Hi everyone, here’s the latest round of answers — sorry for the delay in getting them to you. I’d also like to take this opportunity to reiterate, as many of you have been doing, our recommendation from the blog post to speak to a professional accountant / tax advisor for advice specific to your tax situation. If you are finding the forum thread hard to follow and have further questions relating to the original announcement, you can also email firstname.lastname@example.org.
Question is what if seller exempt from VAT (is individual freelancer)? You will collect more money than it’s required (?)
From January 1st, due to the introduction of new laws in the EU, the VAT collection and remittance obligation passes to Envato as the platform operator. This means that it is Envato’s status that determines the VAT collection obligation, so the author/seller’s location and exemption status won’t matter.
These laws are designed to put platforms like Envato Market into the position of VAT responsibility. Because the seller’s exemption won’t factor in, effectively more VAT will be collected (since there is a 0-threshold for non-EU companies like Envato).
Simple because I have to know if as Author (not buyer) do I need to register company and/or register to VAT and get VAT ID?
This is extremely important to get answer before 01.01.2015 because in my country IRS is very restrictive and I need to get things clear before I sell anything after this date.Even though I’m seller, but I the only thing I sell is license, then I don’t need to register company and I can be freelancer. So it’s important what exactly is going to be mentioned on invoice. It’s also extremely important according to income tax (license = 10%, service = 18-32%).
For the purposes of selling on Envato Market, as of January 1st, 2015 you don’t have any VAT obligation – as the obligation to collect and remit VAT passes to Envato. To determine whether you need to be VAT registered, you should be considering all your business circumstances (not just what you sell on Envato Market), and your country’s specific requirements.
@ natman — Tumbling down the rabbit hole. More questions:
1. In which country is Envato setting up the MOSS? Why?
2. What author information is given to the MOSS country?
3. What author information is provided to countries collecting tax from the MOSS?
4. What’s to stop an EU country from reviewing the payments collected through MOSS, and demanding the author provide proof? What is Envato’s commitment as supplier?
5. What if a non-EU author simply wants to opt-out of selling to the EU completely?I’m sure every country in the EU doesn’t have the same data security standards. When this goes live our personal info (addresses, tax numbers, income) will start pinging around to different countries. The implications are not comforting.
Envato’s MOSS registration will cover all of Europe. The MOSS system allows VAT payments to be sent to a single country and then distributed through Europe. As part of our registration we will comply with reporting requirements from the VAT authorities in the EU. So far as I’m aware this doesn’t include providing author information, since it is Envato’s VAT collection and obligation as a platform as of January 1st. That said, tax authorities have broad powers to audit, examine and collect information. Obviously we can’t comment on behalf of EU authorities, but if authors are contacted we will assist as much as possible to ensure it’s clear how VAT has been collected and accounted for.
We don’t have a system to allow authors to sell only into specific countries, so to opt out of selling into the EU completely, you would unfortunately need to withdraw completely from Envato Market.
Well, here’s my question!
Will past statements be subjected to VAT’s? If so, will that be deducted / reversed from our accounts? Because if you guys do that, you’re probably gonna hit elite authors with @ 25.000 – 50.000$ sale reversals. As far as I know, this is not retroactive. Am I correct? These changes will NOT affect sales before 2015, right?Also, if these changes affect our accounts as “sellers” will the VAT be deducted from our Envato Accounts (this would be a disaster for every author here) or will we have to declare it ( for those who haven’t ) to our financial institutions and pay VAT there?
With respect to your question about sales reversals, I can confirm we are not clawing back or building a system to apply VAT retroactively to past sales. Effectively the past is the past, and those sales and payments have happened already. More generally, as I wrote previously here, Past VAT is something Collis has said he’ll have have a statement on as soon as possible, and that we will be supporting our authors, in line with Envato’s community values. If assistance is required in the meantime, please contact email@example.com.
Hi guys, thanks for keeping it on track overnight. Here’s the latest round of answers. It’s Friday here in Australia now so I’ll be back again on Monday to address any new questions that come in over the weekend. Please read the blog post and my earlier answers before asking new questions so others can follow the thread and get answers too. Thanks!
When Envato will start to collect the VAT?
As outlined in the blog post, we’ll begin collecting VAT in early 2015.
1. Does it means that envato wants to put MY company details on YOUR invoice to the buyers?
Invoices to buyers for items and buyer fees will include author, item and Envato details as appropriate. The VAT for both components will be billed, collected and remitted by Envato.
2. What kind of invoice envato wants to send to the authors? What information we will find in this invoice? (I want to see an full example, to discuss this with our accountant) https://d13yacurqjgara.cloudfront.net/users/2442/screenshots/1785169/invoice.jpg
We’ll have more details and examples in an upcoming release. In the meantime, invoices from Envato to the author for author fees will include an itemized listing of fees, any taxes that are inclusive in that fee, and our company details.
3. What changes are planned for the statements page?
We simplified the statements page a little on September 1st when we made changes to create the dual fee structure. Our first statements change will get the gross sale made back on to the statement. Subsequent changes will include links to the invoice, credit note or other documentation for each transaction.
4. Who will be the seller on the information provided for MOSS?
As detailed in previous announcements, Envato will be the supplier on record (in a MOSS registration) for VAT purposes only.
Can you clarify these few points for us: Country – We know the authors badge can be deleted but why does a country name need to be displayed at all on an authors page? New VAT rules when do these start – 1st Jan 2015? Are their any past liabilities? – As authors we do not sell directly to buyers as this is Envato role, so if there are any past liabilities are these Envatos or the Authors?
The country shouldn’t be displayed on author pages if you’ve opted to not display the country badge. I’ll get that fixed.
New VAT rules begin on January 1st 2015, and these clearly provide for Envato to step in and manage and remit the VAT obligation on behalf of authors.
Past VAT is something Collis has said he’ll have have a statement on as soon as possible, and that we will be supporting our authors, in line with Envato’s community values. If assistance is required in the meantime, please contact firstname.lastname@example.org
What is the subject of sale?
Problem is that all these regulations apply to:”Telecommunications, broadcasting & electronic services”
While we as Authors and even as Sellers do not provide any service. What we do is giving license to use our creative work on specific conditions.
In Poland VAT is then 8% not 23%, but only if…. author is seller. If Envato is seller then 23%. If author is direct seller then 8%, but only if subject is license. Support services are 23% again.
Another problem is (and I don’t know the answer yet) what happens if Author is individual and has no VAT ID. In Poland you don’t have to register to VAT until your earnings do not exceed 150 000 PLN/year (~ $ 50 000).So, I don’t know what happens then. If Author=Seller=No-Vat-ID then VAT to C2C sales = 0%?
Envato Market operates on a platform model where authors are acting as seller directly to the buyer. This is complicated by the fact that for VAT purposes only, and as of January 1st, Envato assumes the responsibility for managing, collecting and remitting VAT. Put another way, for VAT purposes only, Envato acts in the capacity of supplier.
So as of January 1st, we will be managing those calculations, and VAT will be collected regardless of whether a particular author has hit the VAT threshold.
This is a rule that is coming in to play as of January 1st for all platforms, including big ones like Google Play, to get sites like ours to help in the collection of VAT.
So by way of example, here is Google Play’s announcement about the changes, and how Google is stepping in as supplier (for VAT purposes only) when you buy an Android app: https://support.google.com/googleplay/android-developer/answer/138000?hl=en
What is changing on Envato Market, is basically exactly the same.
There are a few questions about invoices (e.g., those posted by 7Studio) which I’m still trying to get answers to — I’ll try to have these tomorrow. For today, I have an answer for KrownThemes (and others who asked) around country info for author teams:
“What happens with authors who are collaborating with other authors? You tell us to put our country of residence but if we’re a team in more than one country, how do we manage this?”
It’s important to keep in mind that while authors collaborate to create work for sale, Envato Market enters into a legal agreement with the person that creates the account. This is covered in more detail in our Help Center article on the subject. The country of residence, and any other account or tax information, should be for the account owner.
On the question of the business model, I don’t have any more information yet, but I know Collis and many others on the team are working hard to get back to the community asap. As Trav said a couple of pages back, though, this thread is about country info and VAT number collection and in the interest of trying to help people with questions about this specifically, please keep it on topic. If you’d like to continue discussing the business model, please feel free to do so in Collis’ original thread or the new one created by Gareth.
System maintenance on account.envato.com begins now. We’ll continue to post updates here and on our social channels. Full details on the Market Blog: http://marketblog.envato.com/releases/account-envato-com-new-home/
Hi guys, thanks for comments and questions overnight — I’ve tried to address some of the more common ones below. I’ll be checking in again tomorrow (Oz time) to answer what I can then.
Are authors obligated to give that VAT Number?
We don’t require VAT numbers for authors (unless they also happen to be buyers) however we do require country information for all users as buyers and authorities in some countries require seller information to appear on buyer invoices for proper record keeping.
What happens if I don’t provide that number ( to my sales and buyers ) am I affected in anyway on the marketplaces?
No, only EU buyers are affected if they don’t provide a VAT number.
How can one issue an invoice if doesn’t know any address, name and VAT number?
We’re working to improve all the documentation we issue, and collecting information such as country of residence and VAT numbers is part of that. In the new year, we’ll be rolling out VAT compliant invoices to buyers and sellers, along with more informative statements. In tandem will be more releases requiring more details from users of Envato Market to ensure that documents are accurate and well composed.
EU VAT and if it’s applicable or not is actually not important.
The most important part is that:
“Since our launch in 2006, our terms and licenses have expressed Envato Market as a platform with direct transactions between buyer and author, and we’ve had a general attitude of letting buyers directly communicate with sellers to ask questions, follow them and receive updates.”
Without an explanation of this statement anything else is irrelevant. Author’s country of residence is not important then as well.
This: “direct transactions between buyer and author” can be a nail in EU author’s coffin.This gives an argument to local IRS to demand VAT not only since 2015 but actually since 2009. This can also give an argument to punish all authors from EU that have been selling items on Envato marketplaces as individuals! Consequences can be terrible. Believe me, terrible.
Hi Cocomero, thanks for the comment and feedback. As of January 1st Envato will be managing the entire VAT collection and remittance process, and that’s what this rollout is about.
You’re asking about the past, and we are working on providing authors with a clear picture that is in line with our community values and commitment to authors. It’s a slower process than we would normally have because there are multiple considerations that need to be taken into account. We’re engaged with European experts on this matter, working hard on it and talking to authors individually via email@example.com in the instances where specific situations or concerns come up. We’re looking to come back soon with more information for the community.
In the meantime we’re moving forward with our VAT registration numbers and country of residence rollout to kick in for 2015.
Confirm country link in the alert isn’t working for me.
Thanks Dave. I’ve let our devs know They might follow up here with additional questions so if you could please keep a lookout, that would be ace.
Also, big thanks to QuanticaLabs for jumping in to answer questions!
I’m signing off for the day, but I’ll pop in tomorrow morning to address any new questions that come up overnight. Thanks guys!