ScriptFodder Sellers and VAT
What are the new VAT regulations?
On January 1, 2015, new regulations took effect on the sale of digital items to buyers in the EU.
The new regulations state that businesses selling digital goods to customers in European Union countries will be required to collect and pay VAT based on the VAT rates of the country where the customer is located--not on the rates of the country where the business is located.
The rule applies to any business selling digital goods and delivering them to consumers in the EU, regardless of where the business is located.
In order for us to allow our sellers to keep selling to European buyers we need to being charging VAT on items.
How do the new rules affect sellers?
ScriptFodder collects and pays VAT on behalf of all ScriptFodder sellers. It does not matter if the seller resides in the EU or not. We do this as described here.
This means you won’t have to process VAT returns on your items items sold on ScriptFodder to buyers in the EU.
To be clear, EU buyers – not ScriptFodder or sellers – will be paying VAT as part of their total purchase price.
How will the VAT rate applicable to individual sales be determined?
VAT will be determined based on the VAT rates of the country where the customer is located. Current VAT rates can be found here.
Why is VAT charged on my items when I’m based outside of the EU?
VAT on digital items is charged based on the buyer’s location, not where the seller is. If you sell an item to a buyer in the EU, they will be charged VAT on top of their order. It is something the buyer pays; not the seller.
Am I required to have a VAT ID?
Nope, all VAT is payed to the correct people on items by us, sellers do not have to do anything in addition for this change to take effect.
Filing Digital VAT on Your Tax Returns
ScriptFodder remits VAT collected on digital items to EU authorities. Sellers do not have to file VAT for sold items with their tax returns.
Changes to the current payment model
In order to achieve all this we have to change to a new payment processing system - currently any purchases are done directly from the buyer to seller and we do not act as a middleman. In order to process and handle VAT properly we need to change the system to split the payments, we will charge a handling fee of 5-10% on all script sales when the new payment system is implemented and we will take any VAT that is applied to items and remit it automatically on your behalf.
We will be removing monthly developer subscriptions and take a variable amount between 5-10% from every sale after VAT.
When will these changes take effect?
We are currently working very hard on the new system, an announcement will be made near the end of the month when we plan to release this.
Helpful Links
Flowchart explaining why all sales are require for VAT How ScriptFodder as a platform is require to handle VAT as a digital marketplace Current VAT rates can be found here.
Have you decided what percentage you'd take from sales with chained payments?
ByWebmasterat 12th of July 2016 16:08:36
Have you decided what percentage you'd take from sales with chained payments?
The standard rate for marketplaces is 30% but I feel that's far too much of a transition from our current model - we were thinking 10% or less with further reductions for bigger sellers.
I think 5% will be sufficient, but I'm okay with 7.5% if it's gonna help the website grow.
The website deserves more revenue to help the development along, plus it doesn't hurt the smaller devs. In some instances it may even help the smaller ones who don't do a lot of sales.
I grew and connected with ScriptFodder too much not to want to contribute in any way.
I'm OK with 5-10% 👌
What is a 'bigger seller'?
ByJacob // Back & working on updatesat 12th of July 2016 18:04:16
What is a 'bigger seller'?
We'd have to run the numbers before we decide on such. We've ran the numbers enough to know we can't take anything less than 6-8% without making the same as before, before VAT. With 10% we'd make a bit more than previously after VAT. Which would allow us to decrease the percentage for bigger sellers to reduce their loss in revenue due to this.
Right now there's a set fee of £10.49(roughly $15 pre-brexit) a month, but for someone who makes $500 a month that'd be $50 if we took 10% from them.
This is definitely the only good way to not require any of you to register for VAT though.
And what if we are VAT registered?
Then theoretically it's more profitable for you to let SF handle it, then your customers will pay it.
@Edit: and you can then lower price by the difference, and they'll pay the same amount (vat included)
Sellers are legally required to register for VAT when selling digital goods to consumers in the EU.
Well in France it's only required if you earn more than 10K/year (source : https://www.service-public.fr/professionnels-entreprises/vosdroits/F23570 )
By[ExtReM] Lapinat 12th of July 2016 22:08:25
Well in France it's only required if you earn more than 10K/year (source : https://www.service-public.fr/professionnels-entreprises/vosdroits/F23570 )
It's a requirement on all digital goods sold to EU consumers regardless of any threshold limits.
Personally I think this is a really good suggestion, as new developer will no longer need to worry about their sales amount as they won't lose money even if they get under $15 revenue per month, instead they can focus on their development work.
Would like to see this new system asap.
I'm not really sure on this.
Would it be better to register a company and get my VAT number or use SFs. I don't have to pay taxes anyway because I'm under 18 and doesn't earn the $6k you can earn without paying any taxes in Denmark
ByPatat 13th of July 2016 13:58:59
I'm not really sure on this.Would it be better to register a company and get my VAT number or use SFs. I don't have to pay taxes anyway because I'm under 18 and doesn't earn the $6k you can earn without paying any taxes in Denmark
Use SF's system, if you earn below 6K a year, then you'll be charged less than dev sub.
ByPatat 13th of July 2016 13:58:59
I'm not really sure on this.Would it be better to register a company and get my VAT number or use SFs. I don't have to pay taxes anyway because I'm under 18 and doesn't earn the $6k you can earn without paying any taxes in Denmark
Every digital good sold to EU consumers must have VAT applied, there's no exemptions.
Yes, but as far as I understand the seller actually doesn't pay VAT for selling, only the buyer will pay VAT. Or did I sleep when we got taught this in school?
ByPatat 13th of July 2016 16:07:52
Yes, but as far as I understand the seller actually doesn't pay VAT for selling, only the buyer will pay VAT. Or did I sleep when we got taught this in school?
Yeah the buyer pays VAT but the seller is responsible for delivering that money to the correct government entities. In this case it doesn't make sense for everyone on this site to require a VAT registered company for the relatively small earnings they make. Instead we can pay VAT to each local government at the correct tax rates for you - if anyone seriously wants to handle their own VAT that's cool I guess there's no benefits to it though just extra work for you.
So what if I don't use your system? $15 a month?