New EU Law about VAT on Sale of Digital Property

The new EU law about VAT on the sale of digital property went into effect January 1st, and I am so pleased that Ravelry (where I sell my digital patterns) has decided to co-operate with the British website Loveknitting, blog.loveknitting.com/loveknitting-ravelry-team-up-for-hassle-free-eu-digital-pattern-sales, who will deal with paying VAT to all the different EU countries, dependent on the buyer’s country, on my behalf. The announcement of this VAT led to an outrage because it affects not only the intended large internet companies such as Amazon but all of us micro businesses (I think nano businesses, fits even better for some of us) too. This article explains it well: How-the-EU-is-throttling-online-business-with-idiotic-VAT-reform. Here is a blogpost about the co-operation between Loveknitting and Ravelry: blog.loveknitting.com/update-loveknitting-ravelry-team-up-for-hassle-free-eu-digital-pattern-sales.

I have chosen to continue to sell my patterns to EU citizens – Norway is not part of the EU, only the EEA (European Economic Agreement; working with the EU) – through Loveknitting, while other designers have decided to block sales of patterns to customers in the EU (temporarily or permantly), or stop selling patterns completely, or pay the VAT themselves. I checked my Ravelry sales by country, and discovered that I sell 3 times as many patterns to the US as I do to Norway and Denmark, followed by Germany.

So any EU customer can either buy any of my patterns from Ravelry and be re-directed to Loveknitting where they will need to pay the added VAT according to their country’s VAT percentage, or log on and buy it directly from Loveknitting.

I was in the second selected batch of testers on Ravelry, and have used a considerable amount of time during Christmas editing my pattern descriptions to fit with Loveknitting’s formatting. There are still a few glitches that needs to be fixed before it is up, and running perfectly. If you are a member of Ravelry you can follow the discussions, the options and the testing in the Ravelry Shopkeepers Group. The Loveknitting option is giving me an additional 6 months (free trial period) to look into other solutions such as picking an EU country (unless you are a resident in one, that is), e.g. UK and Ireland, and register with the VATMOSS (Mini One Stop Shop) – nicknamed VATMESS – or hoping that Ravelry’s programmer Casey (code monkey is his preferred title) will figure out a smart technical solution to this mess. In the meantime I will try to focus on designing instead. Here is more recommended reading:

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2 Responses to New EU Law about VAT on Sale of Digital Property

  1. Tracy A. says:

    This is a part of doing business that never occurred to me would affect you. I hope that you are able to continue to market your patterns satisfactorily!

    • No, me neither, Tracy! I live in hope that a threshold will be announced so that all of us nano businesses can remain outside of this law. Yes, thank you, I will certainly do my best!

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