VATMOSS...Alien invasion?

If you are part of the ever-growing European digital scene, you might have lost some sleep when you heard about a new tax rule that threatens to rattle every E-Service company out there. It doesn’t matter if you are selling children’s eBooks or fully-fledged SaaS platforms the situation is the same. Don’t worry B2B businesses…this doesn’t affect you.

So without further buzz, say hello to the VATMOSS (short for VAT Mini One Stop Shop)! This EU regulation coming into action on January 1st, 2015 will force digital service sellers to register for VAT in every country where their product is sold rather than just register at the place of production/supply.

Yes you heard right.

You remember how easy it was before for small businesses to simply go onto any payment processor’s site, copy their code, add it to their own site and boom, they had a payment button ready to go. With those simple 3 steps you could start selling digital products with the simple click of a link. VATMOSS will obliterate that! Performing those 3 steps after January 1st will make your business operations illegal. You will now need a lot more than 3 steps to get your E-Service running. Obtaining home addresses, IP addresses and country-specific VATs are just some of the obstacles that small businesses will need to jump before that same payment button becomes legal.

So just to get things cleared up, let’s look at a scenario. This is one that is running around blogs and affects about 23% of the web. You are a Wordpress theme creator in London who started his business a couple of months ago and is looking to sell in continental Europe. You’re top selling theme could fetch up to 60£ per download and you want to know what you would be facing if you decided to sell outside the UK. How would this look from an invoicing perspective? Let’s say you didn’t want to follow the sheep into the big Western European markets and chose to sell your theme directly to customers in Luxembourg (VAT 17%), Hungary (VAT 27%), Greece (VAT 23%) and Croatia (VAT 25%). You would quickly make the decision to stay out of three of those markets and stick with Luxembourg in order to keep your profits rolling. This would not only create an unfair situation for the seller but to all the buyers in countries with high VATs.

Now imagine the mess that this would create, not just with your finances, but with your sales pitch. If you decided to pursue those high VAT markets you would no longer be able to advertise all your E-Services at the same price on your website or on your monthly newsletter because such prices would change depending on the place where it would be purchased. You wouldn’t be able to sell your Learn on your Own Ruby on Rails video tutorials or your Christmas Dinner eBook to people in Cyprus and Finland at the same price. Your invoicing would have to turn into some chameleonesque solution that contemplated every single element of the surrounding scenario in order to adapt and comply to the smallest detail. It will be hell!

And that is not the end of it. You see, the VATMOSS rule will not only pose problems when considering your next market placement but it will also cause countless headaches when analyzing your current situation. Many digital service entrepreneurs and companies have been operating for quite a few years by now, specially since the sharing economy gave birth simultaneously to the individual craftsman movement that has swept through Europe. Imagine all those people on Payloadz and Sellfy selling digital services to the world. When the New Year celebrations tone down, they will have to face a hard, hard reality!

BUT DON’T PANIC!

We can help!

Here at Octobat we have been analyzing every single law and regulation that comes into play. And this one didn’t escape our eyes. The VATMOSS is a feat of strength in our books and we will succeed at conquering it. The idea is to look at case studies, flukes and random events that could trigger the regulation and to assess every detail with a magnifying glass.

We have been studying every single scenario that could arise in order to provide our clients with a simple task: to keep selling.

The rest…automatic invoicing, churn rate optimization, payment lifetime notifications and more…leave it to us.

Don’t be scared of regulation because it is in times like these that true champions arise. It is in times like these that market makers go from niche growers to global changers. Those E-Services and E-Service facilitators who manage to rise to the occasion will forever change their future and the future of others.

We want to HELP YOU!

We want everyone to feel comfortable before the changes take place, in less than a month, so we created a comprehensive visualization API to test the various scenarios that could affect your business. With just a few clicks you will have access to every single VAT in the EU in order to simulate cross-border sales and see the results.

Go ahead. Try it out.

Become a student of the game! Play with our VATMOSS simulator and contact us as soon as you have a question.

Octobat is ready for these new rules invasion! Are you?