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Bandcamp taxes on Martin's releases

I think this is worth looking into. My info may be out of date, since most things I've read stem from legislative changes that came into effect in 2015 across the EU, but I suspect that Bandcamp charges tax because it has to, to stay within those regulations.

However, what I've read does seem to suggest that there is a possible way around it. The site that seemed to sum it up most clearly is in the link below. It says:

All digital download and e-service traders, telecoms providers and broadcasters selling to consumers will have to charge VAT on sales to a customer in the EU (regardless of their annual turnover), and do so at the tax rate of the buyer’s country.

Previously, a UK business with an annual turnover below the current £81,000 VAT registration threshold (at time of writing) wouldn’t need to become registered and charge tax on sales.

From 1 January 2015, all businesses, whether inside the Union or outside it are affected. The EU will attempt to use its foreign trade agreements to press businesses located outside its borders to comply.

But it then goes on to say:

The level of manual intervention when supplying digital content plays a big part in establishing if the regulation applies.

If you run a smaller business with low sales volumes, a more manual approach allows you to stay outside the regulations. For instance, you can send the buyer an email with the purchased content attached and this is not classed as supplying content electronically. However, if you manually email the buyer a link to the purchased download, instead of attaching it, this still has to be taxed.

So the solution would seem to be, chuck £6 at Martin via Paypal, and have him email you the digital album.

Bandcamp is one of things that makes purchasing - especially digital - quick and convenient. but like most things in life, that convenience comes at a cost. As I understand it, through Bandcamp, Martin will still only receive £6 even though it costs you £7.20, it just depends whether you mind paying that tax, which Martin won't get.

Of course the other way to do it might be to send Martin £7.20 to his Paypal account and ask him to email it. That way, it costs you the same amount as through Bandcamp, but Martin gets another £1.20 in his pocket. And surely even paying that little extra, they're still bloody good value?

What's anyone think?

All you need to know about VAT regulations for websites selling digital downloads


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