Patreon turns taxman to take burden off EU sellers (Wired UK)


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Funding portal Patreon has announced plans to take care of
complicated new VAT payments for creators selling their content
within and across Europe using the platform. The move comes in
response to a large and ongoing outcry against recently implemented
EU-wide tax revisions that
ironically negatively affect the small businesses they were created
to protect.

Since 1 Jan 2015, any business of any size
selling digital content across the EU must now file a tax return in
the destination country, rather than the one the company is located
in. Many small traders have been left with the harsh choice of
incurring vastly increased accounting costs to abide by the rules
or closing their businesses.

Patreon joins crafts-focussed site Etsy¬†as a ‘middleman’ service, using
their larger presence to sort out the often microscopic payments on
behalf of sellers using the platforms.

After announcing plans for a larger investigation into the tax
mess at the start of march — including whether money earned by
creators using Patreon’s pledge-based system, where supporters
reward creators with regular monthly stipends, are even eligible
for taxation under the current system — Patreon updated users this
week with their plans.

In a post on the official
site
, Patreon’s operations team announced: “Good news! Patreon
will handle the collection, filing, and remittance of VAT payments
on behalf of our creators. The cost of VAT will be carried by EU
patrons. As always, thank you for your patience and feedback.
Patreon has your #vatmess covered so you can do what you do best:
create.”

What this will likely mean in practice is slightly higher prices
for the customers buying or pledging, if their country’s tax rate
is higher than the person offering the content. While it also
removes a considerable burden from creators and sellers, it also
brings about one of the predictions campaigners against the VAT
change warned against — that only larger third-parties will have
the manpower to navigate the financial minutiae accurately.

Although the tax change was implemented to curb the activities
of giants such as Amazon setting up in low
tax havens such as Luxembourg and using purchasing power to crush
smaller rivals, the lack of any form of exemption for those with
low turnovers means those larger companies are the only ones able
to meet the new demands.

Currently, the tax revision applies only to virtual goods –
PDFs of sheet music or knitting patterns are common examples, but
could also cover purchases of MP3s, download-only games, video
content delivered across the internet, and more. Any creator
offering physical content, which covers a lot of Etsy’s userbase in
particular, doesn’t need to worry — unless a planned expansion of
the rules to cover material goods goes ahead next year.

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13 March 2015 | 4:00 pm – Source: wired.co.uk

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