VAT and the fee to Envato. If I did, the tax authorities would expect me to pay the VAT.
So legally it seems to me that nothing has changed, really. Envato are still the sellers, and our "customer" is till Envato. Which means that I can flush the invoice down the toilet and consider my income at Envato as export to Australia.
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An update on my exchanges with Envato support.
1. The escalation (support in the UK) was only to ask "...if you've raised your specific concerns with our Finance Team? You can reach them directly via: [email protected]" I replied that I hadn't because I assumed they had no ability to change what Envato is doing, only to try and explain why I should change my accounting at tax reporting to fit their new scheme.
2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.
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I sent my email to [email protected] yesterday and have only had an automated response so far. Hopefully they are working on their announcement that they have screwed this up and will go back to being an agent :) I think that's their only option, if they like making money.
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Likewise, have emailed PD about clarification and also enquired about account closing.
Last thing one needs is audit and tax problems on the pennies made … so unnecessary ???
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I'd suggest everyone speak to their own tax professional before making any decisions, but the advice I've received from my accountant has led me to ask for my Envato account to be closed. In short, my accountant had major concerns about two parts of the issue: Invoices being written in my name that othr people/companies could then claim as expenses to my business, and money I never received being reported to the IRS by Envato.
Even though I could show that the money that I ended up keeping was accurate, after the overpayment Envato reports minus the authors fees paid back to Envato, just the fact that there would be this big discrepancy in reporting would almost surely trigger an audit. And since I don't make enough with Envato to justify the time, hassle, and cost of going through an audit, I'm better off parting ways with them.
I can deal with the possibility of being audited. Being self-employed and getting paid the way we do, it's probably almost a certainty that it will happen someday. But I'm not going to let one company speed up the process of getting the IRS to come knocking just because they think they've found a new creative way to save money.
I've been on the fence with Envato for a while now. They don't pay particularly well and the prices they set on my images were often the lowest of any company I work with. This whole tax fiasco was just the last straw.
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2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.
That's amazing!
Given that they claim to be a platform and the invoice is from author to client and the client has paid, that's theft, right?
How can an invoice be paid on the client side but unpaid on the author side? Is this come kind of Schroedinger's invoice?
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I will also close my account. Waiting for their email... I hope a lot of people will do the same... It's even better than any D-Day ;D
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2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.
That's amazing!
Given that they claim to be a platform and the invoice is from author to client and the client has paid, that's theft, right?
How can an invoice be paid on the client side but unpaid on the author side? Is this come kind of Schroedinger's invoice?
+1000
Well, time to e-mail Envato. They contribute only 2% to my overall earnings, it's not worth the hassle if they don't change things.
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I'd suggest everyone speak to their own tax professional before making any decisions, but the advice I've received from my accountant has led me to ask for my Envato account to be closed. In short, my accountant had major concerns about two parts of the issue: Invoices being written in my name that othr people/companies could then claim as expenses to my business, and money I never received being reported to the IRS by Envato.
Even though I could show that the money that I ended up keeping was accurate, after the overpayment Envato reports minus the authors fees paid back to Envato, just the fact that there would be this big discrepancy in reporting would almost surely trigger an audit. And since I don't make enough with Envato to justify the time, hassle, and cost of going through an audit, I'm better off parting ways with them.
I can deal with the possibility of being audited. Being self-employed and getting paid the way we do, it's probably almost a certainty that it will happen someday. But I'm not going to let one company speed up the process of getting the IRS to come knocking just because they think they've found a new creative way to save money.
I've been on the fence with Envato for a while now. They don't pay particularly well and the prices they set on my images were often the lowest of any company I work with. This whole tax fiasco was just the last straw.
Good post. Thank you. I just wrote envato telling them I will be dropping them if they don't get this sorted. I make good money there. Will cost me average of $250/month to drop them, but this tax problem is a threat to my business.
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...this tax problem is a threat to my business.
I think it's a threat that goes beyond just Envato, too. This is another one of the numerous examples in stock where a company comes up with some new and creative way to save a little money and pass the burden on to contributors. When companies try to pull this junk on us, it's important that people let them know it's not ok to do this kind of thing, and that if they insist on moving forward with it, there are consequences.
I get that Envato didn't get into this business as a stock photo company. They started out differently and brought graphics and photos into the mix later on. They're used to doing things a little different than we're accustomed to, as evidenced by their unique upload system, treating everything as a "product" with buyer comments and feedback, etc. I think they've done a lot of cool things as well. They were (as far as I know) the first company to require vector artists to include a file with editable text still intact (if text was used) and not only provide outlined lettering. Which I think is great and I wish more companies did that. But Envato's uniqueness seems to also have drawbacks. We all know the upload system is painful. And now it seems they're extending this notion of playing by their own unique rules to how they handle payments and tax issues.
Although they didn't start out as a typical stock agency, they are one to some extent whether they like it or not. And there are certain ways that things are done across the board in stock content licensing that should be adhered to always. One of them certainly is that the company is the agency, agencies receive payment from buyers, and agencies pays contributors. No creative accounting should change that and if a company wants to try an pass that kind of complex burden on to contributors they should expect that there will be some concern, criticism, and sometimes loss of contributing artists.
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(Edited to make more sense :O)So what does Red Bubble do, they act like an "agent" don't they, even though you set your own prices? Don't both companies originate in Australia? Has RB had sweeping changes this tax year?
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2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.
That's amazing!
Given that they claim to be a platform and the invoice is from author to client and the client has paid, that's theft, right?
How can an invoice be paid on the client side but unpaid on the author side? Is this come kind of Schroedinger's invoice?
+1000
Well, time to e-mail Envato. They contribute only 2% to my overall earnings, it's not worth the hassle if they don't change things.
That is... honestly, what. They didn't even think through their own stupid scheme.
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My portfolio has gone. Annoying that another small bit of income has gone but I couldn't see any other option.
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My portfolio has gone. Annoying that another small bit of income has gone but I couldn't see any other option.
Same here. Just got the email that my final payout is being processed. My portfolio is deleted, I'm out.
Sure I'll miss the extra income but I can make it up elsewhere. Despite the loss I still feel like I had no choice and this is the way it had to be. It's a shame it came to this, really, but what else can you do.
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My portfolio has gone. Annoying that another small bit of income has gone but I couldn't see any other option.
Don't worry about the income. I think the other agencies will compensate the loss of Envato, at the latest when the buyers notice that they can't find the pictures they need ;-)
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I didn't hit $50 before month's end, so I will be gone, but not before I make the additional $10 :)
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Why are you leaving so fast? The way I see it it's legally impossible for them to claim that the contributors are the sellers. So things will probably change?
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Why are you leaving so fast? The way I see it it's legally impossible for them to claim that the contributors are the sellers. So things will probably change?
I would think so but apparently they have made their minds up as Mike, Jo Ann and other have written them. Envanto "considered the concerns" and said bye bye to them. They are moving forward with the scheme (and it is a scheme, but more like a scam) and do not care what the collateral damage is. Why? As usual they have plenty of images to fill the slots of deleted portfolios. It's crowd sourcing that is putting these companies in the drunken drivers seat.
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Why are you leaving so fast? The way I see it it's legally impossible for them to claim that the contributors are the sellers. So things will probably change?
Fast? This should of been sorted out 2 months ago. It's an obvious problem for contributors that we don't need and none of the other sites I use has done this. I don't want to continue with a low earning site that doesn't see that this is a big problem or, more likely, doesn't care.
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Why are you leaving so fast? The way I see it it's legally impossible for them to claim that the contributors are the sellers. So things will probably change?
From what I've been told, they have no intention of changing this.
At this point even if they changed the policy I'd have a hard time going back in with them. This wasn't the only reason I was unhappy with Envato.
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I have removed my portfolio too. Cannot be bothered with agencies (yes, agencies, not "marketplaces") who shift their responsibilities upon their contributors, and still keep their large share of the sale.
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On Feb 22, I requested that Envato delete my PhotoDune portfolio.
On Feb 23 & 24, I got followup replies asking if I really wanted to do that. I said yes.
On Feb 24, I got this message: This is to let you know that I’ve assessed your ticket and have assigned it to one of our level 3 teams. They’ll be in touch with you shortly.
Now it's March 1. I've had no further response. Gotta wonder if those Level 3 teams are overwhelmed with delete-my-portfolio requests.
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Why are you leaving so fast? The way I see it it's legally impossible for them to claim that the contributors are the sellers. So things will probably change?
This has been going on for many months. There's a massively long thread in their forums (and although I didn't read all of the posts, everything I saw said this was just wrong). I wrote in the forum, I wrote to support; they escalated and the response there was "have you asked our tax center for help" - I don't want help in figuring out how to deal with it and I told them that I was only interested in a change of policy.
They've changed their site to reflect these fictional "invoices" and I just don't want to go further into the 2015 tax year with some vague hope they'll end up saying "oops" and not issue a US 1099. If they were a huge earner for me (someone else said they earned $250 a month there; clearly the more you earn the more you might hope things will change) possibly that might alter my views?
In addition to all of the above, PhotoDune appears to be very much an afterthought at Envato. The business model doesn't really fit (they're an agency, albeit not a very good one, saying they're a marketplace). Sales haven't grown in the 3 years I've been there - they're more like CanStock - nice guys, bumping along at the bottom. But the nice guys became a nuisance with this ridiculous invoicing scheme and they appear to have dug in. Given that they really don't appear to view PhotoDune as important, I can't see any realistic likelihood they're going to change anything even though their new polcies are unlike those of any agency out there.
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It's really strange and confusing. Since Envato collects the VAT, handles refunds and are the ones responsible for the license sold, it would seem to me like it's business as usual, which means that the contributors could just ignore the invoices and only keep record of the chunk of money that they withdraw every now and then. And consider that money as in income from Envato, not the actual buyer.
As far as I know (could be wrong here, though) there's no such thing as a "supplier for VAT purposes only" in the EU. And so far I haven't found any information stating that somebody else can pay my VAT. This is why I think they will have to change the system, otherwise it's impossible to follow the rules in the EU (pretty much the same problem in the US I suppose).
Personally I don't even sell there yet. I was just about to start uploading when I read about this change, so I guess I'll wait and see what happens.
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I'll pull the plug once i make payout because for sub-$50 a month its not worth it.
All the time wasted reading threads about their plans could have been more profitably used making product to sell with other agencies. And I'm still none the wiser really on what . it all means.
I try to keep my taxes as simple as possible which keeps my accountants bill down and anything like this is just not worth it.
If I want to earn $50 ($31.40 for February!) i can go and mow someones lawn, easier and healthier and a lot less strain on the eyes.
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Just got a note from Envato that my port is deleted now.
I left a little money on the table, but at the low rate of sales it would take forever to get to payout. Happy to be done with it.
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Since I have a small port (<100), is it better for me to delete the images (one by one) and then request the closure of my account ?
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I'd suggest everyone speak to their own tax professional before making any decisions, but the advice I've received from my accountant has led me to ask for my Envato account to be closed. In short, my accountant had major concerns about two parts of the issue: Invoices being written in my name that othr people/companies could then claim as expenses to my business, and money I never received being reported to the IRS by Envato.
Even though I could show that the money that I ended up keeping was accurate, after the overpayment Envato reports minus the authors fees paid back to Envato, just the fact that there would be this big discrepancy in reporting would almost surely trigger an audit. And since I don't make enough with Envato to justify the time, hassle, and cost of going through an audit, I'm better off parting ways with them.
I can deal with the possibility of being audited. Being self-employed and getting paid the way we do, it's probably almost a certainty that it will happen someday. But I'm not going to let one company speed up the process of getting the IRS to come knocking just because they think they've found a new creative way to save money.
I've been on the fence with Envato for a while now. They don't pay particularly well and the prices they set on my images were often the lowest of any company I work with. This whole tax fiasco was just the last straw.
Good post. Thank you. I just wrote envato telling them I will be dropping them if they don't get this sorted. I make good money there. Will cost me average of $250/month to drop them, but this tax problem is a threat to my business.
And if I am correct it is different tax category for royalties and for other income
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Since I have a small port (<100), is it better for me to delete the images (one by one) and then request the closure of my account ?
Envato does a "soft deactivation" when you ask them to close your account, in case you ever want to come back. If you want your stuff gone completely, you can delete images manually from the Edit menu.
You can also do this after soft deactivation. I've been deleting some of mine since being deactivated. I don't plan on going back unless they change the tax policy, raise royalty rates for non-exclusives, and raise prices. And since none of those 3 things are likely to happen (no way all 3 ever will), I know I'm out permanently and I don't mind that my portfolio is just as permanently emptied.
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Since I have a small port (<100), is it better for me to delete the images (one by one) and then request the closure of my account ?
Envato does a "soft deactivation" when you ask them to close your account, in case you ever want to come back. If you want your stuff gone completely, you can delete images manually from the Edit menu.
You can also do this after soft deactivation. I've been deleting some of mine since being deactivated. I don't plan on going back unless they change the tax policy, raise royalty rates for non-exclusives, and raise prices. And since none of those 3 things are likely to happen (no way all 3 ever will), I know I'm out permanently and I don't mind that my portfolio is just as permanently emptied.
Thanks Mike for the information. A small portfolio and a non-seller is a easy decision for me to go ahead and delete the images. I am in the process of deleting them and then I will ask them to close my account. Thanks again for the reply and the information that you had provided in your earlier posts :)
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They keep pointing me to their blog when asking under what law they have the authority to disclose my personal data. I want them to tell me under what law they are authorized to do what they are doing.
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I'm not involved in the Envato Marketplace, but I once considered becoming a contributor. However, considering the total lack of clarity on this matter I would now get the heck out of there.
(Edited to make more sense :O)So what does Red Bubble do, they act like an "agent" don't they, even though you set your own prices? Don't both companies originate in Australia? Has RB had sweeping changes this tax year?
I was wondering about that as well.
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(Edited to make more sense :O)So what does Red Bubble do, they act like an "agent" don't they, even though you set your own prices? Don't both companies originate in Australia? Has RB had sweeping changes this tax year?
I could be wrong, but I'd assume that redbubble is in a different category of company since they manufacture a physical product and ship that out to customers. There's really no way they could argue that they're a marketplace like Envato, simply facilitating these transactions between artist and customer. Redbubble ships physical goods.
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I fail to see how Envato are simply facilitating transactions between contributors and buyers when they have a payout threshold and will be holding on to some peoples money forever. If they really wanted to not be an agency, they need to have a system where the contributor is paid automatically as soon as a buyer purchases a license.
Now they are going to have a lot of contributors leaving because they don't want to deal with the potential tax problems and they will be keeping their money under the $50 payout threshold, how can a reseller justify keeping that money?
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... If they really wanted to not be an agency, they need to have a system where the contributor is paid automatically as soon as a buyer purchases a license...
Exactly. They want it all in their favor, they're a marketplace when it benefits them, but an agency when the market status doesn't benefit them. They pay contributors directly but invoice customers on behalf of the contributor. They can't always be all of these things, and even though they operate like an agency, they'll continue to insist that they're not, at least when it suits them.
...Now they are going to have a lot of contributors leaving because they don't want to deal with the potential tax problems and they will be keeping their money under the $50 payout threshold, how can a reseller justify keeping that money?
They can't justify it if they're a true marketplace. So again, they're operating like an agency. At least until they see some tax benefit to being just a marketplace and then they're saying they're that again.
It all makes no sense.
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... If they really wanted to not be an agency, they need to have a system where the contributor is paid automatically as soon as a buyer purchases a license...
Exactly. They want it all in their favor, they're a marketplace when it benefits them, but an agency when the market status doesn't benefit them. They pay contributors directly but invoice customers on behalf of the contributor. They can't always be all of these things, and even though they operate like an agency, they'll continue to insist that they're not, at least when it suits them.
...Now they are going to have a lot of contributors leaving because they don't want to deal with the potential tax problems and they will be keeping their money under the $50 payout threshold, how can a reseller justify keeping that money?
They can't justify it if they're a true marketplace. So again, they're operating like an agency. At least until they see some tax benefit to being just a marketplace and then they're saying they're that again.
It all makes no sense.
It makes sense alright for Envato they are just like the rest of the stock weasels in the rabbit warren.
They just want an easy ride off the backs of contributors and sit on their arses making money off them.
Contributors cry and wail about poor sales, poor returns and the crapola that agencies pile on them and the agencies just shrug and carry on their sweet way.
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Just saw an interesting post on the Envato forum. A buyer was asking about additional information on a contributor, that they need more detailed contributor information on the invoice to make the invoice legal and useful for tax purposes.
What was interesting about it to me is that buyers are, indeed, taking these invoices to mean that they are paying contributors directly. So buyers will be claiming money paid to contributors as business expenses, and they're asking Envato for additional information on contributors to be able to do exactly that. Meanwhile Envato will issue 1099s claiming to have paid out the same money.
Glad I walked away from that mess.
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Glad I walked away from that mess.
Yep. I'm glad I left before any payments were handed over. US taxes are complex enough without adding that kind of deliberately messy cr*p.
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So.... I put a $13 ID template into my cart, when I went to buy it they asked for a $2 fee or to pay by Envato credits. I thought that fee may have gone away, don't they still take a percentage from the authors? I didn't go through with the transaction. I'll look to see if s/he sells it anywhere else first.
I could not find where to purchase Envato credits though, or how much they are, when they expire. I purchased credits a couple years ago and was quite perturbed when the balance expired.
On a side note: First, I'm Canadian, with all the business numbers that go along with it. "IF" I SOLD THERE.... (I don't) would they not have to collect GST and PST for Canadian and Provincial sales on my behalf? If I am the INVOICEE I would be responsible to pay those taxes when sold in my Country and Province whether they were collected or not. It is also unlawful to give a customer a receipt without your GST number on it. Just a thought. So happy I never contributed.
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Finally, last payment is coming and all images are removed!
platform
invoice
VAT
"keep the jack"
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Support have been helpful, they will close my account once it reaches payout which is just a few cents away.
Shame as although i didn't earn much with them i did get a few good paying customers for private work through them.
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So.... I put a $13 ID template into my cart, when I went to buy it they asked for a $2 fee or to pay by Envato credits. I thought that fee may have gone away, don't they still take a percentage from the authors? I didn't go through with the transaction. I'll look to see if s/he sells it anywhere else first.
I could not find where to purchase Envato credits though, or how much they are, when they expire. I purchased credits a couple years ago and was quite perturbed when the balance expired.
On a side note: First, I'm Canadian, with all the business numbers that go along with it. "IF" I SOLD THERE.... (I don't) would they not have to collect GST and PST for Canadian and Provincial sales on my behalf? If I am the INVOICEE I would be responsible to pay those taxes when sold in my Country and Province whether they were collected or not. It is also unlawful to give a customer a receipt without your GST number on it. Just a thought. So happy I never contributed.
I was reading their terms and was wondering if they consider the buyer fee OUR income. They say the selling price is made up of
1. the price of the product
2. A buyer fee
Total price
Does anyone know if that fee is being reported as income for contributors by Envanto?
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So.... I put a $13 ID template into my cart, when I went to buy it they asked for a $2 fee or to pay by Envato credits. I thought that fee may have gone away, don't they still take a percentage from the authors? I didn't go through with the transaction. I'll look to see if s/he sells it anywhere else first.
I could not find where to purchase Envato credits though, or how much they are, when they expire. I purchased credits a couple years ago and was quite perturbed when the balance expired.
On a side note: First, I'm Canadian, with all the business numbers that go along with it. "IF" I SOLD THERE.... (I don't) would they not have to collect GST and PST for Canadian and Provincial sales on my behalf? If I am the INVOICEE I would be responsible to pay those taxes when sold in my Country and Province whether they were collected or not. It is also unlawful to give a customer a receipt without your GST number on it. Just a thought. So happy I never contributed.
I was reading their terms and was wondering if they consider the buyer fee OUR income. They say the selling price is made up of
1. the price of the product
2. A buyer fee
Total price
Does anyone know if that fee is being reported as income for contributors by Envanto?
They issue an invoice to the buyer in my name for the full amount, and then they add a line on my statement that I paid them an author fee. Its a complete mockery. I dont even know how they are legally allowed to do this. They act as a platform, but I have no control over anything.
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So my receipt would say $15, the author would be paid $13? Or is there more commission on top of that?
Sounds like the author has to claim $15 as income, then take the $2 fee as a direct expense against earnings?
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I get 15 and then they deduct 2.