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New EU Tax Rule Could Ruin A Lot Of Indie Developers

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Not something we cover very often, but it seems the EU is introducing new rules that could really ruin things for indie developers. It could also cause price changes across many stores.

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.

Source

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:

@kickstarter @Patreon @Indiegogo do you know how #VATMOSS will affect crowd funding creators from Jan 2015? Wont this cripple your business?

Owen Jollands (@ComicColorist) December 9, 2014


See this video for more info:
https://www.youtube.com/watch?v=cZdDIVNaL18

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. Article taken from GamingOnLinux.com.
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25 comments
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Segata Sanshiro 17 December 2014 at 10:31 pm UTC
I find these kind of measures pretty hilarious. Those in power need to be seen doing things against major issues like tax evasion, which are ultimately out of their power since the entire global economy is completely dependent on corporate tax evasion.

So what do they do? Token gestures like this which makes no real difference on the grand scheme of things other than to make headlines and only hurts the little guy while Amazon, HSBC (and Valve) and countless others continue to pay nothing. It's kind of ridiculous that Valve S.A.R.L (subsidiary based in Luxembourg) most likely pays next to no tax while some indie devs may have to put their businesses at risk so some people somewhere can score some political points.

Remember a thing a couple of years ago where HMRC would "name and shame" tax evaders and create greater transparency. People expected the likes of Barclays, Vodaphone, etc. but all we got was some small businesses like carpet layers. That same year I believe those considerably larger companies payed around 1% corporation tax.
DrMcCoy 17 December 2014 at 10:35 pm UTC
QuoteThis 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 in the UK

Not quite. You have to be registered (*) at one "Mini One Stop Shop" (MOSS), not necessarily the UK. Every EU member should have one, so if you're already living in the EU, you should probably register at your local MOSS.

In Germany, for example, this thing is called the "Kleine einzige Anmeldestelle" (KEA) and it's part of the Bundeszentralamt für Steuern.

EDIT: (*) Well, you don't have to, either. You could just do all the VAT crap for every EU member state yourself.
liamdawe 17 December 2014 at 10:36 pm UTC
Sadly, it will probably mean shutting down our Patreon. Since that would most likely be classed under a service of giving users GOL Premium. From what I have seen Patreon aren't replying to people about it.
liamdawe 17 December 2014 at 10:38 pm UTC
DrMcCoy
QuoteThis 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 in the UK
Not quite. You have to be registered at one "Mini One Stop Shop" (MOSS), not necessarily the UK. Every EU member should have one, so if you're already living in the EU, you should probably register at your local MOSS.

In Germany, for example, this thing is called the "Kleine einzige Anmeldestelle" (KEA) and it's part of the Bundeszentralamt für Steuern.

Ah yeah, I was writing from a UK point, but have removed that small reference as this is EU-wide.
Segata Sanshiro 17 December 2014 at 10:41 pm UTC
liamdaweSadly, it will probably mean shutting down our Patreon. Since that would most likely be classed under a service of giving users GOL Premium. From what I have seen Patreon aren't replying to people about it.

You could register as a non-profit... Depends if you think its worth the hassle though (no idea how easy or difficult it is in the UK unfortunately).
DrMcCoy 17 December 2014 at 10:47 pm UTC
Hmm, well, Patreon does the billing and administrative things. You probably don't even know where the people giving you money live, right?

So yeah, this is something Patreon will have to handle. They will have to react to that before long. This is something concerning nearly all people getting money through Patreon.
liamdawe 17 December 2014 at 10:50 pm UTC
DrMcCoyHmm, well, Patreon does the billing and administrative things. You probably don't even know where the people giving you money live, right?

So yeah, this is something Patreon will have to handle. They will have to react to that before long. This is something concerning nearly all people getting money through Patreon.

It's quite disturbing they are being quiet on it. Seen many complaints across twitter of no one getting a reply out of them.
Belarrius 17 December 2014 at 11:52 pm UTC
I'm french, i'm live in a country with a LOOOOOOOOOOOOOOOOOOOOOT ot tax....... Tax for USB drive/Hard Drive etc.... Grrr....
Kiba 17 December 2014 at 11:55 pm UTC
Fuck EU, the peoples of southern europe are tired of this monopolistic shit.
mao_dze_dun 17 December 2014 at 11:57 pm UTC
I'm sorry but I'll have to disagree with the author. While it's an obvious inconvenience for the small developers this is a matter that goes way beyond gaming and aims to solve a much more important problem. You know how big companies operating in the states sell their production in America but pay taxes elsewhere? That hurts the national budget. So it does in Europe. Getting this rule means more fair taxation could be in place and more money would go to public services like health care and eduction or even subsidies for small, medium and large businesses. As much as I feel for indie developers this is one of these cases where the need of the many outweigh the need of the few. Plus, I'm sure they'll find a way. Worst case scenario - they'll use Skrill and PayPal for checkout and let them handle at least part of the administrative bullcrap.
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