Apologies….. #VATMESS


… To anyone in Europe who wants to buy an eBook via Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.es, and Amazon.it.

The 20% UK price hike from 1st January 2015 is not due to publishers and authors getting greedy. Far from it. Collectively we’ll be taking a sizeable pay cut. Because in the New Year (2015) eBook downloads and similar are being subjected to Value Added Tax. This will hit anyone who is an ePublisher, both coming and going. Especially the small independents.

As a Kindle Direct Program Author I received an email containing this bombshell;

On January 1, 2015, European Union (EU) tax laws regarding the taxation of digital products (including eBooks) will change: previously, Value Added Tax (VAT) was applied based on the seller’s country – as of January 1st, VAT will be applied based on the buyer’s country. As a result, starting on January 1st, KDP authors must set list prices to be inclusive of VAT. We will also make a one-time adjustment for existing books published through KDP to move from VAT-exclusive list prices to list prices which include VAT. We’ll put these changes into effect starting January 1st; you may always change your prices at any time, but you do not need to take any action unless you wish to do so.

One-time Adjustment for Existing KDP Titles:
Starting January 1st, for any titles already published in KDP, we will make a one-time adjustment to convert VAT-exclusive list prices provided to us to VAT-inclusive list prices. Subject to minimum and maximum thresholds, we will add the applicable VAT based on the primary country of the marketplace to the VAT-exclusive list price provided. For example, if an author had previously set £5.00 as the VAT-exclusive list price for amazon.co.uk, the new VAT-inclusive list price will be £6.00 because the applicable VAT rate in the UK is 20%. Please note, if an author had set a consistent VAT-exclusive list price for all Euro based Kindle stores, those prices will now be different due to varying VAT rates for the primary country of each Kindle store. For example, if an author had previously provided a €6.00 VAT-exclusive list price for amazon.de, amazon.fr, amazon.es, and amazon.it Kindle stores, the list prices including VAT will be €7.14 (19% VAT), €6.33 (5.5% VAT), €7.26 (21% VAT), and €7.32 (22% VAT) respectively.

Minimum and maximum list prices for the 35% and 70% royalty plans will now also include VAT. For books published before January 1st that would fall outside these new limits after VAT is included, we will adjust the list price to ensure the book remains in the same royalty plan that was previously selected.

I have only one title available on Kindle alone and that’s ‘Head of the Beast’ special Kindle edition. Which has me thinking of withdrawing said ‘Kindle only’ eBook and producing a new edition for general distribution on all the main platforms.

In the interim, there is a way around the EU’s tax grab, which is to surf Amazons listings via a VPN service like TunnelBear. Avast! antivirus also offer a reasonably priced VPN solution for subscribers. Or go to your chosen author’s offshore web page and purchase a download directly from their US or overseas publisher. In my case Lulu.com (See sidebar). This is a win-win for both independent author and reader, as the author of a chosen title will probably get a bigger royalty than if purchased via Amazon. In my case that works out at CAD$3.46 (About GBP1.90) from Lulu.com out of a CAD$4.99 priced title (Currently about GBP2.75) or CAD$1.92 (About GBP1.05) if the same title is purchased via Amazon and the reader can duck the EU’s tax hike. Currency conversions are based on the current rate of 1.82 Canadian Dollars to one British pound.

We should have seen this coming like a twister on the horizon. Staring at this dark cloud but not quite believing it was heading our way. A tax on eBooks? Surely not. Too late. If you can’t use technology to duck the extra tax, buy all the eBooks you can before the 1st January 2015 deadline. For my part, I’ll try to work out how to trade direct to consumer with a virtual currency like Bitcoin.

The UK’s Daily Telegraph is not impressed. Neither am I. It’s hard enough trying to make a little money in the writing game without being subject to daylight robbery.

Pass it on.

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Published by:

Martyn K Jones

A writer who first trained as an Electrical Engineer, then fulfilled various roles within the computing industry. First published in 'SuperBike' magazine, 1978 under the pseudonym Harry Matthews. Since then has written and had published a wide variety of work; from PR copy in trade magazines to supernatural short stories and the occasional satirical article. Emigrated to Canada in 2007. Became a Canadian Citizen December 2014. Now branching out as a serious science fiction novelist.

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