VAT MOSS changes

I just read that the EU have decided to make it easier for small businesses to deal with that VAT MOSS mess (selling digital services within EU) - if you sell less than 10.000 euros in cross-border sales you will not have to deal with VAT MOSS. (Should have been higher than 10K euro imo, but hey that is a good start)

So I wonder if Patreon are planning accordingly too? I don’t want my patrons to have to pay VAT when they are not supposed to.

“Companies whose annual cross-border net sales amount to less than 10,000 euros will continue to be able to use the VAT rules in their home country.
Member countries will have until 31 December 2018 to incorporate the regulations into national laws and regulations.”

http://europa.eu/rapid/press-release_IP-17-4404_en.htm

Please correct me if I’m wrong, but I don’t know if those rules will change much for us. Cause as a patreon creator you aren’t selling your services directly to a client, but rather to Patreon who in turn “sell” them to your patreon supporters. (They collect the money and give the clients access to your content, just like if you sell an app via appstore or similar marketplaces) If you were to create your own website where you sell your content via an automatic “pay and gain access” system, you’d be affected by the new rules and not have to bother with the VAT MOSS, that’s all as far as I understand it.

In fact, reading the link it seems like they’ll make the rules even stricter in regards to marketplaces, applying VAT MOSS to physical goods as well as electronic services?

Again, correct me if I’m wrong, ^^;;

Ooooh that’s right! I think? Hmmm, does the threshold apply to Patreon (/the online marketplace) then, and not me?

Are Patreon responsible for collecting VAT on digital sales made by companies in the EU, to consumers in EU, if the company is below the MOSSVAT threshold?
(I mean they’re not responsible when I sell physical items from an EU country to another EU country.)

This says they are responsible, when it’s a company in the US: "make large online marketplaces responsible for ensuring VAT is collected on sales on their platforms that are made by companies in non-EU countries to EU consumers"
I guess that includes both physical and digital sales.

(Just did a bunch of research on this for my work.)

SugaryViolet is correct. The business on the billing is the one who has to pay VAT. Since Patreon runs everything through their payment system and “Patreon” shows up on the billings, they are the ones who must pay VAT.

And yes, the EU has created rules to also cover digital services under VAT laws.

Thanks for chiming in!
So because they are a marketplace, they have to pay VAT and that threshold will be on them?
If they were not a marketplace, and just a regular company in the US, they wouldn’t have to pay VAT when selling to the EU. Because VAT-MOSS applies to companies and consumers within EU.
And these new VAT rules seem to apply to “large online marketplaces” with companies (creators) outside EU, and consumers (patrons) within EU.

It just seems weird that they would have to add VAT, if the company/creator is in the EU and is under the threshold, and the marketplace/Patreon are in the US. The reason they have to collect the VAT-MOSS in the first place is because I sell digital items from the EU to folks in the EU - therefor VAT-MOSS applies to me. But with the new rules VAT-MOSS shouldn’t be applied to me.

But you are probably right. I just sent an email to the EU commission, I hope I get a clear answer. ^^

So I guess after the new rules, Patreon will have to add VAT also to pledges made from EU patrons to outside-EU creators.

Thinking about Etsy, I guess they would be affected by these new rules too. For folks that sell from outside the EU, to customers within EU.
…Etsy hasn’t even provided us with a usable VAT tool for the EU shops yet, which is bonkers imo. :expressionless:

If they were not a marketplace, and just a regular company in the US, they wouldn’t have to pay VAT when selling to the EU. Because VAT-MOSS applies to companies and consumers within EU.

They wouldn’t have to pay VAT if selling an electronic service manually to a client (Like if they manually send an invoice, gets paid and emails a file to the client), but the moment it becomes an automatic electronic service (like a “pay -> get download link” system) they’re affected by VAT MOSS, even if they’re outside of the EU, and thus have to collect VAT from EU clients.

So I guess after the new rules, Patreon will have to add VAT also to pledges made from EU patrons to outside-EU creators.

This was already the case. Patrons from the EU have to pay VAT on electronic services they buy, even if the creator is outside of the EU. As a Swede, when I’ve pledged to US creators I’ve had to pay 25% VAT.

We already pay VAT on pledges made to non-EU creators. I’m based in the UK and ALL my pledges have VAT added to them. though none of the creators are in the EU.

Don’t you think Patreon got this wrong? As someone from Germany, I don’t believe I’m paying VAT for any non-EU digital service, like my Australian-based e-mail service or my US-based hosting service. Only Patreon seems to be adding 19% German VAT when I’m paying non-EU creators.

Oh I do! I think it’s nonsense and I’ve complained about this before.

Its also possible that those other things you mentioned are in the wrong, or that you’re buying those as a business rather than a private person. VATMOSS only applies when selling to private EU-citizens, not businesses. If I buy a music track off bandcamp from a non-EU musician I still pay VAT, same if I buy an app on appstore from a non-EU app maker, but my web hosting I bought through my company I don’t pay any VAT on, regular or MOSS.

The VATMOSS stuff was created (among other things) to prevent businesses from too easily get away from paying VAT when selling to EU customers. With that said its a horribly flawed and complicated system, with a lot of kinks left to smoothen out.

As an off topic comment to illustrate one of its many flaws: If I buy a physical item in the name of my company (I’m a sole trader) I can buy it VAT free, since VAT should never be a business expense, and if I pay it anyway I should get the money back from the tax agency. However, if a digital service doesn’t let me choose to sign up as my business (dropbox plus for example) and I end up paying VATMOSS, I’ll never see those VAT monies again.VATMOSS is only supposed to be charged to private citizens, so you can’t deduct it as a business. Its really really dumb, since my private self = my business as a sole trader, :V Yea, I hate VATMOSS to bits…

1 Like

Edit: Im editing this shit out because Im confusing myself haha. Apparently also digital sales to the EU is affected by VATMOSS, I didnt know that.

Question, do also patrons from outside EU pay VAT to a creator within EU?

Nope, people from outside the EU don’t pay VAT when pledging to a EU creator.

1 Like

Ok good, as I thought, then I have the correct info on my Patreon page. :sweat_smile:

Then I suppose things will just stay the same with the VAT, thanks for clearing that up :blush: I had spaced out on the part with VATMOSS being applied to also digital sales to the EU.

One good thing with the new threshold is that I could move my webshop from Etsy to my own website if I want and not have to deal with VATMOSS when selling PDF tutorials and such.

As I assume the 10k euro threshold is applied to the marketplace (Patreon) and not the company (creator) - we won’t get away from the VATMOSS here on Patreon(?)

Here’s a screenshot of my pledges. Only one of these creators is in the EU, but it makes no difference: as I am in the EU, I pay VAT on ALL of them.

11