So a few days before the start of the year, everyone in the crochet community was worried about the “new” EU VAT laws. Really, these were not NEW laws at all, only that the European taxing agency would be cracking down on their enforcement of the tax law. EU VAT is an import tax that should be collected when selling any digital good to any European country.
For more information or if you’d like to do your own research on this subject, here is the blog I wrote before the first of the year in order to get as much information out there in the same place so that crochet pattern designers could protect themselves. I included all of the sites that I utilized to do my own research. You can do your own research, but I try to detail it as much as possible up top. The information has been updated as I learned new information on the subject.
I thought it time to do ANOTHER update, but this time I wanted to clarify a few things.
It has been determined that anytime a digital good is sold to an EU country, this tax needs to be collected and remitted to the proper authorities.
The question posed at my last update of the above blog on the subject matter was: Who is responsible for collecting the tax when you are using a third party site such as Ravelry, Etsy or Craftsy?
The answer is: The website by law, must collect and remit this tax. However they do so and justify it is fine, as long as it is collected and remitted. If you OWN your website and you do not use a third party site to collect your monies, you may be liable for this tax and you should check with a local Certified Public Accountant. Whilst in the US you may want to speak with a tax accountant chicago, you will likely want an EU accredited one for these issues in particular.
Ravelry has offered a short term solution by allowing their clients to move their EU VAT purchases to Loveknitting.com with a promise of a long term fix within the Ravelry site – however, the loveknitting option has proved a very non lucrative move as well as a hassle. As of yesterday, Raverly has released new information on what they will be offering pattern designers to remedy this situation with their own site!
“Beginning May 1st, we will handle the new EU VAT requirements. If you are using LoveKnitting, we will continue to give you an easy way to publish patterns to LK and sell them there but LoveKnitting will not be part of purchasing on Ravelry….” To read more click here
Etsy has decided to take responsibility as well and they are noted here in their blog as saying:
“…your buyers will be paying VAT as part of their total purchase price. We will calculate the VAT based on the location of the buyer and determine the VAT at the time of sale. Etsy will then remit the VAT to the appropriate taxing authority as required. We’ll share the specific details of how we’ll handle the collection process as soon as possible (and well before the tax filing deadline).” To read more click here
I am sad to say, that as of last week this is the most recent information that I can find on the EU VAT subject and how it relates to sales conducted through the Craftsy website. They are noted as saying:
“To date, Craftsy has acted as a venue on which individual designers can sell their patterns, with designers responsible for paying any and all required sales tax for their pattern sales. Currently, we are treating VAT the same way, with designers expected to collect and pay VAT.” To read more click here
Conclusion: At this time Ravelry and Etsy both have other options in line to help take care of this mess for pattern designers. Craftsy for some reason has decided to ignore the issue completely. I am not sure if it is because they are a free site and they collect no payment for themselves and maybe they are a different animal from Ravelry and Etsy who both take fees for sales conducted through their site? Who knows. I’m going to trust that they have done their tax research.
If you sell on your own website and you are collecting monies for digital goods to an EU country, you are liable for the remission of this tax. In this case you may want to contact a Certified Public Accountant. (If you use Ravelry buttons, then you are still utilizing the Ravelry site as a third party site.)
I hope this gives you the most up to date information on the subject and that you were able to take something away from this that will allow for the continued creation of wonderful works of art and masterpieces that make our little community so amazing!