Hello buddies. I thought the EU VAT have to be collected only when your company is within the EU. Now I see Envato is based in Australia and hosting in USA. If I have a company in Brazil, hosting in the USA and selling services to EU users, should I collect this tax too?
Thanks in advance
MigC saidOne of the main reasons I shop with envato, despite the increasing competition, is price.
There are other factors but an extra 20% on top of WordPress themes will make shopping around more attractive.
Maybe consideration should have been made with splitting the additional tax burden between Envato, Author and Client (1:1:2 ratio for example) would have been fairer.
Yes the VAT is mandatory, but I don’t understand why some narrow minded companies see this as something the client should responsible for. There are other solutions, for example, when one of my US based hosting providers started to add EU VAT they took the hit completely for existing customers.
Maybe Envato has became so big it no longer needs to show any consideration to it’s customers.
The point here is that prices are very low, and majority of authors do not have it easy and with free support people demand to much if the item does or does not have sales, if this vat splitting would increase sales it would be logical in this way the lower price is quality would fall.
Its simple as that.
Here is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
MigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
Have the same problem. I’m the owner of the small business operating in EU without a VAT number, but I ALWAYS need to pay local VAT when i’m buying services abroad. That means, that now I need to pay VAT twice (yes, i asked local authorities, and they said, that I should receive invoices without VAT or I must to pay twice then).
MigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
Hit the nail on the head.
Hi guys, thanks for all the questions and feedback! Here’s the first round of Q&A and I’ll be back again tomorrow to do the same 
prestahome saidOne last question, where we can find full Envato (in Europe) company details with EU-VAT number, address etc?
We don’t have a physical presence in Europe, but here are the address and MOSS details that appear on EU VAT invoices:
Address: Envato Pty Ltd, PO Box 16122, Collins Street West, Victoria 8007 Australia
ABN: 11 119 159 741
EU VAT Number: EU826409867
Firsh saidWhat about Canada and some other countries that are not EU but may have a sales tax system. Are you supposed to include it in invoicing?
Except where explicitly called out (such as EU VAT), indirect taxes are the responsibility of the author. For example in Canada, if the author meets the relevant threshold for registration for GST/HST, then sales to Canadian buyers would be treated as inclusive of applicable sales taxes. You can add a custom invoice footer and business number to show this to buyers, and you can download a CSV of your statement to quickly ascertain information such as which province the buyer is in.
You can find more information on managing sales taxes (other than EU VAT) in our Help Centre.
LoopsLab saidCan anyone explain what happens with non-EU authors VAT that Envato collect?
All EU VAT collected on Envato Market, regardless of whether the author is located within or outside of the EU, will be remitted by Envato to the EU via our VAT MOSS in the UK in our name.
dtbaker saidGood to see this implemented after such a big lead up. Must be a big relief for the devs!
A very serious question, are you having a VAT party?
It’s a big relief, and we’re really proud of the product and dev team. Although it might seem like a simple thing when you’re using the system, it’s actually monumentally complex with a huge number of permutations to consider and build for.
All up we counted, and seventy people worked on the VAT project in different phases over six months. So yes, we’re having a little celebration on Friday for the launch! And then back to work, as we actually have post-VAT VAT work to do (there’s some edge cases and extra features that would improve the VAT system).
Still - a big well done to the whole team who worked on this stuff!!
FXNinja saidSo now an EU buyer has to actually pay 20.52$ for an item with a 16$ price tag ? … am I correct?
The amount you pay depends on the EU VAT rate of the country where you’re located. However, you’re correct that EU VAT is exclusive to the purchase price and that EU buyers who don’t provide an EU VAT number will be paying more than in the past.
BaumannMusic saidHello natman,
as a German resident I make use of a VAT exemption for small trade and start-ups (This is a very common practice for freelancers right here). So what happens to the VAT which is collected on my items?
Will I have a checkbox to opt-out of VAT collection?
Best wishes!
Hi Baumann, great question. We’re currently looking through what VAT exemptions there in different member states and regions. There seems to be a lot of edge cases so we may not be able to adequately implement solutions to all of them, but obviously it would be ideal to have solutions for as many as possible.
Could you shoot an email to taxinfo@envato.com with any extra information you have about the specific German small business exemption (like what it’s called in German) and who it applies to?
neutrico saidAnyway I got a feature request: Can we have Author Terms in PDF format as a single all in on document?
Thanks for the request, we don’t currently have that feature planned, but will pass it on as a suggestion.
DOGmotion saidSomebody explain me, why Envato collect VAT from my EU buyers if I’m not from EU? Furthermore, why you put this information on Tax Invoice if I don’t need it at all? Weird.
This is due to the EU’s new rules on VAT collection as of January 1st, 2015. For electronically supplied services, EU VAT rules need to be considered anytime the buyer is based in the EU, and with the new rules, that responsibility sits with Envato.
MigC saidMy opinion, and I respectfully admit we do not agree here, is that Envato could do more by allowing businesses to prove their EU business status without a VAT number and with suitable proof (tax documents, company website, commercial documents).
This is relevant because of the fact that I and many others will be paying a tax that legally does not apply to them . For example, EU freelancers under the VAT threshold are not required to pay VAT on these transactions, it is at entirely Envato’s discretion.
Official Source:
It’s a great point, and one we are working on in our post-VAT VAT work including ways to confirm business status and exemptions beyond a VAT registration number, and for which countries what proof is applicable.
Could you please email support@author.envato.com with documents you typically use to do this when interacting online? I know the team would find that really helpful to have real user feedback here!
I should not have to pay this tax as a UK business owner for reasons already explained, so I will not be doing so. The only way this is possible, is for me to no longer make any purchases from Envato until you fix the system.
The rules have always been simple. If you run a business in the UK and are VAT registered, you have to charge VAT. if you are not VAT registered, then you do not have to charge VAT, so where does this suddenly mean countries outside of the EU have to charge VAT? That is against the EU, not Envato.
Of course, various companies have been charging VAT when they don’t even have to. Vimeo is one that was charging it long before this law came into effect.
I was swaying, but this just goes to prove why we need to be out of the EU and now will have to vote UKIP just so I can purchase from a website.
UKFilmFestivals saidI should not have to pay this tax as a UK business owner for reasons already explained, so I will not be doing so. The only way this is possible, is for me to no longer make any purchases from Envato until you fix the system.
The rules have always been simple. If you run a business in the UK and are VAT registered, you have to charge VAT. if you are not VAT registered, then you do not have to charge VAT, so where does this suddenly mean countries outside of the EU have to charge VAT? That is against the EU, not Envato.
Little bigger companies like Envato must be VAT registered because their turnover is more than £81,000 in a 12 month period.
Diabolique saidUKFilmFestivals saidI should not have to pay this tax as a UK business owner for reasons already explained, so I will not be doing so. The only way this is possible, is for me to no longer make any purchases from Envato until you fix the system.
The rules have always been simple. If you run a business in the UK and are VAT registered, you have to charge VAT. if you are not VAT registered, then you do not have to charge VAT, so where does this suddenly mean countries outside of the EU have to charge VAT? That is against the EU, not Envato.
Little bigger companies like Envato must be VAT registered because their turnover is more than £81,000 in a 12 month period.
Of course. I think the main point is that the rules don’t apply to business-to-business transactions and Envato are solely using VAT registration as proof of being a business, when of course you can be business without having a VAT number.
MigC saidI don’t understand how Apple is relevant here, Envato has one set of global websites with all prices in dollars catering to a global market. Apple is a business to consumer company, it is segmented into regional storefronts and websites with registered offices in the relevent territories.
Apple was just an example. You should just know that it’s not only Envato with higher prices for EU customers.
MigC saidAnd one point here that is being missed is that this law applies to businesses supplying digital services to private consumers. I AM NOT A PRIVATE CONSUMER, I am a business that is BELOW the threshold for VAT registration in my EU member country. I am not required to pay VAT on transactions outside the EU, it is actually Envato’s decision whether I pay VAT.
I think you are wrong and you should go to your tax advisor to get more details on this topic.
AFAIR small companies in EU can register voluntarily to MOSS and get VAT id number and still preserve their VAT threshold on domestic sales.
So in this way you can identify to Envato as company and purchase items without VAT.
This is going to be very interesting. I think, in my opinion, Envato has just made a very fundamental mistake which is going to hurt business.
So taxes won’t bring any additional income to neither the product developers or Envato. In this situation, when EU decides of taxes like this, you really got two choices. Either you put the entire tax burden on the customer. This is what tobacco companies does because their products are generally quite inelastic and people will buy cigarettes no matter what the price is (almost
). Or, you divide the burden between the parties. The question that needs to be answered in order to determine the outcome of this is; who is the typical, for example, the wordpress theme buyer customer?
I’m a poor student; studying some economics, law and web development and design at university. I’m using envato to learn more about web development and design. I get 7 themes, develop some, and releases 1 or 2 just to try it out. I know of no businesses using envato in Sweden, but I’ve got 15 friends of mine just like me who does. For us, the prices at which you sell at are very elastic. When price increases by 1% the demand will drop by 0.3% or 0.4%. Putting the tax burden on us will result in a drop in demand by 30%-40%. I can only afford 1 item a month instead of 2 in some cases.
So, with my perception of envato, there is no rational or logical reason for doing what envato does; putting the entire burden on the customer. Your products are not very inelastic because of the customers envato got. Unless I am the only normal person here buying some theme, maybe starting a business, this move by envato is worrying. I am not against taxes, I think these taxes are necessary but I get a sence of too much greed by envato which will hurt business. Just my opinion!
UKFilmFestivals saidThis EU law is in force since 2003, what has changed by 1 January 2015 is that also EU based companies must now proceed according to the same law. Non-EU companies had take VAT for providing e-services to consumers in the EU since 2003. Most non-EU companies have ignored this for years or just founded an establishment in the EU to circumvent this law eg. Amazon.Of course, various companies have been charging VAT when they don’t even have to. Vimeo is one that was charging it long before this law came into effect.
According to the EU, even now only 7000 companies had registered for MOSS, including only 500 non-EU companies, the vast majority outside the EU continues to ignore this law.
neutrico saidMigC saidI don’t understand how Apple is relevant here, Envato has one set of global websites with all prices in dollars catering to a global market. Apple is a business to consumer company, it is segmented into regional storefronts and websites with registered offices in the relevent territories.
Apple was just an example. You should just know that it’s not only Envato with higher prices for EU customers.
MigC saidAnd one point here that is being missed is that this law applies to businesses supplying digital services to private consumers. I AM NOT A PRIVATE CONSUMER, I am a business that is BELOW the threshold for VAT registration in my EU member country. I am not required to pay VAT on transactions outside the EU, it is actually Envato’s decision whether I pay VAT.
I think you are wrong and you should go to your tax advisor to get more details on this topic.
AFAIR small companies in EU can register voluntarily to MOSS and get VAT id number and still preserve their VAT threshold on domestic sales.So in this way you can identify to Envato as company and purchase items without VAT.
That link is relevant to suppliers.
I give up. It’s like banging your head off a brick wall. My head is splitting trying to explain the same point! I don’t have time for this. You’ll be glad to hear I’m off.
MigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
We are in exactly the same boat. We are a partnership who are not VAT registered within the UK so do not have a VAT number. If this EU ruling excludes business to business then we should not be being charged VAT.
BanksMedia saidMigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
We are in exactly the same boat. We are a partnership who are not VAT registered within the UK so do not have a VAT number. If this EU ruling excludes business to business then we should not be being charged VAT.
Exactly - same for freelancers who are not VAT registered. Surely they could just accept our UTR numbers?
Also, MigC - you’re one of few talking sense on here.
dnfs2000 saidBanksMedia saidMigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
We are in exactly the same boat. We are a partnership who are not VAT registered within the UK so do not have a VAT number. If this EU ruling excludes business to business then we should not be being charged VAT.
Exactly - same for freelancers who are not VAT registered. Surely they could just accept our UTR numbers?
Also, MigC - you’re one of few talking sense on here.
Indeed a UTR number would suffice.
This needs to be sorted pretty swiftly as I have lots of purchases to make this week. If the UTR system is brought into place, will I receive a refund on the VAT I didn’t have to pay in the first place?
BanksMedia saiddnfs2000 saidBanksMedia saidMigC saidHere is the massive elephant in the room that no-one seems to want to address:
- This law applies to business to consumer transactions
- This law does not apply to business to business transactions.
- Envato wants us to prove we are a business with a VAT number
- However millions of small business operate legally in the EU without a VAT number under the VAT threshold in their country
- Envato could accept other proof of business eligibility but choose not to no
I’m not having a go at how hard authors work, I apologise as it has been taken this way (Anps)
All I am trying to say is why do Envato want to punish small business users without a VAT number by enforcing a VAT charge when it is not legally required?
We are in exactly the same boat. We are a partnership who are not VAT registered within the UK so do not have a VAT number. If this EU ruling excludes business to business then we should not be being charged VAT.
Exactly - same for freelancers who are not VAT registered. Surely they could just accept our UTR numbers?
Also, MigC - you’re one of few talking sense on here.
Indeed a UTR number would suffice.
This needs to be sorted pretty swiftly as I have lots of purchases to make this week. If the UTR system is brought into place, will I receive a refund on the VAT I didn’t have to pay in the first place?
I’d suggest emailing taxinfo@envato.com suggesting they collect UTRs instead…
MigC saidneutrico saidMigC saidAnd one point here that is being missed is that this law applies to businesses supplying digital services to private consumers. I AM NOT A PRIVATE CONSUMER, I am a business that is BELOW the threshold for VAT registration in my EU member country. I am not required to pay VAT on transactions outside the EU, it is actually Envato’s decision whether I pay VAT.
I think you are wrong and you should go to your tax advisor to get more details on this topic.
AFAIR small companies in EU can register voluntarily to MOSS and get VAT id number and still preserve their VAT threshold on domestic sales.So in this way you can identify to Envato as company and purchase items without VAT.
That link is relevant to suppliers.
It’s relevant to BOTH. It’s just a way to get your VAT ID and not to lose your VAT threshold.
You register as ‘supplier’ however your supplies are going to be 0/null/nada.
Thing is that you get VAT ID and you can provide this ID to Envato, confirm that you are business customer and get prices without VAT.
MigC saidI give up. It’s like banging your head off a brick wall. My head is splitting trying to explain the same point! I don’t have time for this. You’ll be glad to hear I’m off.
While you are off, you should go to tax advisor.
Envato is now perfeclty OK in what they are doing. Now it’s your problem to adapt to environment that has changed since 01.01.2015.
neutrico saidMigC saidneutrico saidMigC saidAnd one point here that is being missed is that this law applies to businesses supplying digital services to private consumers. I AM NOT A PRIVATE CONSUMER, I am a business that is BELOW the threshold for VAT registration in my EU member country. I am not required to pay VAT on transactions outside the EU, it is actually Envato’s decision whether I pay VAT.
I think you are wrong and you should go to your tax advisor to get more details on this topic.
AFAIR small companies in EU can register voluntarily to MOSS and get VAT id number and still preserve their VAT threshold on domestic sales.So in this way you can identify to Envato as company and purchase items without VAT.
That link is relevant to suppliers.
It’s relevant to BOTH. It’s just a way to get your VAT ID and not to lose your VAT threshold.
You register as ‘supplier’ however your supplies are going to be 0/null/nada.Thing is that you get VAT ID and you can provide this ID to Envato, confirm that you are business customer and get prices without VAT.
MigC saidI give up. It’s like banging your head off a brick wall. My head is splitting trying to explain the same point! I don’t have time for this. You’ll be glad to hear I’m off.
While you are off, you should go to tax advisor.
Envato is now perfeclty OK in what they are doing. Now it’s your problem to adapt to environment that has changed since 01.01.2015.
Not really - if you don’t supply digital goods why should you have to register with the MOSS just to get non-VAT prices as a business? It would make more sense for Envato to accept other forms of proof (such as a UTR number).
dnfs2000 saidNot really - if you don’t supply digital goods why should you have to register with the MOSS just to get non-VAT prices as a business? It would make more sense for Envato to accept other forms of proof (such as a UTR number).
As I said before - go to your tax advisor and try to find solution.
I’m not from UK, however in my country there are solutions to get VAT-EU ID which is valid according to VIES and not to lose your threshold.
In my country there are identifiers simmilar to your UTR called NIP and they are not sufficient to identify as business for EU transactions. There are separate rules which describes VAT-free supplies and purchases and I believe that similar regulations are in UK as well.
VAT is very complicated, international VAT is even more complicated.
Anyway IMHO Envato cannot accept your UTR or other local business ID numbers. They should accept VAT-EU only and it’s your problem if you can avoid VAT or not.
In some countries you can register to VAT and not to lose your threshold, in other countries you can demand return of VAT after you purchase… go to your tax advisor and find information there. But do not demand from Envato to do some exeptions just because you think they should.