Russian VAT (НДС) for Authors

And it would be great to get a heads up, so authors could adjust pricing in order to compensate this “innovation” (5 days notice is not a proper heads up). Currently it’s impossible to make any pricing changes, since a lot of authors has applied to Cyber Monday.

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Bad, bad news and especially in light of such horribly late informing of us. We need time to see how our sales and privacy will be affected by this move. Also we need to adjust our pricing accordingly (and this is not simple task with 400+ items and lack of flexible tools for doing this for years). I am also have no idea do we have ANY tools for registering VAT as individials here, in Russia. As far as i know it is possible only for companies, not individual artist. So you left us with pain in some place, leaving us 7 days for consulting and evaluating our potential troubles and loss. Why you did not informed us prior this decision? Why you still dont have some sort of focus groups with established aithors to consultimg and discussing all changes? Why you claim “together we succeed” slogan and in the same time you not doing even minimal steps to consult us months, not week before this changes? Do you have any idea about how this changes will affect us here? I think we need red alert level about this changes and we need extra time to evaluate this situation. Month at least, not week.

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Hi Steve!
Do i understand you correctly , Russian VAT will be charged only from Authors Fee? For instance if item price is 20$ my Author Fee (as Elite author) is 2.2$ (12.5% ) then additional VAT will be approximately 0.25$-0.30$ ( based on 16.67% from 2.2$)

We will see it in few days

We saw it 20 hours ago when this announcement was posted.

Thanks for your messages and questions so far, I’ve got some answers from the team which I’ll put below :slight_smile:

This is not a policy but evidence of Envato’s compliance with Russian VAT law. Most established countries have similar tax regimes such as Singapore, South Korea and many others. We will be introducing sales taxes from additional regions over the next year, so please be assured that Russian authors are not being singled out.

Envato will pay VAT quarterly to the Russian Tax Service in accordance with legal requirements. The amount we will remit will be all VAT charged to Russian authors during the quarter as well as VAT on buyer fees, handling fees and some item purchases. This is an obligation imposed on Envato by the Russian Government.

In regards to personal details, we do not regularly send any information to Russian tax authorities apart from filing returns.

Russia introduced VAT on digital services (which was applicable to Envato and by extension its Russian authors) on 1 January 2017. We are now coming into compliance with this law.

The taxation of digital products is a very complex area, and Envato operates in over 100 different regions, so it takes time for us to work through the tax rules, as they apply to Envato, in each region.

Tax forms are required for US tax purposes, this is a very different concept to VAT being introduced by the Russian Government.
It’s important that authors submit a tax form to ensure that the correct amount of tax is withheld from your earnings (separate to VAT on author fees).

We charge VAT on purchases of digital goods on Market. The EU does not impose tax on author fees as this is considered to be a “service” under EU VAT law and not subject to tax.

Yes, this is correct :slight_smile:

If an author is running a business, whether as an individual or as a company, and breach the threshold for VAT registration (2m RUB or US$25K per year), they can register for VAT. Through registering, you can claim credits for any VAT paid.

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Thank you, Steve, for all the answers!

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Thank you for the answer, but what you did not answered is why you dropped this notice only week or less before. Is it possible to do it way way before? Believe me, not every author read this forum frequently. We have large Russian (and Russian speaking authors from post Soviet countries) authors community on Russian social network VK to discuss, explain and ask for feedback. This is sign of respect to those who sell here and contribute to overall success.

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Actually very similar system is in EU. It is not Envato fault.

Actually EU does it if you have a company :slight_smile: If you are an active vat payer, you can make kind of automatic tax “reversal” = you do not have to pay it. But if you are a passive vat payer, you have to pay on your own a reversed vat from author fee.

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I know all this very well. So am I an author or a buyer? It’s time for you to decide =)

Unfortunately, you haven’t answered all the questions.

I would like to see the formula for calculating the new tax (for example, the edit-price tab, when you click the “How much of this will I earn?” Button, you can see the calculation: how much tax, how much I get. All this is perfectly visible in this formula). I just want to understand how much I will pay now.

If back in 2017 it was known that you want to introduce VAT, then at least the management could have reported this much earlier, at the same meetups of the authors.

Yes, it necessarily need to do so that there is no confusion for the authors, especially since someone has already written this formula above.

If I understand correctly, then as a buyer of the digital service (your stay on Envato) the right to use this platform and sell our items here, we will now pay VAT for using site.

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Yes, I already understood that.
It turns out that with this new tax there will be a slight difference in the total amount that we will receive. Half a dollar or a dollar. I hope I didn’t mess anything up.
The whole problem is that the guys from Envato could not immediately chew everything competently and show by example how much the author would receive and pay. Now everything is clear.

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While they may add that to the ‘how much will I earn’ feature, in the meantime, just take the authors fees listed in your statement page, and increase them by 16.67%. So if your author’s fee is $10 currently, then the new author’s fee will be $11.67 which means you’ll get $1.67 less per sale.

This difference can be compensated for and avoided because you set the prices for your items yourself. Therefore, I do not see any loss in income! :slightly_smiling_face:

You’ve misunderstood me. The issue is not the VAT itself. It’s the author fee and buyer fee nonsense that replaced the commission based system. The fact that authors have to pay taxes on Envato’s cut is insane and very unfair.

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Hi there, thanks a lot for the useful information.

As I understood from my calculations, I will probably lose about 0.6-0.8 dollars from each purchase. And the more expensive, the higher the percentage seems to be obtained. Okay, it will be clear already on Monday what will come of it.
You’re right that everything can be compensated for by price. But Envato itself is cunning with the search. For example “New or Hot under $ 12”. And all the same, we as authors cannot win from this. But I think that we will survive this too. :smiley:

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Higher the amount, but always the same percentage.

Hello!
Envato is ******** more and more for himself this year! At first, an incomprehensible decision to introduce a system for the adoption of tracks on the basis of the latest ones. Did you promise to shorten the appointment time? Well, in the end, my tracks hang again for 19 days, probably they need to expand the staff, no? Now this is an innovation that is shaking the authors. Subtract VAT from our deductions to you! The authors are already donating sufficient amounts! Greed will destroy you! The competition among stocks is starting, sooner or later you will realize your mistakes! Do something adequate in 2020! No offense, just my opinion.

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Envato collect the VAT and send the money to the Russain tax authorities, so they don’t get a penny of it. And as they’ve had to implement this change, even though it might be a relatively small amount, they’re now making less money than they did previously… so exactly what ‘greed’ is it that will destroy Envato?

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