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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.
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Let me stop you there.
Ah, Luxembourg.
Once upon a tax-wheeze, Government decided that the act of selling a transmitted product was the providing of a SERVICE. This attracted VAT.
The nature of the service was unimportant. Paper books are zero-rated for VAT. Electronic books are delivered via digital transmission, and attract VAT - much in the style of shit summoning flies.
For a time, VAT on e-books added a 20% tax. Luxembourg ran a lower rate of 3% for this, provided the company concerned was based in, koff, koff, Luxembourg.
Why are all these companies suddenly doing business from offices in Luxembourg, you ask?
COINCIDENCE.
Running your business from Luxembourg? Why, that's 3% VAT to you, and you are welcome. Your customers are happy. All is right with the world.
But now that's all gone. The purchaser's location determines the rate of VAT applied. If you bought a book out of thin air off Amazon, you unwittingly purchased that electronic tome from Luxembourg and THAT MADE A DIFFERENCE, DAMN IT!
No more. Let's delve into that Amazon message again.
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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.
Learn more about the new minimum and maximum KDP EU list prices:
https://kdp.amazon.com/help?topicId=ANRML55B0BWBK
Learn more about how EU prices affect royalty payments:
https://kdp.amazon.com/help?topicId=A30XCAGX3E5QDC
No need to do anything. Is it important? Amazon runs a two-tier rate for royalties. If you want the higher rate, you'll have to satisfy certain price conditions.
A VAT-related alteration to price might throw you across a threshold into a different level of royalty. The Amazon e-mail handed me a warning...
eBooks in the 70% royalty plan need to meet new minimum list price requirements.
You currently have one or more books in the 70% royalty plan that will not meet the new minimum list price requirements. To make sure that your books still meet the minimum list price required for the 70% royalty plan after January 1, we'll adjust the new list price that includes VAT to £1.99 and € 2.99 in order to meet the minimum for 70% royalty.
Setting List Prices for EU Kindle stores.
Starting January 1st, to make it easier to set customer friendly list prices without having to calculate VAT for each country, authors will set list prices for EU marketplaces that include VAT.
Learn more about the new minimum and maximum KDP EU list prices:
https://kdp.amazon.com/help?topicId=ANRML55B0BWBK
Learn more about how EU prices affect royalty payments:
https://kdp.amazon.com/help?topicId=A30XCAGX3E5QDC
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No need to do anything. Is it important? Amazon runs a two-tier rate for royalties. If you want the higher rate, you'll have to satisfy certain price conditions.
A VAT-related alteration to price might throw you across a threshold into a different level of royalty. The Amazon e-mail handed me a warning...
*
eBooks in the 70% royalty plan need to meet new minimum list price requirements.
You currently have one or more books in the 70% royalty plan that will not meet the new minimum list price requirements. To make sure that your books still meet the minimum list price required for the 70% royalty plan after January 1, we'll adjust the new list price that includes VAT to £1.99 and € 2.99 in order to meet the minimum for 70% royalty.
Setting List Prices for EU Kindle stores.
Starting January 1st, to make it easier to set customer friendly list prices without having to calculate VAT for each country, authors will set list prices for EU marketplaces that include VAT.
To accommodate this, the KDP pricing grid will be updated to accept VAT-inclusive list prices. Previously, if an author wanted to provide a suggested list price of “£1.99”, he would have to set “£1.93” as the VAT-exclusive list price to account for the 3% VAT we would have applied.
Now, authors can simply enter “£1.99” and we will deduct the applicable VAT to calculate royalties. In the pricing page, authors will also see their suggested price without VAT displayed for the primary country of the marketplace to help them understand how royalties will be calculated for sales to customers from that primary country.
Learn more about setting list prices for EU Kindle stores:
https://kdp.amazon.com/help?topicId=A30464Q6OVH578
We think that respecting your VAT-exclusive list prices and keeping books in their chosen royalty plans offers the best experience for authors. If you would like your books to be handled in a different way, contact us with your feedback:
https://kdp.amazon.com/contact-us?topicId=euvat
Best Regards,
Kindle Direct Publishing Team.
*
This annoyed me. VAT always annoys me. What was the upshot of the change, when the bells finished tolling and 2015 stumbled in out of the rain?
Fuck knows.
I had a look on Amazon sales pages on both sides of the Atlantic. And I checked my Amazon bookshelf too. The bookshelf has new entries to take account of the VAT alteration.
Here in Scotlandia, a 20% rate now applies. The sweet 3% Luxembourg rate is a thing of the past. So...
I should be able to see, at the clichéd glance, how things stand.
Er...
I've looked at my books on sale.
When I set the price for Neon Gods, I had to muck around with the bookshelf until I chose a dollar price that translated into a sterling price of £4 once VAT was included.
Fiddly. But I managed. My price points were £2 for anything up to 50,000 words, £4 up to 200,000, and over £6 for anything larger.
At the £6 end of the scale, I was close to the maximum dollar price for the 70% royalty, so I pushed the price up a little higher to take account of later vagaries in the exchange - if I reset the price during a Financial Apocalypse, say.
On the day that I set the price for VAMPIRES, I faced 3% VAT on £1.94 to give the customer a book at £2. Staring at the change now, the book will jump to £2.33 if I update the file. Or I can revise down to keep the price at £2...
Well, no. Depends where the purchaser lives. Staring at the charts for assorted EU territories, I see fluctuations in the Euro prices.
The Single European Currency is used by most EU countries, and so the price should be the same in each country. Not so. That tells me these countries have differing VAT rates...for now.
This all sounds like an evil ploy to bring harmony to differing levels of VAT on e-books in the long-term. And screw the customer. Also, to hell with the writers.
Harmony. You know. Straight out of that scene in Revenge of the Sith. We've shredded the heroes. Now we'll have peace. That kind of harmony.
Not the harmony of applying 3% VAT to all territories, but the rising tide of bringing everyone into line at 20% VAT.
To keep the cost of VAMPIRES the same after accepting VAT changes, I'd have to knock $0.09 off the cost at tonight's rate.
Meanwhile, over in the USA I see a glitch. When I land on one of my books, it costs the price I've set. (Wow. That's just fucking amazing. Who knew?!)
Mutter mumble. When I go further into the system, I see a different price in dollars. And when I go to the point of purchase, I am told that I can buy this book from where I am...and not from the USA. So no price is listed.
This added filter must be related to the VAT thing. I've not encountered it before, bold-as-you-please, on a purchase page.
As I am looking from over here, the VAT is inescapable. I can't see what Americans, living in the land of the VAT-free, are being asked to pay for my books.
The price I set, I'd guess. But I can't see, for certain.
This is annoying. It shouldn't be.
Amazon put in a VAT calculator for me. I choose the pre-tax price, and I can see the end price right in front of me, on the instant. Well, the end prices for different territories.
That is convenient, I won't deny. No more fiddling around one cent at a time, accepting a dollar value that then converts to sterling, with a guessing-game at the end over the exact decimal fraction that trudges to the mystical price of asking.
Yes, that bit is handy. Would've been nice of Amazon to include it before. But never mind all that. It's here now.
Separate issue? The shift in the rate of VAT erodes value. Yes, Value Added Tax will cost you. Do I reduce my prices, to keep them standing still for the consumer? (Depending where the consumer lives?)
Or do I adjust to the new VAT regime and let the prices bump up?
I was annoyed at the change, and for reasons of simplicity I WAS going to throw the prices up slightly. But the fluctuation in the exchange softened the blow a little since last I set prices...
So dropping $0.09 off a title to let the price stand still...is the price of doing business. It's less aggravating to me than it is to my customers.
My domestic customers will see no increase in prices. And my American customers will see a slight reduction. The VAT shakeout is a one-time thing. (A lie was told there, surely. But I DO believe in fairies. I do, I do, I do, I do, I do, I do.)
VAT. Pah.
I think my gerbil porn comes out slightly cheaper domestically. And on that note, having just altered the prices, I'll publish this blog. It'll take maybe four hours for the new same prices to cycle through.
That's my cue for a coffee.
Fuck knows.
I had a look on Amazon sales pages on both sides of the Atlantic. And I checked my Amazon bookshelf too. The bookshelf has new entries to take account of the VAT alteration.
Here in Scotlandia, a 20% rate now applies. The sweet 3% Luxembourg rate is a thing of the past. So...
I should be able to see, at the clichéd glance, how things stand.
Er...
*
I've looked at my books on sale.
When I set the price for Neon Gods, I had to muck around with the bookshelf until I chose a dollar price that translated into a sterling price of £4 once VAT was included.
Fiddly. But I managed. My price points were £2 for anything up to 50,000 words, £4 up to 200,000, and over £6 for anything larger.
At the £6 end of the scale, I was close to the maximum dollar price for the 70% royalty, so I pushed the price up a little higher to take account of later vagaries in the exchange - if I reset the price during a Financial Apocalypse, say.
On the day that I set the price for VAMPIRES, I faced 3% VAT on £1.94 to give the customer a book at £2. Staring at the change now, the book will jump to £2.33 if I update the file. Or I can revise down to keep the price at £2...
Well, no. Depends where the purchaser lives. Staring at the charts for assorted EU territories, I see fluctuations in the Euro prices.
The Single European Currency is used by most EU countries, and so the price should be the same in each country. Not so. That tells me these countries have differing VAT rates...for now.
This all sounds like an evil ploy to bring harmony to differing levels of VAT on e-books in the long-term. And screw the customer. Also, to hell with the writers.
Harmony. You know. Straight out of that scene in Revenge of the Sith. We've shredded the heroes. Now we'll have peace. That kind of harmony.
Not the harmony of applying 3% VAT to all territories, but the rising tide of bringing everyone into line at 20% VAT.
To keep the cost of VAMPIRES the same after accepting VAT changes, I'd have to knock $0.09 off the cost at tonight's rate.
Meanwhile, over in the USA I see a glitch. When I land on one of my books, it costs the price I've set. (Wow. That's just fucking amazing. Who knew?!)
Mutter mumble. When I go further into the system, I see a different price in dollars. And when I go to the point of purchase, I am told that I can buy this book from where I am...and not from the USA. So no price is listed.
This added filter must be related to the VAT thing. I've not encountered it before, bold-as-you-please, on a purchase page.
As I am looking from over here, the VAT is inescapable. I can't see what Americans, living in the land of the VAT-free, are being asked to pay for my books.
The price I set, I'd guess. But I can't see, for certain.
*
This is annoying. It shouldn't be.
*
Amazon put in a VAT calculator for me. I choose the pre-tax price, and I can see the end price right in front of me, on the instant. Well, the end prices for different territories.
That is convenient, I won't deny. No more fiddling around one cent at a time, accepting a dollar value that then converts to sterling, with a guessing-game at the end over the exact decimal fraction that trudges to the mystical price of asking.
Yes, that bit is handy. Would've been nice of Amazon to include it before. But never mind all that. It's here now.
*
Separate issue? The shift in the rate of VAT erodes value. Yes, Value Added Tax will cost you. Do I reduce my prices, to keep them standing still for the consumer? (Depending where the consumer lives?)
Or do I adjust to the new VAT regime and let the prices bump up?
*
I was annoyed at the change, and for reasons of simplicity I WAS going to throw the prices up slightly. But the fluctuation in the exchange softened the blow a little since last I set prices...
So dropping $0.09 off a title to let the price stand still...is the price of doing business. It's less aggravating to me than it is to my customers.
My domestic customers will see no increase in prices. And my American customers will see a slight reduction. The VAT shakeout is a one-time thing. (A lie was told there, surely. But I DO believe in fairies. I do, I do, I do, I do, I do, I do.)
VAT. Pah.
I think my gerbil porn comes out slightly cheaper domestically. And on that note, having just altered the prices, I'll publish this blog. It'll take maybe four hours for the new same prices to cycle through.
That's my cue for a coffee.
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