In the UK, you don’t have to pay VAT until your sales amount exceed a certain threshold. If you are within the EU, you might have a similar setup. Check to see if there is VAT in your country for digital goods.
I have not yet been paid by Envato but the V.A.T rule should not be complicated.
When you look at sales, only check one thing:
-Who is paying you(who supplies who)?
Based on this:
Envato is the supplier to the buyers of music, therefore, Envato seems to have its own V.A.T EU number.
Envato will charge the V.A.T(or zero rate it) according to the buyer’s country(and if he is V.A.T registered).
Envato will account for its own V.A.T
Regarding Authors, as I have not yet been paid, I expect Envato to use their EU V.A.T number on our invoices, meaning that we will have to account for this in our V.A.T returns(as we will be paying V.A.T on this).
I believe it will be some kind of self invoicing system where we will automatically invoice them for a set fee(the threshold set in the account) with our own country’s V.A.T(in my case 18%).
I do not know yet, awaiting for my first payment. Whatever happens it should not be complicated.
Simply email your tax authority and explain the matter, then you have a proof by email that you have asked the right question.
You only pay VAT on items you buy. You have no VAT liability on anything you sell here, as Envato charge and remit the VAT on all applicable sales. For the purposes of VAT, Envato are considered the sellers.