2015 EU VAT regulations and the Engine Publishing store

A substantial change in European Union (EU) VAT (value added tax) regulations has been put in place beginning on January 1, 2015, and despite being based in the United States this change impacts Engine Publishing. The new rules are explained on the European Commission website.

I’m not a lawyer or an accountant, but here’s my understanding of the new rules: If you sell a digital product to a customer in the EU, you have to verify their location, charge the appropriate VAT for that country, and remit VAT to all countries where you made even a single sale. It doesn’t matter where the seller is based, only where the customer is based. It’s an accounting nightmare that is too expensive, both in time and money, for Engine Publishing to handle.

The only legal, financially viable option for me is the one that impacts the fewest customers: Effective today, Engine Publishing will no longer sell our products directly to customers in the EU. I’ve agonized over every possible solution, and I wish there was a better option. Choosing from a menu of shitty options has been a stressful process, and this new law makes no sense to me as it applies to small businesses. I apologize to all of our customers in the EU for making this change to our online store. It sucks, and I’m sorry.

The rest of this lengthy post lays out the new rules, the options I considered, and what this means for Engine Publishing and you.

The new VAT rules

Direct digital sales, such as sales of PDF RPG products from our online store, must comply with the new rules. Because Engine Publishing has always provided a free digital version with every print product, the new rules apply to the digital “portion” of those sales as well. This means that for every sale to a customer in the EU I would have to:

  • Charge VAT based on the customer’s member country. There are currently 28 countries in the EU, all of which have their own VAT rates and laws.
  • Collect very specific data proving that the customer lives where they say the do, and retain that data for 10 years.
  • Remit VAT payments to each member country where I’ve made any digital sales, with no minimum threshold.
  • …or face fines and other penalties from any EU member country for not following the new law.

The crazy part is the lack of a minimum sales threshold. By way of example, that means that if I sell a $10 PDF to one customer in France in 2015, I have to remit VAT to France for that sale. Add a threshold, and the law wouldn’t impact me — or most small-press RPG publishers — at all, because I don’t make enough money from EU sales to meet a reasonable threshold.

What this means for Engine Publishing

This presents a big problem for Engine Publishing.

Engine Publishing is a small business with one part-time employee, me, and I run it in my spare time. Like a lot of small-press publishers, I have a full-time job that pays the bills, and I also have a family. I handle direct order fulfillment (shipping), accounting, customer service, advertising, and other “publisher stuff” like finding new sales venues on an ongoing basis. Alongside that, I do the stuff that goes into publishing our books: lining up freelancers, handling contracts, making payments, editing, indexing, etc.

Adding complex VAT remission on a regular basis isn’t something I can handle. There are products and services available that will handle the tax stuff, but they’re too expensive for me. That leaves a few options, all of them bad.

  • I can just ignore the law and hope no one notices, but that’s not how I roll. I pay my taxes and run my business on the books and above-board, and doing otherwise isn’t in my blood. It’s a shitty law, but I’m going to follow it.
  • I can rely on the Internet’s advice regarding complex tax law and employ a loophole, such as manually attaching a PDF to an email and manually sending that email to customers in the EU. I’ve read as much information as I can find on the automated aspect of the new law, which is also pretty weird, and — setting aside the time and effort costs involved — I’m not convinced that this manual workaround is legit. So I’m not going to do that.
  • I can stop bundling free digital versions with print products in our online store. This goes against one of my deepest-held beliefs about gaming books — that buying the print book should give you access to all available formats — and it impacts all of our direct print customers. This isn’t an option.
  • I can close the Engine Publishing store entirely, shifting all sales to third-party marketplaces. This would impact 22% of our sales (both print and PDF, overall) in some way. Exactly how is hard to calculate, because some direct customers would be willing to buy our books elsewhere and some wouldn’t, and I don’t know how to guess that. This option isn’t economically viable for Engine Publishing as a business, and on top of that it would remove an important component of the company’s present and future development. I can’t do this.
  • That leaves only the least-shitty option: I can stop selling books to the EU. This will impact roughly 25% of our direct customers (roughly 6% of our customers overall), though some EU-based folks will likely buy the books through other channels. This, unfortunately, is what I’ve decided is the best option.

From setting fair prices, to providing free digital versions with print sales, to bundling multiple digital formats at no extra charge, to customer service, I’ve always tried to run Engine Publishing as a customer-focused business. No longer selling books to the EU is a crappy, customer-unfriendly thing to do, but it’s the legal, financially viable option that impacts the fewest customers and I can’t see a better choice.

What this means for our customers

Effective today, our online store will no longer sell products to customers in the EU. Again, I’m very sorry about this.

If you’re in the EU and want to buy digital versions of our books, I recommend DriveThruRPG.

If you’re located in the EU and want to buy print copies of our books, I recommend your local gaming store or an online retailer (Amazon, Noble Knight, etc.). Our books are distributed worldwide, and your local store should be able to use one of their regular distributors to order you a copy.

Our PDF guarantee (Bits & Mortar) still applies to customers in the EU. (I may send PDFs through DriveThruRPG or via email; I haven’t figured that out yet.)

The future

I’ll keep tabs on these regulations, as I have done for the past several months, and if a sensible exemption for small businesses or some other change makes it feasible for me to start selling books to customers in the EU again, I’ll go right back to doing that. However, I’ve heard that these regulations will also apply to physical products — i.e., printed books — starting in 2017, so it’s entirely possible that this change will be a permanent one. I just don’t know.

Thank you for reading this, and my apologies again for making this change.

8 Responses to “2015 EU VAT regulations and the Engine Publishing store

  • Citali
    6 years ago

    “if I sell a $10 PDF to one customer in France in 2015, I have to remit VAT to France for that sale.” How is that even remotely enforceable? How would France know a French citizen bought…anything really, much less something downloaded from a website?

  • I don’t know how enforceable it is or how it will be enforced. But like I said in the post, it’s now (well, about to be) the law and I’m following it even though I think it’s stupid and unfair.

    I can’t afford to risk the consequences of not doing so, which could cause me to close up shop entirely.

  • Robbie
    6 years ago

    In case you are unaware, there is no VAT on printed books in the UK. There is on digital books however. Since you are providing the digital versions ‘free’, there would be no applicable VAT.

  • Everything I’ve read points to free digital books bundled with print books being a gray area. I have yet to see anything in black and white that confirms that digital books provided in that manner are exempt from the new rules.

    If I can confirm that that’s the case and that it applies to the entire EU, then only the “2017 problem” (the new rules applying to print books in 2017) would remain. I’d likely turn back on print sales to the EU until 2017 in that case.

  • AylaDoC
    5 years ago

    No, exceptions about VAT are country only. Each country has his own rates and exceptions (basically 2 rates: one low (around 5-7%)and one high (around 20%). And for books it can be different according to digital or print (at least according to the EU Commission in a recent decision against France).

  • Tauno Siirinen
    5 years ago

    I am sorry to be harsh, but this whole not-selling-to-EU decision is based on total ignorance and misinterpretation.

    The law/directive is clearly aimed at taxing phone and internet service providers. It has nothing to do with (a) physical goods and (b) electronics books/documents.

    Anyone bothering to read the material provided on EU Commission website above and particularily the explanatory PDF it links to can see, that electronic services refer to video phone and cloud services, HBO, Netflix etc.

    And even if everything I wrote above was false and lies, the PDF you give out for free with the order of a physical copy would make no difference: free equals $0, 24% tax on $0 is still $0 as zero can not be taxed. And our friendly customs officials will still grab the physical copy when it arrives and we have to pay VAT the usual way before the item is released for delivery.

    So guys, how about you start selling overseas again?
    There is no reason to have this silly no-overseas-sells policy besides the fact that you believed as a fact some nonsense some internet bessewisser spread.

  • Martin Ralya
    5 years ago

    I spent a great deal of time reading up on and researching this issue, and reached a different conclusion than you did.

    Part of the problem with trying to sell print orders (with free PDFs, as you note) is that neither my ecommere software nor PayPal will allow me to configure a filter that enables an EU customer to buy print books but not standalone PDFs.

    That brings things full circle: Engine Publishing has one part-time employee, and I can’t afford to do the required VAT accounting.

    I’m not happy with the whole situation either. That’s why I spent so much time trying to find workable alternatives.