My VAT Solution

Amy FriendCraftsy, etsy, pattern, VAT8 Comments

VAT solution

I am sure that most of you have heard all about the changes to VAT as of January 1, 2015 as there has been lots of chatter about it online in the past month.  In a nutshell, the EU legislation is changing and will affect all digital sellers worldwide.  The VAT is no longer paid in the seller’s country but is now payable in the buyer’s country too.  There are very low thresholds in many of the EU countries, sometimes even zero.  If I were to continue to sell my digital patterns on Etsy and Craftsy, where there is currently no way to handle the VAT, I would be responsible to submit quarterly VAT returns to every country I sold to and I just don’t have the ability to do that as a one person small business.

I know many sellers are closing their pattern shops entirely or limiting sales only to US customers. I contemplated that myself but I would say that half of my customers live outside of the US.  Not only do I not want to lose those sales, I don’t want to exclude them from the ability to purchase my patterns.

I did adjust my Paypal settings to block all outside of the US sales.  Therefore, only customers from the US will be able to purchase my patterns from Etsy and Craftsy.  But for those of you in the US who are used to shopping that way, I want to allow you to continue to do so.  In fact, I earn the most money per pattern from Craftsy sales so I appreciate it when my customers shop for my patterns there.

Thanks to help of my wonderful friend Sally, I was able to set up a new shop on my blog.  You can access it from the “Pattern Shop” button in the side bar of my blog and from the new header at the top of my blog.  All my digital patterns are available for sale right here on my blog using a Paddle checkout.  Paddle is the ‘merchant of record’ and that makes them responsible for collecting/storing customer data, applying the correct VAT rates to purchases and filing the returns too.  It’s a bit less economical to use Paddle due to the higher listing fee and percentage of sale that they charge but it is so worth it not to have to manage the VAT myself.

I could not have done this without Sally’s help and would recommend her services if anyone is looking to set up something similar and needs to hire help.  You can find her contact information here.

The new system is not without kinks. It has all been done very rapidly over the last few days.  As of right now the check out process is working smoothly. The customer receives an email with a link to download the pattern and can save the link but it won’t open. I know, not very helpful right? But if anyone places an order before that problem is solved (Sally is working on it), I will promptly send you an email with the pattern attached. It should be resolved soon along with any other problems in the process that we haven’t identified yet.  I will make another blog announcement once the download problem is resolved.  In the meantime, don’t hesitate to make a purchase.  Know that I will send you and email with the file asap.

Thank you to all those who support my pattern sales! If you have purchased my patterns in the past, I would love it if you would visit my new Pattern Shop and leave a review for one or more of your favorite patterns. If you click on a pattern, you will see a “Review” button next to the “Description” button. It should be easy to choose from 1-5 stars and leave a brief comment. I would appreciate it!

Happy New Year!