EU: Tax specialist says I need to pay VAT

#1

Because I had wondered about the VAT issue myself, I had contacted my accountant who in turn contacted a tax specialist. Long story short, the tax specialist has read the terms and conditions of TF and says that I need to pay the Value Added Taxes and that I need to send every buyer an invoice ánd need their personal information.

This is strange because there’s no way to track who purchased a theme and due to Envato’s privacy policy, I don’t have any access to personal information.

Is the tax-specialist over-complicating things or is he right? I’m hoping that I can get an in-depth (un)official response from anyone (but in particular Dutch authors) to clear this matter once and for all.

Thanks!

#2

I think you pretty much can’t get an answer. I once opened a support ticket and all I got from back-to-forth messages, that it is my duty to figure out how the tax policy works in my country. And as your tax specialist stated, that you need to track down the buyers etc. In my opinion you’re pretty much (a bad word here). :confused:

#3

corrected*

#4

Everybody has to pay income tax, this question in particular is just about the VAT.

#5

My accountant had the same doubt but since Envato pays me and they sell the products (in a legal manner) You don’t need any info from buyers.

#6

All money operations are done by the Envato, your clients get invoice from Envato, your money come from Envato, refunds are operated by Envato. That’s pretty much all I know.

With other words, you externalize accounting, financial and many others to Envato for your online business.

#7

From what I understand, you don’t need to worry about VAT unless you pass a certain amount. You do need to declare your monies from TF to pay tax though :frowning:

In England, this is the example we are given: http://www.hmrc.gov.uk/guidance/selling/examples.htm#c

#8

Thanks for the responses guys, let’s keep the comments rolling as this might help anyone now or in the future.

#9

Note: I’m not Dutch.



Almost all countries exempt VAT collection for exported goods/services.

Since you’re exporting services outside the EU (Envato is based in Australia), you’re not supposed to collect VAT. Keep the invoice as evidence.

Also, see this.

#10

Off topic: Same old story. It seems income from Envato marketplaces confuses accountants all over the world :slight_smile:

On topic: try to find a friend who sells stuff on AppStore or Google play. I’m 99% sure that he can give you relevant reply and advice you a competent accountant.

#11

ive asked 3 accountants and all 3 told me the same thing Hexahedron mentioned a bit earlier: since Envato is in australia, i dont have to add VAT to the invoice.

also, my accountant told me that i have to write the “Service export” words at the invoice description…for example “Design and development services export”.

#12

I am bit confused that a tax specialist concluded something like that. In the end it’s like a tooth paste manufacturer would have to invoice every buyer who buys the tooth paste in a store that the manufacturer supplies the tooth paste to. I think that does not make any sense does it?

Anyways I think you should be contacting your local government tax office in the end they are the ones that will want explanations if you should be audited or something.

As I mentioned in the other thread I contacted my local tax office because I wanted to have everything cristal clear (mind this was for work via oDesk, but I think essentially the same financial flow as here on Envato) and after quite a long conversation I was reassured that if I invoice oDesk everything will be allright from the TAX point of view.

Also if you look at the cash flow Envato invoices the full price to end buyer then they take the fee which is their income and the rest goes to the author which is their expense. So if you invoice Envato once a month for all the fees you receive your are not withholding any income are you? If you would be audited you can always show your Envato account to the auditor so they see that any money you receive is all on the invoice. I guess any items are digital goods and any fees from referrals would be a service I guess.

Once you know you only have to invoice Envato and you know Envato is in Australia then everything is clear you just charge the total amount and don’t charge any VAT because Australia is outside the EU. And that’s it.

Again contact you local government tax office for clarification that the best way to get reassured I guess.

#13

Hi Prothemeus, i’m also from the netherlands.

You don’t have to collect and/or pay VAT.
The accountant is wrong. Just like other guys here mentioned, outside EU, no VAT.

If you have any questions you can mail me ( in Dutch :slight_smile: )

#14

Thanks a lot for all the replies everyone! So what do you do when you receive a payment? Address a monthly invoice to Envato with the amount of your earnings? Do you actually have to send it to Envato (I’m thinking no).

@Chapter, ik heb je een email gestuurd! :wink:

#15

I think if Envato would need an invoice they would definitely clearly state so.

Just make an invoice once a month when the funds from the previous month a finalized and keep it in your records so your accountant can also put your earnings into the books.

#16

There is a mistake in the ToS:

By being registered as a Member, you are entitled to:

    buy Products from other Members;
    sell Products to other Members (subject to clause 15);

ToS is trying to say that Envato works like eBay but it’s not true.

#17

I don’t know about your countries guys, but my country (Bulgaria) have what is called “Australia Double Taxation Prevention Treaties” with AU in order to AVOID double taxation for the same thing. I would suggest if you’re getting a percentage from something that was already taxed in Australia - you don’t need to pay VAT for it. However, you still have to pay taxes for your own income.

The main problem is that our case is something relatively new to the financial/tax system and most of the accountants just doesn’t know what to do. We are in some kind of a semi-legal position. My legal adviser and my accountant tried to find the answer together, but they couldn’t… We are kinda self-employed (but not exactly), our money are already taxed in Australia (but not exactly) so we are kinda @#$%* (but not exactly). :smiley: :smiley: :smiley:

#18

Prometheus: according to the ‘tax specialist’ there are now over 21000 authors who are in trouble because they havent charged and payed VAT. The country of the author doesnt matter. What matters is the country of the buyer.

In my opinion, authors can’t possibly pay VAT for 2 main reasons:

  1. our items are not purchased with real money. items are purchased with envato credits. the client buys these credits from envato and he gets an invoice for that. This is the only real money transaction that actually matters. Then the client spends these credits on items from the marketplaces. You can’t expect the author to issue an invoice with envato credits. And then the client would get 2 invoices for the same thing? i don’t think so.

  2. the second reason is that we dont even know the identity of buyers and especially their countries of residence, and in my opinion this is normal. After all, envato sells these credits to the client. if envato wants to keep the identity of clients confidential is their right to do so.

The relationship between an author and Envato is similar to the relationship between an app developer and Apple. I know for a fact that whenever a client from the EU buys an app, Apple is the one that charges and pays the VAT (not the app developer). Instead Envato is treating every buyer the same and charges the GST rate of australia for every purchase/deposit.

I’m not accusing anyone of anything, but boy it would surely be nice if we the authors and envato would come up with a solution and solve this VAT thing once and for all.

Personally, I do what most of the authors here can possibly do. Make an invoice between me and envato and dont pay VAT because its outside the EU

#19
PixelBook said

Prometheus: according to the ‘tax specialist’ there are now over 21000 authors who are in trouble because they havent charged and payed VAT. The country of the author doesnt matter. What matters is the country of the buyer.

In my opinion, authors can’t possibly pay VAT for 2 main reasons:

  1. our items are not purchased with real money. items are purchased with envato credits. the client buys these credits from envato and he gets an invoice for that. This is the only real money transaction that actually matters. Then the client spends these credits on items from the marketplaces. You can’t expect the author to issue an invoice with envato credits. And then the client would get 2 invoices for the same thing? i don’t think so.

  2. the second reason is that we dont even know the identity of buyers and especially their countries of residence, and in my opinion this is normal. After all, envato sells these credits to the client. if envato wants to keep the identity of clients confidential is their right to do so.

The relationship between an author and Envato is similar to the relationship between an app developer and Apple. I know for a fact that whenever a client from the EU buys an app, Apple is the one that charges and pays the VAT (not the app developer). Instead Envato is treating every buyer the same and charges the GST rate of australia for every purchase/deposit.

I’m not accusing anyone of anything, but boy it would surely be nice if we the authors and envato would come up with a solution and solve this VAT thing once and for all.

Personally, I do what most of the authors here can possibly do. Make an invoice between me and envato and dont pay VAT because its outside the EU

Nuff Said! :slight_smile:

#20

Prothemeus,

I’ve had some contact with the Belastingdienst and done some additional reseach! Would very much like to compare notes on this one since it’s pretty confusing and there seems to be no “real” awnser.

Just sent you an e-mail through your profile!