“Imagine an entire generation of digital businesses wiped out. On January 1 2015, this nightmare may come true” – @Henry__Hyde on Twitter
It doesn’t matter where in the world you are located, the new EU VAT law that goes into effect in 2015 impacts businesses worldwide.
Digital microbusinesses are angry, frustrated, overwhelmed and stressed out. And they planned on closing their doors on December 31st.
The EU’s new regulations require any digital business that sells to anyone in the EU to collect a Value Added Tax (VAT), based on the customer’s location. Not on the seller’s location. It’s a complex new tax system, that puts an enormous amount of stress on any microbusiness. They simply don’t have the resources to handle the amount of paperwork required to comply.
As study done by the EU VAT Action Team, shows some devastating consequences for microbusinesses. Here’s a few sobering statistics:
- Only 4% expect to be able to comply with before January 1st
- 60% of affected businesses sell direct to their customers, not through third party platforms (like Amazon or the App store)
- 50% believe they won’t be able to comply
- 20% will increase their prices to handle the extra admin costs
- 10% are going to be closing their business completely by January 1st
Plus, many non-EU digital businesses will just stop selling to EU consumers – which may or may not be considered discriminatory. When it’s government red tape versus a solopreneur, the solopreneur is clearly on the losing end.
One of the biggest issues is finding affordable eCommerce solutions. Some big names in eCommerce aren’t doing enough, and some are charging premium prices for any VAT service. Again, this new law impacts the smallest businesses in the world. Those who don’t have the budget to pay for expensive overhead.
This includes grandmothers selling knitting patterns on platforms like Etsy. They’re the ones who are being forced out of business.
It’s shameful for governments to put hard-working people out of business, just to collect taxes. Many are working to overturn or change these rules, or at least make an exemption for microbusinesses. But for now, it’s a harsh reality.
However, there are a few eCommerce platforms and services that offer free solutions that may help these businesses stay open.
Selz: Free Solution Features
Selz is an eCommerce platform that allows users to sell digital products either from the seller’s website, or sellers can create a free Selz store.
To solve the EU VAT issue, Selz released several new features including:
- EU VAT reporting
- Order exports include EU VAT data
- Ability to block specific countries / zones
Selz is offering this suite of EU VAT solutions free for all their users. Similar eCommerce platforms charge a premium price for this reporting system.
WooCommerce EU VAT Compliance: Free Version
- Identify customers location
- The ability to block EU sales (feature not released yet)
- Record evidence (to comply with any audits)
- Entering and maintaining each country’s VAT rates
- Distinguishes VAT from other taxes
The premium version offers additional features, but one difference is the plugin offers a licensing option, not a monthly fee. This means even the premium version is more affordable than many other options.
Taxamo: Free Option Available
Taxamo is a real-time Software as a Service (SaaS) solution for compliance with 2015 EU VAT rules on the sale of e-services. It is not an eCommerce platform, but integrates with existing checkout processes like PayPal and Stripe.
They have a free start option that is free for up to 20 transactions per month. They also offer a pay-as-you-go option for up to 2000 transactions.
SendOwl: Free Solution Features
SendOwl is another eCommerce platforms for digital products. Similar to the Selz solutions, SendOwl offers sellers the following VAT support:
- Automatically tracks EU VAT rates and charges the correct amount based on customers country
- Stores evidence of the buyer’s location for up to 10 years
- Providing easy set-up for compliance and are working on an EU blocking solution
SendOwl wrote a special blog post outlining how they will support sellers: New EU Vat rules on 1st January 2015 that explaines everything they are doing to help with compliance.
Finding a Cheap Solution
The new 2015 EU VAT rules are a nightmare for digital businesses across the world. These solutions can’t do anything to change the compliance requirements, but they are a step in the right directions for saving microbusinesses from shutting down.
If 50% of affected businesses believe they won’t be able to comply, these free solutions give them options that can help. Instead of closing down, increasing prices to offset administrative costs, or completely blocking EU consumers, try choosing an eCommerce platform that is trying to help sellers stay in business.
They can’t solve the EU VAT nightmare, but they can help.
This article was syndicated from Business 2 Community: Will the EU VAT Nightmare Close Your Business in 2015? Free Solutions that Can Help
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