It's annoying how out of touch the people are who come up with these rules. The good news is that if you sell through a store like Steam, Desura or other stores they are responsible for it, so it may not hurt as many developers as first thought, but anyone who can't get on a store will get burnt badly.
This basically means that any small developer who is too small to get onto a store that properly implements these rules will have to be VAT registered, and that's even if you only make £1.
You will need to store country details for all your customers for ~28 countries. Instead of charging say UK VAT if you're based in the UK, you would do VAT for the country of the customer. This is utter madness for any small business to manage.
QuoteAfter January 1st, not only will they have to pay VAT on sales made in Europe, they will also have to VAT-register, file quarterly reports and keep detailed records on all their sales for a period of 10 years. For someone making a little money on the side from selling games (or digital comics, or e-books), it’s just not worth the cost and hassle. Many independent creators have already said they are being forced to choose between breaking the law and stopping selling digital things on the Internet in the New Year. It’s not worth the cost of compliance.
What a bloody mess. Luckily stores like Itch.io exist which are already working on implementing it, and Itch.io is apparently the easiest store to get your game on. Looks like they may get a lot more smaller indie developers pushing games to their store:
@lucyamorris It is something that we're working on. The announcement was very sudden but we're hoping to have something ready b4 2015.— itch.io (@itchio) December 17, 2014
We shot off a message to Desura and they confirmed people selling games through them are fine too:
@gamingonlinux Yes we are... We've been in compliance throughout 2014— Desura (@Desura) December 17, 2014
No word back from Humble Store, but we imagine it's the same for them.
It's also worth noting that developers that opted to use FastSpring don't have to worry, as that does it for them too:
seem to be repeating myself massively - if you're worried about these VAT issues then use Fastspring https://t.co/LGCxZV4lfH— Paul Mode7 (@mode7games) December 17, 2014
It isn't known how this affects Patreon, Kickstarter or IndieGoGo:
See this video for more info:
I see where the government is coming from; they want to stop massive corps from using dodgy tax rules to pay really low VAT and that does reduce a governments income, but removing exceptions for smaller businesses can destroy them for admin time and costs.
There is a rather large petition growing here to try to get it changed. I urge anyone in the UK to sign it, now!
It's not clear right now how it affects us, and we have shot off a message to Patreon to ask about it.