Cash, books and the EU

No, it’s not about the EU’s cashbooks never balancing. It’s about two separate things with the EU as a common theme.

First, there is Outrage! within UKIP because Smoky Nige has accepted EU funding for his new grouping.

I don’t see the problem. As the article says, if Smoky Nige’s anti-EU group refused the money, the EU would give it to a pro-EU group instead. The EU will never consider giving a single penny of tax back to the taxpayer. Neither will the Government – in whatever country. Once they have it, they will spend it.

Besides, this is the EU having to pay its own tormentors. To a smoker that looks like karma.

Second, the EU have decided to change the VAT rules on eBooks. Paper books are VAT-free but eBooks are not and never have been. They were VAT-ed at a low rate and you paid the rate that applied in the country you bought it from. Now they are to be fully VAT-ed and you pay the rate in your country, no matter which country the servers reside in.

A snippet from Amazon’s email to authors on the matter (note that this is not an exclusively Amazon issue, it applies to all eBook retailers operating in the EU and the complexity and expense will destroy the small ones. Which is probably the point of it):

On January 1, 2015, European Union (EU) tax laws regarding the taxation of digital products (including eBooks) will change: previously, Value Added Tax (VAT) was applied based on the seller’s country – as of January 1st, VAT will be applied based on the buyer’s country. As a result, starting on January 1st, KDP authors must set list prices to be inclusive of VAT. We will also make a one-time adjustment for existing books published through KDP to move from VAT-exclusive list prices to list prices which include VAT. We’ll put these changes into effect starting January 1st; you may always change your prices at any time, but you do not need to take any action unless you wish to do so.

It is not yet clear what happens if you buy an eBook from a server based in the USA, but the rules suggest that you would pay VAT at your local rate, no matter what. The interesting part is – what if someone in the USA buys a copy from an EU server? They should pay no VAT at all in that case.

It means that after Jan 1st I will have to set an eBook price for every EU country based on their current VAT theft, and adjust it for each book every time they change their theft rate. Or I can set one fixed price and just put up with lower royalties for the same book when it’s bought in a high-VAT country.

This is not good news for authors at all. It makes self-publishing and small-publishing murderously complex. All those low-priced eBooks are going to be more expensive from January 1st but the authors get not a penny more. Neither do publishers or booksellers. All the extra money goes into the EU tax pot to be wasted.

So yes, I am with Smoky Nige on this one. The more he bleeds from those damn vampires the better. I’d rather see the money go to those who want to put a stake through that vile EU heart than to any other cause at all.

Of course, I’d much rather the EU or government didn’t steal so much of it in the first place – but that will never be an option.

They are addicted to other people’s money. It’s so much easier than actually working for it.


16 thoughts on “Cash, books and the EU

  1. I hadn’t known this about VAT and I’m registered and was considering going into eBooks as a wannabe writer as hopefully a more effective route to changing attitudes than has hitherto been the case.

    But that’s probably the reason for this. It’s like a book-burning exercise to get rid of writers who cannot get published by the mainstream. I’m thinking of Sean Gabb of the Libertarian Alliance, who (from memory) has had several historical novels published by Hodder and Stoughton, but they wanted him to change some aspects of his latest futuristic novel The Break, so he self-published this one just recently.

    Like this Telegraph article suggests, many writers simply won’t bother any more: New EU VAT rules threaten to kill UK micro firms.

    It is also puzzling why there is VAT on eBooks, but not on actual books when the manufacture and distribution of the latter is worse for the environment. Won’t the green god be miffed? Or is the EU waiting until eBooks are more popular, to then insist that VAT is added to all books to create a “level playing field”?

    We have to remember that something they do today might be for a purpose in many years’ time.

    The way around it would have been to register for VAT (you can do it voluntarily, regardless of turnover) and take advantage of MOSS (mini one-stop shop) which means the different rates would all be taken care of for you, but you would have to charge VAT on everything you sold, like on Ebay.

    But… a subsequent article a fortnight ago about a useful ‘tweak’ in the rules means that you can now get around this by only charging VAT on eBooks and nothing else if your total turnover is below the VAT threshold.

    Unless Brussels decides that the UK is acting “unlawfully”!

    One benefit of this new rule is that huge companies headquartering in Luxembourg because their VAT rate is “only” 15% will have to start paying for their apparent tax-evading move. In fact, they’ll probably relocate to low-wage countries like Romania.


  2. Quite recently Nigel Farage tried to turn UKIP into part of a pan European poliitical party – in pursuit of ever closer union with EU funds. Members voted against it and I had an eye/ear witness account that he remarked ” that’s cost me a million quid”. The members were not consulted this time and will be under great pressure to shut up and maintain unity with the approaching election. Those who know the way Farage operates will recognise the technique. Farage is a remarkably energetic, able communicator who is giving a voice to people whom the main parties have ignored for decades. He is very good at thinking on his feet and winning the next trick. But that is not enough to make the UKIP phenomenon sustainable as a stable political force. There has to be a scaffolding of principle and policy beyond the cult of personality and opportunism. Many who support the cause of independence regret that the party has not taken advantage of the resources and funding already available from its 15 years of membership of the EU parliament to do that.

    It is one of life’s little ironies that the leadership is riding roughshod over the earlier democratic decision of its members to join a group which is supposedly devoted to – er – promoting direct democracy!


    • UKIP need to control their loons. All parties have them but those parties are already established. The MSM only concentrate on UKIP loons – the party does need to be tighter.


  3. So much for a single unified market then – one of the few good ideas the EEC had was to avoid this sort of nonsense. how long before we start hearing complaints from the usual suspects that companies are “avoiding” paying UK VAT when they sell in the UK by paying lower rates of VAT elsewhere in the EU?


  4. LI,
    Your surmise about ‘destroying the small ones’ is correct. And it’s not just ebooks. It applies to all online sales. For large companies the cost involved in setting up the logistics is trivial. (I wonder who lobbied for it?) For small ones – a nightmare. Not just charging the correct VAT, but also sending it to the appropriate country’s tax office.
    OTOH, I see an opportunity for a small software house to build a cheap package to bolt on to any seller’s website. Sell it really cheap, pile it high, and they have a winner.


  5. I am an accountant, with a first small effort on Kindle and the others. Busy at the moment, but will read up on the new rules and if I have anything useful to say, will drop you an email.

    Two points: VAT will be calculated on the customer’s home rate, so sales outside the EU (Spit) will be VAT-free; to the USA, for instance.

    Also, paper books remain, for the moment, free of VAT. Amazon has a division where you can make your titles available as a paper copy. I think the royalty is 60%. I am going to look at that before I finish the next slim volume.


    • The really interesting part comes when someone in the EU buys an ebook from the US. The US seller is going to say ‘get stuffed’ to the VAT.

      So will we get charged import duties on electronic transmissions? How long before it applieds to blogs, newspapers etc? This is a very big can of worms.

      Amazon’s print self-publishing is Createspace. I have books in it. It costs nothing, well worth doing.


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