Posts by collis

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collis Envato team says

Collis, what about ThemePunch case?

Hi prestahome, sorry I can’t comment on a specific authors situation except to say that if you’re concerned about something specific about your own, please do get in touch with taxinfo@envato. I think I mentioned I’ve had calls with authors who had something particular they needed assistance with, and we do our best to help in whatever ways we can.

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collis Envato team says

Hi all, lots of good questions, I have answers for some – and am working answers for others. I tried to pick out the main ones and put them in below.


Hi Collis, what about countries and their authors that they are not members of EU, but they are located in Europe (geographically)?

VAT will be added for all EU buyers (unless they provide evidence of being a business), regardless of where the author/seller is. However the compliance (charging the VAT, collecting it, giving it to the EU authorities) will be managed by Envato. So there should be little to no burden for authors.


1. As things stand at the moment, should the authors pay VAT or any kind of taxes on the money they make on Envato Market? 2. What about when things will settle down with the new changes?

1. You should consult your tax advisor on what taxes you need to pay in your country/jurisdiction, as you might guess I can’t give an answer on something like “any kind of taxes”. I’m working on more answers about VAT, though there’s lots of detail and dependencies on country regulations, so for now it’s still ‘talk to your tax advisor’ and if you wish to discuss your specific situation, email taxinfo@envato.com and we’ll see if we can provide extra details.

2. As of January 1st, 2015, Envato Market will manage VAT compliance to EU buyers. So there should be minimal, if anything, for an author to do.


My question: if i own a company who don’t pay VAT, inside of country or outside, doesn’t matter (some UE countries allow that business organization), why Envato will charge VAT? I mean who can check if each market authors business are eligible for VAT or not?

Charging VAT to EU Buyers will be irrespective of whether an author is from the EU or not, and whether they are registered or not. All EU non-business buyers will have VAT added, and Envato will manage the compliance (determining the rate, collecting it, sending it, etc).


Now it affects all users as well, great… If I am the seller, why do I have to pay VAT for people for which my country charges no VAT for. My country does not have a specific VAT for selling people in EU.

The way the EU laws work is that it’s Europe’s buyers who are charged VAT. This article from Forbes might help explain a bit more.

I’d point out that the introduction of VAT won’t affect author income. Depending on whether they are a business or not, the buyer may pay extra which will go straight to an EU authority, and the rest of the transaction remains the same.


I’m so curious how the country of residence will be determined.
The EU has a number of regulations covering how this is to be determined. For example you can see some guidance here on the UK’s gov.uk site about recording “2 pieces of non-contradictory evidence): https://www.gov.uk/government/publications/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop/vat-supplying-digital-services-and-the-vat-mini-one-stop-shop

3. If it is true that authors are the sellers then that means authors in many (but not all) U.S. states are required to collect sales tax from customers who reside in their state.

- Has Envato looked into whether or not each of the 50 states will see it the same way as Envato does? I wonder if they see Envato as the seller, since Envato is collecting the payment or if they see the author as the seller simply because Envato says so.

- If any of the states agree with Envato, what are Envato’s plans for dealing with this? Authors are currently not able to collect sales tax.

- Lastly, if it proves true that authors are sellers, will authors be given full access to order/customer information and be able to process refunds at their discretion? If responsibility is going to be put on authors as sellers then authors need to be treated as true sellers. It should be an equal trade-off.

We’re currently working on a deep dive of how US sales tax will be managed, and we’re looking for solutions to remove any burden from authors. As you probably know the US sales tax system is quite complex and there is a lot of variance on what is taxable, where and by whom. We’ll have more information on how we’ll manage this soon.

Good question about what are the benefits of the ‘direct’ model. More marketing tools, portfolio/shopfront tools and refund tools are logical additions to Envato Market.


1. So if the buyer should be charged VAT, then Envato is the seller. But if the buyer should not be charged VAT, then authors are the seller. Does that mean earnings (with/without Envato fees) are reported differently as adjusted gross income depending on each transaction’s VAT status?

Example: a $100 theme is reported as $100 income if VAT is not charged (the author then deducts $30 Envato fee), but it’s $70 reportable income if VAT is charged because Envato released funds to authors minus fees.

So for all purposes other than VAT, the author remains the seller directly licensing their work to the buyer. So the amount the author reports as income remains the same. I’ll make sure we have some example transactions in our VAT release.


This is all getting really messy. It worked well till now why do you want to mess it all? Only reason is that last system changing saved you millions upon millions but it complicated tons of other things.

A few people have asked variations of this, hopefully this answer helps as a general answer.

Our core model of operating a platform currently remains the same. We started clarifying it and I think that is raising a lot of questions from authors, and they are ones I and the team are weighing up heavily. The way things are, and have been, has already happened. So the terms and conditions the site has been operating under, and the licenses being sold, has already happened.

I understand there is a lot of requests that we shouldn’t work this way, and again that’s one of the things we’re investigating. Alongside we’re improving the way the current site/system/service works to be better.

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collis Envato team says


I think the main point here is that authors won’t receive or have responsibility over the VAT paid. In the transaction chain, for VAT purposes, Envato will step in as the supplier and manage the compliance.

1. So if the buyer should be charged VAT, then Envato is the seller. But if the buyer should not be charged VAT, then authors are the seller. Does that mean earnings (with/without Envato fees) are reported differently as adjusted gross income depending on each transaction’s VAT status?

Example: a $100 theme is reported as $100 income if VAT is not charged (the author then deducts $30 Envato fee), but it’s $70 reportable income if VAT is charged because Envato released funds to authors minus fees.

2. Will items from non-EU authors sold to EU buyers be subject to VAT? Likewise will EU authors selling to non-EU buyers have VAT?

Great questions!

On (1), I’ll get a full answer as I need to check it off with the EU team.

On (2), yes items sold from non-EU authors sold to EU buyers are subject to VAT. On the flip, items sold by EU authors to non-EU buyers are not subject to VAT.

This article on Forbes was shared on the previous thread which has some useful information about the effects of EU VAT for US sellers (though it’s the same for any non-EU seller). Just to reiterate though that authors won’t need to manage the VAT compliance on Envato Market.

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collis Envato team says

Hello again! As I mentioned in the post, we’re working hard on many of the issues you guys are asking about, though I don’t have specific answers yet.

There is a lot of complexity in these things and details matter a lot, so it’s not the sort of thing that can be rushed. I appreciate the author concerns and am working on this as my highest priority.

Basically, more clarification on the way, and please know that I am taking this enormously seriously.

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collis Envato team says

Hi guys, some broad answers to a few of the comments:

I think the main point here is that authors won’t receive or have responsibility over the VAT paid. In the transaction chain, for VAT purposes, Envato will step in as the supplier and manage the compliance.

If you’re concerned about a specific situation, please don’t hesitate to email taxinfo@envato.com. I’ve been on the phone with ThemePunch (wish we were talking for a more fun reason, but really cool to speak to them!). We are committed to our community and work with authors on specific situations.

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collis Envato team says

Hi pricop, thanks for the question. Broadly yes, but with the important exception that business buyers won’t have VAT added, as they can use something called the reverse charge procedure to account for their VAT. Our user base has a heavy make up of business buyers (freelancers, agencies, entrepreneurs, small enterprises, and so on).

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collis Envato team says

Hi all, I’m closing this thread as I’ve now posted an update to Market Blog with a fresh forum thread.

Read the Post: Authors, VAT and a Global Marketplace Fresh Forum Thread

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collis Envato team says

Hi all, I’ve closed the last thread on these topics, and am opening a fresh one to discuss the blog post:

Authors, VAT and a Global Marketplace

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collis Envato team says

Hi guys,

Sorry it’s taking so long to come back with my follow-up post. I’m trying to make sure it’s actually helpful for most of the questions/issues being raised. We’re working with advisory groups in three different countries/continents, and I think I might have underestimated how much coordination there is to do that!

Nonetheless we’re almost there, and tomorrow I’m off to see our Board to make sure they are all comfortable as well with what we want to communicate. And then I should be back at the start of next week to discuss with the community.

A few people were concerned with Jan 1 rolling around, if it helps in the meantime, I can tell you we’re going to delay that date and the start of information reporting. I’ll have more related answers though next week!

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collis Envato team says

Hi guys,

Thanks for all the questions. I’m going to start working on a follow-up post which is a little broader than this current US Author W-9 announcement. It will talk more about the model and the approach we take on a variety of related issues that people have been asking about – ranging from tax information questions to the relationship between author and buyer. It’ll be up towards the end of October.

In the meantime, a little more clarity on my post from last night. Our terms and conditions that users agree to when using the site, have always described Envato as facilitating a platform. You can go back in time and read them via the internet archive. However we had a variety of language on the site that made this not so clear – in particular the word ‘commission’ which we used at times to describe everything from author earnings to affiliate fees to Envato’s fee. Moreover the financial tools we’ve had on site, could be a lot better and haven’t in all cases reflected correctly the transaction flow and our terms and conditions.

Again, this model of author-buyer transaction has always been in our terms and has always been the way the marketplaces operated. Our audited financial reports follow this structure and financial flow.

We’re working hard to give authors better tools for the future. This first release (W-9’s and 1099’s commencing Jan 1, 2015) is the first step in this direction. And as I’ve mentioned earlier, I think the next release around statements and documentation will help a lot.

I understand authors have lots of concerns. We will continue to support authors as we have in the past, where a specific situation has arisen, by providing remittance advice and other documentation for their earnings and income. Where and when other taxes might apply, we’ll be working to give authors notice and the tools they need to charge them.

I know a few people have asked about 1099’s from PayPal. Most online payment providers issue these, I believe Skrill does as well for example. As always it’s a good idea to talk to your tax advisor about how your online income is attributed.

Overall, I’d like to say that I and Envato are committed to working through the many author situations, with our community values in mind. It’s a very complex project, made more complex by how Envato started, the global nature of the marketplace and how we’ve grown over the years.

On the broader question of our business model and related issues like VAT, I’ll leave it at this forum post, until I put together a bigger blog post. If you have questions about the W-9 form and US Author information however, please continue to ask away in this thread.

I know this post doesn’t answer all of your questions and sorry for any concerns still unanswered, but we’re aiming to get better details to you in the future, starting with my next post later this month.

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