There have been some major changes as to how I sell my products, that as of 1st January 2015 have come in to effect. It’s all due to the new EU VAT legislation regarding digital products that I previously wrote about here.
Under this new EU law it states that third party sites like Craftsy and Etsy that I sell through, should be the ones responsible for dealing with collecting and paying the VAT due on any EU sales. However, both Etsy and Craftsy have stated that they won’t deal with paying the VAT. Which is one of several reasons why this law is so hard on businesses like mine, as it had assumed that third party sites would deal with the VAT and not impact micro-businesses.
As I stated previously, registering and dealing with VAT payments myself is too costly, particularly when only 1% of my digital sales goes to other EU countries (outside the UK) which would mean about £5/year or so VAT due being paid to about 10 different countries i.e. each EU country would receive pennies from these sales, it would cost the EU countries more to process and collect the payment than what is owed. It’s completely ridiculous, which is why a minimum threshold is needed. EU VAT Action is campaigning on behalf of micro businesses and consumers. I already have heard of several different sellers saying they will block EU customers entirely, so not only will EU customers find prices of digital products increase due to VAT being added on, but we’ll also find that the selection of products we can purchase be greatly reduced as other sellers refuse to sell to us. So please think about signing the petition.
Craftsy
I no longer sell my PDF tutorials on Craftsy. I can’t currently legally sell via their website. Even if I was willing to register and deal with paying the VAT due on EU sales, Craftsy don’t currently provide the appropriate customer location information that is required under the law. As they also don’t allow me to select which countries I wish to sell to (thereby not allowing me to exclude EU countries) I can no longer sell via their site. This is the reply I received from Craftsy on 23rd December 2014:
A. Our engineering team is working on building out a system that will provide you with the country that a buyer was in when purchasing your pattern which we can provide you as part of the downloadable CSV for all of your pattern sales. You will still need to determine taxes and fees appropriately. For questions see: https://www.gov.uk/vat-on-digital-services-in-the-eu
More information to come on this! We’re aiming to have this live in January, and I will work with our engineering team to see what we can do to back populate information for sales made in January before this is live.
B. As far as preventing payments to certainly countries, we’re still working with PayPal to determine if this is possible and if so, how that affects those that attempt to purchase your patterns – ie what that experience looks like to your potential customers on Craftsy.
However, with no date of when they will implement limiting to certain countries, I have had to stop selling through them.
Purple Wyvern Jewels Site
I did have purplewyvernjewels.co.uk set up to sell to anywhere in the world. However, in order to limit where I sell my PDF tutorials to, I can only do that by limiting the overall countries that the entire site sells to, as I am unable to limit based on specific listings. As I’ve only ever had UK customers purchase through this site, I’ve limited the site to UK customers only.
Etsy
Any customer can purchase my physical products via my Etsy shop. However, I have had to change my PDF tutorials to being emailed out (as you can’t limit countries if the items are downloadable), plus I’ve currently limited my tutorial items to Australia, Canada, New Zealand, UK and USA customers as they are my target customer base. I can add other countries if a customer wishes (but not EU ones), but the way Etsy allows you to select which countries you sell to makes it difficult to exclude only a few. In this case I don’t want to sell to EU countries outside the UK, but there is no easy option to choose, instead you have to add every single other country in the world to say you will sell to them, which is why I’ve so far just added my target market countries.
Etsy wrote a blog post on 22nd December 2014 (after knowing about the EU law change since June 2014) and is the first official response they provided any of their sellers. They state:
1) Providing information on buyer countries: Beginning in January, you’ll be able to verify the country of your buyers.
2) Control over where you sell items: We’ve heard from you that you’d like to be able to control the countries in which you sell digital items. We are looking into the feasibility of this and will update you in early 2015.
However, with no date as to when they will implement any of this, it’s a little bit late for an awful lot of sellers on Etsy. I have not been impressed with their communication on the issue, and even worse some Etsy sellers only found out from an email Etsy sent out on 31st December 2014, even though they put a blog post up the week before about it all.
Payhip
Payhip is a company I came across while searching for somewhere that I could legally sell my PDF tutorials through to EU customers, preferably somewhere that allows digital downloads. I was looking for a site that would not only deal with collecting the VAT, but that would pay it on my behalf to the appropriate authorities, so that I wouldn’t have to deal with the tiny amount that would be due for the amount of EU non-UK sales I typically get. So I’ve specifically set up an account on payhip at payhip.com/purplewyvernjewels for EU customers outside the UK to be able to purchase my tutorials, although anyone in the world can purchase via this site. I’ve set my prices on Payhip to be VAT inclusive, so the price you see, is the price that you pay. I’m currently still setting this up, so not all of the tutorials are currently on there, but I will be adding all of my tutorials over the next few days.
Having found a website that will still enable me to sell my tutorials to EU customers, allows me to continue selling my tutorials anywhere. As if I didn’t sell to other EU countries, I could be breaking the EU anti-discrimination law, by refusing to sell to particular EU countries. In order to comply and stay legal with selling my tutorials I will be taking a 29% loss on my digital sales by not selling on Craftsy anymore, but I’ve at least managed to find a solution that allows me to keep selling my tutorials. I have heard of others that have stopped selling entirely as they can’t currently find a solution that works for their business.
Overview Of Where You Can Purchase
| Customer Location |
purplewyvernjewels.co.uk |
Etsy Site |
Payhip Site |
| UK |
physical & digital products |
physical & digital products |
digital products |
| EU (non-UK) Countries |
– |
physical products |
digital products |
| Everywhere Else |
– |
physical & digital products |
digital products |
I also sell a limited selection of physical products to anyone through Dawanda.
Purple Wyvern Jewels 