my EU VAT position

January 1, 2015 @ 9:26 am · Filed under My Craft Business

Sorry for two posts in one day, but customers are asking how PlanetJune will be affected by the new EU VAT law, so I need to address that today…

The new EU place-of-consumption tax law that comes into effect today applies only to telecommunications, broadcasting and electronic services. In this case, an ‘e-service’ is defined as something you buy that is entirely digital, where the process is automated and has minimal human involvement.

For example: you buy an ebook from Amazon. You pay, you download your file, and that’s the end of your transaction. Nobody at Amazon did anything manually to deliver the product to you, and Amazon has no further responsibility after you receive your product.

Now, as it says in my Pattern User Licence information (linked from every pattern page in my shop):

By purchasing any PlanetJune patterns, you are not buying a copy of a pattern; you’re buying far more: a perpetual single-user licence for the pattern. Your licence entitles you to [many perks, including]:

Unlimited customer support from the pattern designer (that’s me: June Gilbank).

That means you’re buying as much of my time as you need to be able to complete the pattern you’ve purchased. This is not a service that can be supplied automatically by a computer! If you need my help, as per my customer support FAQ:

You can also email me directly for further assistance with any PlanetJune pattern. Please send me a photo of your work (if possible) together with a description of what’s going wrong, to help me diagnose what your problem may be.

photos from customers needing help
Photos that accompanied recent help requests (all now happily resolved)

Can you imagine emailing a photo of your crochet work-in-progress to Amazon and asking for assistance?! Knowing you have unlimited access to expert help from me, now or at any point in the future, should you have any difficulties in completing the pattern you’ve purchased, is the difference between an automated ‘e-service’ and the licence you buy from PlanetJune every time you purchase a pattern.

And that’s why EU PlanetJune customers will not be charged ‘e-services’ VAT under the new law, as I don’t provide any products without a human component attached. As any customer who has ever needed my help can testify, the personal service I provide as part of every pattern licence purchase at PlanetJune goes far beyond the scope of an automated pattern delivery with minimal human interaction.

Disclaimer: This is my understanding of the law, but I have no legal background and am unable to answer any questions regarding this topic, so please don’t ask me! I also cannot be held responsible for the decisions any similar businesses may decide to take.

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8 Comments »

Kathryn Vercillo said

January 7, 2015 @ 10:05 am

I’m really glad that you shared this information. It’s something that a lot of people have questions about and you’ve done such a great job of explaining your business process and why the VAT isn’t impacting your customers. Thank you.

Rebecca said

January 4, 2015 @ 8:52 am

With PlanetJune, the human element is a huge part of what you get when you buy patterns – in a way it’s never been with any other designer I’ve bought from, including one who’s a friend. (Not that my friend wouldn’t have helped me with the work if I’d needed it, but I’ve interacted with her about it less than I have with June about her patterns!) It’s part of why I love buying from PlanetJune – the human touch. I don’t usually need any support from June when making her very clearly documented patterns, but I like sharing my designs with her, hearing about her process, and generally knowing there’s a person behind the adorable turtles I’m working on!

Michelle said

January 2, 2015 @ 2:57 am

Great to offer support, but I’m with Kati on this one. You’re not operating a business in an EU country so they have no jurisdiction over you. It’s like if the USA were to implement a similar tax law, you would be similarly not affected because your business is registered and operates out of another country. If you were affected by the EU tax changes (despite not living/operating a business out of the EU), you’d in theory be affected by all taxes/regulations/laws from every single other country in the world. I live in Canada, so when I purchase from an online store, I don’t get charged their sales tax. It’s like how for some online shops, they will only charge you sales tax if you are in California (where they are located), but not if you are in any other state.

Kati said

January 1, 2015 @ 3:33 pm

I’m not a legal expert myself but I’m not sure if your reasoning would be considered valid. Downloadable software was one of the main target products of this new rule, and those often include assistance too (as much as I know – with IT expert in family I never needed outsider help :))
On the other hand, because you are not currently an EU resident I’m pretty sure our tax offices have no jurisdiction over you anyway. All this fantastic rule will do is ruin small EU businesses who try to be honest… 🙁

Juliana said

January 1, 2015 @ 2:40 pm

Thanks June! It’s good to know you’re still around. 🙂

And it makes sense. You spend a lot of time on the Ravelry group answering questions and commenting on FOs.

Thank you!

Simone said

January 1, 2015 @ 12:23 pm

Dear June,
I’m so glad to hear that!
And of course, I wholeheartedly agree that your service includes far more than just a digital transaction.

Happy New Year, and all the best for your health and happiness,
Simone

.: petrOlly :, said

January 1, 2015 @ 9:41 am

This sounds reasonable; and it’s true there’s not only patterns that can be bought from you, it’s far more – even for the donationware patterns (in the “free” mode), you always offer help.
So I hope your understanding of this new law is correct 🙂