Posted in: Comics, Recent Updates | Tagged: Comics, entertainment, EU, indie comics creators, legislation, taxes, vat

New European Legislation Could Spell The End For Many Indie Comics Creators (UPDATE)

Published Wed, 10 Dec 2014 17:00:00 -0600

Last updated Fri, 12 Dec 2014 18:30:14 -0600

By Joe Glass

Okay, so it may not be as bad as all that, but it's certainly not good.

If you are a fan of many of the indie or small press comics you can find at comic cons around the world and online, and especially if you live in the EU, you may have seen a lot of to-do on twitter over #vatmoss (or #vatmess).

At its most basic, new EU VAT legislation coming into effect January 1^st 2015 will mean that individual creators/sellers of digital comics (or any digital product, be it media or online courses), if they sell to any countries in the EU, will have to sign up and be subject to the individual VAT of each EU member state (up to a potential of 75 different groups!). With no exclusion thresholds.

They will also be expected to maintain and administer sales on a level more common practice to companies of a size (including obtaining two non-contradictory forms of location-based identification for each buyer AND storing for up to ten years!) is infeasible for a comic creator working a full-time day job to pay bills and fund their dream career.

In the UK, the HMRC have set up VAT MOSS (Mini One-Stop Shop) to try and alleviate some of the pressure of this, by allowing sole traders to sign up to it and they will divvy out the right amounts among the EU member states. However, in doing so, they will nullify their right to fall within the £81,000 VAT threshold and be subject to UK VAT too.

For many, this leaves comic creators/digital micro-businesses with three options:-

Sign up to potentially 75 different VAT regions subject to each individual returns, checks and VAT amounts (leaving themselves open to potentially hundreds of hours of paperwork and administration and countless amounts of red tape)
Sign up to VAT MOSS and forfeit their right as a small business with low earnings to be exempt from VAT on their UK sales
Stop selling digital comics/products to EU states if able to restrict sales based on sellers location OR, if this is unavailable, stop selling digital products completely

Now, if they decide options one or two, certainly they'd have to increase prices or eat the costs themselves, potentially costing some out of business. Sadly, most are seeing option three as their only option, stopping digital comics sales from their individual stores to the EU or entirely.

Regrettably, for my own comics The Pride and Stiffs, it is looking like I will be forced to join them in that option.

Which sucks. Firstly, if I were able to restrict sales to EU nations, it flies in the face of the message of inclusiveness and representation of The Pride. Secondly, digital comics sales have played a big role in getting me and my comic where we are today; with a low price point and no postage to worry about, many of my audience opted for this product, and it's spread the word and audience of my comic on a global scale far surpassing anything I could achieve from just a presence at UK cons.

Now, thankfully, the comics will be able to remain on Comixology (and potentially other third party marketplaces and apps) and be relatively unaffected (at this time, we've not heard anything about pricing structure changes or anything, but as they will now be responsible for VAT in the EU, it's possible). The problem/difference is, these sales are split 50/50 between ourselves and the marketplace, but the digital comics sold directly through an indie comics creators store goes 100% to the creator, to funnel into the projects/comics. As this now stands, it would seem to be driving us to use solely third party apps, thus increasing business to things like Comixology, Amazon, iTunes et al. Oddly, companies such as these and ensuring they are paying the correct taxes they should be is the exact reason this legislation was brought in, supposedly. And yet, it is small businesses that are going to potentially be crippled or at least adversely affected while big companies will manage it all fine and do well out of it.

There are actions being taken to face this mess of a situation: an online petition on Change.org is looking for Vince Cable MP, Secretary of State for Business, Innovation and Skills, to address these matters on behalf of UK micro-businesses (I urge all of you to sign the petition by the way).

His recent response to this petition, however, was less than helpful. He started by making out we should all have known this was coming as it's been on the HMRC's table for years (as if we check the HMRC website on a daily basis), and reiterated the above options, clearly uninformed by the trials and concerns facing small businesses and creatives.

A recent meeting between HMRC higher ups and creatives/small business owners, however, was more positive, and hopefully this will be communicated to Mr. Cable. But likewise, it was intimated that plans are for the legislation to be rolled out to physical products as soon as 2016 too, which at this point could kill many a comic/small business.

One other potential ray of hope for those selling via Big Cartel, like me. Whilst sadly being on Big Cartel is not enough to leave you unaffected, they have recently been made aware of the problems and are looking into workarounds for those based in the EU, but have warned it may not be pretty…but it's potentially something.

If you are a fan, creator or small business owner, there are actions you can take:

Sign the petition at Change.org
If you are in the UK, write and tweet your MP, and more importantly, MEP about your concerns

It is worth noting, these changes don't just affect businesses/comic creators in the UK and EU; anyone, anywhere who sells to EU member states will be subject to these new rules on VAT, making it the responsibility of the individual seller rather than the buyer. So even if your comic/shop is based in and sells from the US, you best read up on what to do.

For my part, and with things as they stand, The Pride and Stiffs digital comics will not be long for their respective store, so if you were thinking of getting digital copies and supporting indie comics as much as you can, now is the time to get them.

UPDATE: So after the less than stellar response from Vince Cable, sadly, the HMRC after all followed with an equally less than positive update on their VAT MOSS system.

Basically, they have conceded that if you sign up for the service, and fall below the usual UK VAT threshold, then you will not have to give this up to use the VAT MOSS system. But this was never really the big problem (I mean, it would be kind of annoying, but if that was it, we'd cope, I'm sure). The big problem is the insane amount of paperwork involved, even using the VAT MOSS system and the customer interrogation we're expected to do every sale. And these issues have not been addressed at all. In fact, they're 'guide' rather insultingly seems to make out like it's really not asking much.

I suppose it is also worth mentioning that they have simplified the wording so you don't need a degree in accounting to understand it all, which I suppose we should be thankful for.

To try and further the fight, the organisers of the original petition have created another, EU-wide petition, that again, I urge you all to sign. They are also planning a 'twitter storm' to try and force a change before the European Parliament closes for Christmas on December 16th. The twitter action will target three important recipients.

They have also created a website.

On a plus note, Big Cartel have provided a few workarounds. They admit themselves, they are by no means perfect solutions, but they are options we didn't have before. But of course, now those of us on Big Cartel with this option have to ask ourselves if we want to restrict (and risk being seen to discriminate) EU countries to continue sales of our digital products to the UK and the rest of the world, or if we'd rather stop selling digital comics entirely.

Joe Glass is a Bleeding Cool contributor, and creator/writer of LGBTQ superhero team comic The Pride, which is available on Comixology and at The Pride Store. He is also a co-writer on Welsh horror-comedy series, Stiffs, which can be bought at the Stiffs Store and is now also available on Comixology. You can follow him on twitter and tumblr.