Authors from EU! Do you pay VAT?


#1

I just find following info here:

You are responsible for paying all fees and taxes (including withholding tax), associated with your use of the Sites wherever levied (including any goods and services or value added taxes, which will be added to amounts billed to you, if applicable).

Right now I pay 20% CIT and 35% of national insurance. So as I understand I have to pay VAT (25%) too?


#2

You PAY VAT anytime you purchase anything from your local market according to your local legal system.


#3

No you don’t need to pay VAT on earnings unless:

  • You’re earnings reach in the last 12 months have been at the VAT limit for your country (£77k in the UK)
  • You are registered for VAT (voluntarily) which can be beneficial if you buy a lot of goods (not applicable to web designers IMHO).

You need to talk to a tax professional in your country but unless you can say yes to the 2 above then you don’t need to worry.


#4

I think you need to pay VAT only if you’re receiving money from EU. Since you receive money from Envato, Australia, I don’t think you’ll need to pay VAT even if you’ll reach that limit and be registered for VAT


#5

If Envato is an Australian-based company then they should add VAT (10%) to all prices - http://world.tax-rates.org/australia/sales-tax

Who should collect VAT here? Envato (10% VAT) or authors/sellers?


#6
Diabolique said

If Envato is an Australian-based company then they should add 10% VAT to all prices - http://world.tax-rates.org/australia/sales-tax

Who should collect VAT here? Envato (10% VAT) or authors/sellers?

You pay VAT when you are supplied goods or services by another company, Envato wouldn’t collect VAT unless they are supplying goods / services to someone else.

It’s up the receiptant of the VAT to pay it in their country of residence, mine being the UK

FD is right though, you will only pay VAT on income from a EU source, so it wouldn’t be needed in the op’s case.

Do still speak to a tax professional as they will be able to advise much better than someone on the internet (as they will know your countries laws).


#7

I think VAT policy is the same all over EU so I think the same rules apply as here in Slovenia.

Actually having an VAT ID and have to charge VAT is not entirely voluntary. In Slovenia the limit of having to “enroll” into the VAT system was raised from 25.000 € to 50.000 € of annual revenue. So if during a calendar year you exceed this limit you HAVE to start charging VAT.

But you have to charge VAT only when you invoice in your country, if you invoice to another country (even within the EU) you do not add VAT to the invoice.

So being in the VAT system is actually beneficial if you for example make most of your money from Envato, because you essentially get any VAT you pay for services or products in your own country back.

Fo example if in slovenia I buy stuff or pay services for 500,00 € + 20% VAT = 600,00 €, and would make all my income from Envato, I would get those 100,00 € of VAT back from the government.

Furthermore if you have a valid VAT ID, even if you buy stuff from an other EU member country, where you pay their VAT, with the proper documents, you can even get that VAT back. Usually web stores and such require you to send some sort of documents to prove that you have a valid VAT ID.

But you have to check the rates and limits in your own country. I don’t know how it is in other EU countries but here if I would exceed the limit before voluntary enroll for an VAT ID there would all sorts of complications with the TAX monsters.


#8

I know how VAT system works :smiley:
The point is if you are buying a theme on Themeforest, then who is a seller? Envato or me?


#9

envato. that is written on invoices. :slight_smile:
also, when you withdraw the money, the sender is envato.


#10

Envato is invoicing the buyers so I guess that makes Envato the seller, right?

When I was working with oDesk (which is the same base financial flow) I’ve spoken with the tax office and I was told to “invoice” oDesk (basically just in invoice for my archive) and that’s it.

So in this case you “invoice” Envato, and because Envato is in Australia, you don’t include VAT.


#11

OK, but still I don’t understand why Envato doesn’t add 10% VAT to theme price.

If they sell themes for non-business customers then they should collect 10% VAT - http://world.tax-rates.org/australia/sales-tax


#12

Because to non-business customers, you don’t need to display the Non-vat and vat price, so the vat would be included in the price.


#13

envato doesnt charge vat. it charges gst (10%) on all deposits/purchases from the buyers (including the ones fron EU) and pays gst to the australian tax authorities. but we would really want an oficial response to this.

i think there’s an EU law that says that all non-EU companies that provide digital goods to EU customers should charge VAT depending on the country where the customer is located. Then envato would have to pay the vat to that country.

in reality, not many companies from outside the eu respect this legislation. some companies never even heard of it while others choose to ignore it (and i dont blame them). i mean the eu doesn’t really have the authority or jurisdiction to impose laws to companies from all over the world.

but again, a response from envato regarding this matter would really be apreciated.


#14

Then price of theme for companies should be $45.40, not $50.

i think there’s an EU law that says that all non-EU companies that provide digital goods to EU customers should charge VAT depending on the country where the customer is located. Then envato would have to pay the vat to that country.

As I know digital good is a service and if company is registered in Australia then service is executed in Australia, so buyer pays their value added tax.


#15

I think we are just overcomplicating things.

If you are an EU resident, whether buyer or author, you just don’t have to care if Envato is charging VAT or not, that is Envato’s responsibility.

If you are buyer, you pay the final price and that’s it.

If you are an author, as previously said, you are actually “invoicing” Envato for the earnings you make on Envato, and because Envato is in Australia, VAT does not apply (in any EU member country).

I had a similar situation when I worked thru oDesk and after clearing it with the Tax offices here, I was to invoice oDesk and not the end customer so I would (as I am not yet an author) do the same here on Envato and I wouldn’t charge VAT, as I have to do that only for services provided here in Slovenia.


#16

psvent is right.

When i started i’ve checked and researched everywhere, even check with my accountant.

You don’t have to pay VAT from money earned at and payed from Envato.
They are located in Australia and therefore you don’t have to pay VAT in Europe.

What Envato does with their earnings isn’t our business