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ScoobyDoo555 Platinum Member
Joined: 12 Jan 2008 Posts: 840 Location: Herefordshire, UK
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Posted: Fri Jan 02, 2015 11:59 am Post subject: BIG (bad) news for labels and musicians selling music |
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http://www.twitlonger.com/show/n_1sji42f:
Quote: | Some advice if you buy/sell music via bandcamp, to understand the new EU VAT law
This is a long, boring, but VERY important post, mainly aimed at musicians/labels who sell on sites like Bandcamp, but it's also relevant to EVERY person who buys music. Please give it a read and your full attention, because from the 1st January 2015 (aka 3 days time), artists/labels will be breaking the law if they don't act. Spread and share it too, because everyone will need to see it, especially the artists/labels.
(Also, as a disclaimer, although this information is correct to the best of my knowledge, I offer no guarantees there won't be any errors etc.. Think of it as a useful primer to get you started. If in doubt, speak to your local tax advisor and/or accountant)
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Basically, when I (me being a label + musician) sell you one of my digital MP3 files, I don't charge you (the listener/buyer) any VAT because under current UK tax rules, as long as I earn under £81,000/year, I don't need to be VAT registered. £81k is obviously a lot of money and about 99% of your favourite indie artists probably don't charge VAT because they're under this threshold. If they are over, it's a flat VAT price specific to the country they live in. So a UK-based artist earning over £81K/year would charge 20% VAT, as that is what the UK VAT rate is set at.
Unfortunately, a new EU tax legislation was agreed upon, which will finally be made law on January 1st 2015, specific to businesses who offer "digital services" (aka any thing you charge a customer to download, such as games, video, training videos, and most importantly for us - music). The new law will mean that ANYONE who offers a digital service sold via their own automated website will now need to be VAT registered, regardless of whether they are under the UK 81K income threshold. This is bad enough, but it becomes much worse when there are 28 different EU markets, with 75 different tax rates!
Here is the HMRC's definition of what a "digital service" is https://whitehall-admin.production.alphagov.co.uk/government/uploads/system/uploads/attachment_data/file/390300/VAT_MOSS_Flow_chart.pdf
And here is a a good overview of what is happening, specific to musicians.
http://www.bmmagazine.co.uk/in-business/advice/need-know-vat-regulations-websites-selling-digital-downloads/
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So what does this mean really? Well, as an example, I live in the UK and when a German fan buys one of my MP3s, because they live in a country that is a member of the EU, I would now have to charge them an additional 19% VAT on top of the existing sale price. This money is collected by me and then sent to the HMRC (the UK tax office) every 3 months,. There are around 28 EU specific regions, each having their own VAT rates. EVERY single country in the EU will need to be accounted for separately when I file my VAT return. That's over 20 pages, every 3 months, separate from the annual income tax return. Basically, it's an accountants worse nightmare.
It becomes even more insane because if this German fan was to buy my music while he was on vacation in France, then he now gets charged French VAT rates instead! This is because the VAT is specific to where the customer is located at the time of purchase, not their nationality! What if they're on a train at the time of purchase, travelling from Poland to Germany? Well, it is then determined by the country they were located in before they set off! Sounds ridiculous? Yes. Yes it is.
This isn't just a UK problem either. ALL countries are affected. If you live in the USA and intend to sell digital records to any country in the EU, then you too will need to pay VAT tax directly to the HMRC. Live in Australia or Mexico? You're affected too, sorry!
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#scope-of-rule-change
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So here's the problem. If you're an artist who sells on Bandcamp now, you will be breaking the law if you continue to sell your music after Jan 1st 2015 and don't charge EU customers their specific VAT rate. It doesn't matter if you sell just 1 record or thousands. If you charge money for your music, then you need to be VAT registered. Your only option is to either comply or remove your music from sale from the website, effectively killing your business in the process. Not just Bandcamp too, if you have your own website or use a similar service like Limited Run, then you also need to comply or risk prosecution for tax evasion. This will mean MUCH more paperwork and potential accounting bills, just to keep on track of things (and keep you out of court)
Now for music BUYERS (which is probably most of you reading this), if you live in the EU, then you are now going to be paying about 20% more in price for your digial music, games, videos etc.. As if prices weren't high enough!
In addition, the rules state that everyone who charges VAT must keep their customers data for 10 YEARS after the point of sale. This data will include things like your name, your address, your payment details, your IP address (to prove your location, remember?) etc... This was previously in the hands of the payment provider (like Paypal) but now it's also the responsibility of the individual company/label/artist to keep it too, in case of an audit! I don't need to tell you of the massive potential security risks that could and will happen as a result of this... Oh and we, the musicians, are charged £35/year to register with a data protection service to agree to keep your information safe. It might be even higher for your specific country.
Honestly, the whole situation is made 1000x worse because for many of us, this new law came like a bolt of lightning out of nowhere. Chances are that this is probably the first time you've heard of it. I literally found out about it yesterday and have been scrambling to read up and educate myself on it, so I wasn't breaking the law in a few days time.
~~~~~RECAP AND CONSEQUENCES OF THIS NEW LAW~~~~~
So here's the deal. From 23:59 on the 31st of December 2015, I will have to remove all digital music from sale from my https://3six.bandcamp.com page, at least until I get my label VAT registered. It can still be streamed as normal, but you just won't be able to pay for it. It's either remove it all or set my entire digital discography to free (it's currently pay what you want for most albums, but I can't even use that now in case one of you decides to be kind enough to actually support me)
For my http://www.3six.net website, I will also be forced to remove all digital downloads from any physical record you buy from me. If you buy a vinyl record or CD bundle from there (and my bandcamp page for that matter), it will no longer include the MP3/FLAC file, as this will be classed a digital service. Physical records on their own are currently unaffected by this, so I will still keep them up for sale as normal.
I have no clue as to how this will affect my new EP "Pulse Dive" which was due to be put up on sale next month. That release may have to be a vinyl-exclusive with NO digital download for the time being. Luckily, my site will let me add digital downloads to any order made retroactively, so when you buy the vinyl record and I eventually get my VAT registration sorted, you should be able to download the digital file immediately afterwards, with no extra cost.
I'm sorry, I know this is s**t, but I literally can't do anything about this for the moment.
If you've made it this far, then like the rest of us, you're probably scratching your head thinking "WTF have I just read?". It's complicated, it's boring and it's a complete pain in the backside. Many of you are probably thinking this doesn't even apply to you, but the reality is, it's going to completely change the game for both buying and selling music. This new law is going to have a HUGE affect on the musicians and labels you know and love from January. I imagine that most of them, like myself, will have no choice but to remove their music either temporarily or permanently. The smaller, less-known artists will be hit the hardest. You, the customer, will be paying more for your music, and in an industry where convincing people to actually buy music is hard enough, it's going to be made even worse because of this ruling. It's a s**t-show for everyone, basically, except the corrupt bureaucratic wankers who run the European Union.
The communication from the government was dreadful and the burdon of responsibility ultimately falls on them to inform businesses about the new change to the law. I received no letters or emails from them. Sites like Bandcamp found out about this a month ago or so, but even they did email their users to let them know about it. Best yet, when I spoke to my accountant friend about this last night, even he had no idea what the hell MOSS was! We were all left in the dark, almost until it was too late.
Here are some websites with some additional reading, so you can get yourself fully-educated on the subject. Don't wait too long, because this all comes into effect from January 1st 2015!
http://www.bmmagazine.co.uk/in-business/advice/need-know-vat-regulations-websites-selling-digital-downloads/
http://darkfloor.co.uk/eu-vat-darkfloors-bandcamp/
https://whitehall-admin.production.alphagov.co.uk/government/uploads/system/uploads/attachment_data/file/390300/VAT_MOSS_Flow_chart.pdf
https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#eu-vat-rule-change
https://www.gov.uk/vat-registration/overview
https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop
Finally, here is a petition to call for the intervention of this new law for businesses under the current VAT exemption Threshold. SIGN IT.
https://www.change.org/p/vince-cable-mp-uphold-the-vat-exemption-threshold-for-businesses-supplying-digital-products
Thanks for reading. |
_________________ Yamaha SY77 & KX88, SSL Nucleus, Korg Kronos 61, Wavestation A/D, Access Virus B, Roland XP30, DeepMind12D, System 1m, V-Synth XT, Focusrite Red16Line, Unitor 8, Akai S3000 XL, Alesis Quadraverb+, Focal Shape Twins, Full fat iMac, Logic Pro X, ProTools 2021, loadsa plugins.
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Sharp Site Admin
Joined: 02 Jan 2002 Posts: 18197 Location: Ireland
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Posted: Fri Jan 02, 2015 1:18 pm Post subject: |
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Meanwhile, the system is heading towards a complete crash regardless and the powers that be are pushing towards WWIII in order to press a reset button.
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chilly7 Platinum Member
Joined: 04 Jun 2009 Posts: 821 Location: planet Earth
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Posted: Fri Jan 02, 2015 1:47 pm Post subject: |
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Yes, it is very bad, i do not know what to do. Maby it is was made in order to kill independed artists and music and to push devil mainstream music in to mass which make people aggressive zombies who do not want to think by their own brain.
P.s. Lukely for me i am not going to sell my music but will offer it all for free, but will live by donations.( maby it is not for awrybody but i like it).
But maby thouse devils in goverment are looking to find a way even to charge taxes for free music too or maby the goverment have to aprove my desigen to distribute my music for free or i need to get aproval from goverment to accept donations. _________________ https://слово-божье.рф
https://www.facebook.com/GodenWord/
https://youtube.com/777chillyy777
Last edited by chilly7 on Fri Jan 02, 2015 1:51 pm; edited 2 times in total |
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csteen Platinum Member
Joined: 09 Dec 2006 Posts: 792
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Posted: Fri Jan 02, 2015 1:47 pm Post subject: |
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Sharp wrote: | Meanwhile, the system is heading towards a complete crash regardless and the powers that be are pushing towards WWIII in order to press a reset button.
| With the above statement I declare you no longer Sharp, but instead I am thinking you are right in tune with what is going on! This forum just got even better. |
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SanderXpander Platinum Member
Joined: 29 Jul 2011 Posts: 7860
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Posted: Fri Jan 02, 2015 4:02 pm Post subject: |
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I don't know about UK but here in Holland, pretty much every musician who is serious enough to charge for his music is VAT registered. Perhaps because our VAT free threshold is much lower (1345e in VAT, so it depends on the rate of VAT when you hit that).
Also, on my tax form, I only have to fill out "foreign VAT", not specify by country. So not a whole lot would change for me, except if I were selling digital downloads via my own website where I would then have to calculate by country I suppose. Services like iTunes and Spotify take care of this altogether. |
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Bachus Platinum Member
Joined: 23 Apr 2006 Posts: 3127
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Posted: Fri Jan 02, 2015 7:40 pm Post subject: |
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SanderXpander wrote: | I don't know about UK but here in Holland, pretty much every musician who is serious enough to charge for his music is VAT registered. Perhaps because our VAT free threshold is much lower (1345e in VAT, so it depends on the rate of VAT when you hit that).
Also, on my tax form, I only have to fill out "foreign VAT", not specify by country. So not a whole lot would change for me, except if I were selling digital downloads via my own website where I would then have to calculate by country I suppose. Services like iTunes and Spotify take care of this altogether. |
I agree with this, this problem is a local one (UK)... And i think its just normall for everyone to pay taxes equally, so goes for mucisians... |
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Kontrol49 Platinum Member
Joined: 04 Mar 2006 Posts: 1280
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Posted: Fri Jan 02, 2015 8:38 pm Post subject: |
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Ooh dear it seems the Taxman has realised there are people they haven't fleeced yet..
Give a man a gun and he can rob a bank!!!
Give a man a bank and he can rob the world!! _________________ --Korg Nautilus~~Korg Modwave--Korg SV-1-Korg Wavestate--
Last edited by Kontrol49 on Sat Jan 03, 2015 9:32 am; edited 2 times in total |
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Kevin Nolan Approved Merchant
Joined: 04 Dec 2005 Posts: 2524 Location: Dublin, Ireland
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Posted: Fri Jan 02, 2015 8:49 pm Post subject: |
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What I find deplorable about this is not the nature of the tax, or even the massive inconvenience; but the inconsistency on how they view commercial business in the digital domain.
On the one hand, legislators (European, US and beyond) are scared to regulate blatant theft of digital content, confusing the issue with "freedom of speech" because of the pressure they experience from massive (false) lobbying by a weird mixture of anarchist-groups and the likes of Google and Youtube - the upshot being that we're breeding a generation who can identify no commercial value in music, film, books and news; while here the EU find it totally achievable to target those making a miserable living from such content through increasingly challenging times.
Millions are allowed steal content; those generating it have to shoulder the financial burden!
I just saw an ad by HP for their new line of laptops promoting 1.5 TB of storage for all your "music, films and photos". The question is - where are the films and music content coming from?
I'd happily pay all the taxes the EU demand if we lived in a world where the rules of business followed since the dawn of civilisation were applied to the digital content world too; because there's an increased chance I'd actually earn some money from my music (all quality of my music issues notwithstanding !!). We're not living in that world any more, and not because people don't value music or the means to charge for it can't be implemented - but because the likes of the EU are too cowardly to implement smart legislation that protects digital content without impeding freedom of speech and anarchist based innovation. |
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SanderXpander Platinum Member
Joined: 29 Jul 2011 Posts: 7860
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Posted: Fri Jan 02, 2015 9:36 pm Post subject: |
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While I agree that the scale of music and movie piracy is unprecedented, people have been copying that stuff from their mates since forever. Statistics show that the most fervent downloaders also are some of the highest paying customers of digital content. In many cases, it's more a matter of convenience and availability than an unwillingness to pay. I used to download. Now I have paid Spotify and Netflix accounts. The only time I download anything is when I have to learn a Rihanna song because she's not on Spotify and I'm sure not going to buy that just for the one gig.
Perhaps it used to be easy to make big money with your first album, as a band. I wasn't around during those times. My guess is that the record label took huge cuts out of that. What I do know is that an internationally successful artist like Stromae recorded and mixed his album in his bedroom. I know it's not only possible but easy to put your own music on iTunes and Spotify, and social media and the internet in general have made it feasible for the individual artist to reach a global market.
It's a changing world for sure, and I realize that the people who worked the old system are mostly pissed about it. But I don't think it's all negative. We will have to see where we are in ten or twenty years. |
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Kevin Nolan Approved Merchant
Joined: 04 Dec 2005 Posts: 2524 Location: Dublin, Ireland
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Posted: Fri Jan 02, 2015 10:17 pm Post subject: |
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I don't agree. The scale of theft is unprecedented in the digital age. It wasn't the same before. People did not walk into record shops and steal music.
I also believe people want to pay for music they value - to support it, but the mechanisms to pay are not there because ISPs and the few monopolies like YouTube will not implement it. Those organisations are content for people to come to their sites to access quality of the content, and then make money from ads.
So I believe it's a monopoly situation by a very few companies like YouTube, Google and a few others who are the real problem.
You only have to look at a group of people standing around a student string quartet busking and playing classical standards we've all heard before, yet the willingness of people to throw Euros into their violin cases, to realise that people are descent and will pay.
It's not convenience that causes people not to pay - convenience provides access - but if there was a reasonable tariff, people would pay.
I have hope for the future. It can't be that music will remain free to access. I also believe the likes of Spotify will disappear because they pay artists nothing and artists will tire of them and move on - there's nothing in it for th artist (exposure's not enough). But it'll take breaking up the monopolies also - and in this, ironically, the EU are leading the way - as exemplified by their requesting the Google be broken up.
Once the US Congress look for Google to be broken up (and then eventually will as they did with Bell Systems an in deed AT&T; then common sense will begin to come back into the digital domain and people will find realistic mechanisms to value, and charge for digital content.
The alternative is that music, films, games, books and news will no longer be possible to generate the way they currently are - perhaps that's OK too for future generations who'll value other things instead. |
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BobTheDog Platinum Member
Joined: 21 May 2007 Posts: 1535
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Posted: Fri Jan 02, 2015 10:28 pm Post subject: |
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There is of course a benefit from being VAT registered in that you can claim back any VAT spent on any products/services purchased that are used in producing the product/service you sell. |
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seanL Junior Member
Joined: 23 Aug 2011 Posts: 99 Location: CT USA
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Posted: Fri Jan 02, 2015 11:50 pm Post subject: |
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So sad. It's all about "the skim".
You have producers and you have leach f***s
Every year hundreds of thousands of young adults graduate from schools with no other desire than to be leach f***s. They do not produce. They are the predator class of humans.
Musicians produce.
Musicians toil over sounds, they already pay taxes on the equipment that they purchase. They pay taxes on the electricity that they use to produce music in the instances where the sounds are non acoustic. They pay taxes on every aspect of the goods and services all along the way and this is just one more assault by the non producers to ride on the coat tails of producers like a lamprey or suckerfish.
If I spend years crafting an album why on Gods green earth should I NOT be able to sell my product which I have ALREADY paid a boat load of taxes on (to produce) to the end user without it being stepped on one more time? _________________ M3, Radias R, Kurzweil PC3LE, EMU Proteus 1000, EMU Proteus 2000 (three of 'em) EMU Proteus 2500, , Alesis QS6, Alesis QS7.1 (2 of them, 'cause I use them as midi controllers and I prefer their keyboard action), MPK 61, love the buttons / sliders etc but not liking the action. Wavestation A/D. Core i7 PC, 32 GB ram, 500 GB SSD, Presonus Studio One 2 Pro, VST's Pianoteq, Alchemy |
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NuSkoolTone Approved Merchant
Joined: 19 Mar 2007 Posts: 1069
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Posted: Sat Jan 03, 2015 4:51 am Post subject: |
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As an American, I'm completely ignorant of VAT. Perhaps it's time to start pushing a new currency like bitcoin and cut out the middle man altogether! Internet taxes are nothing but a scam. _________________ Korg: KRONOS 73, M50-61, 01W/r
Yamaha: Motif XS7, FS1R
Kawai K5000S, Roland JD-990 w/Vintage Synth |
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laughing_bear Platinum Member
Joined: 30 Jan 2002 Posts: 2970 Location: atlantic coast - northwest ireland
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Posted: Sat Jan 03, 2015 7:39 am Post subject: |
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BobTheDog wrote: | There is of course a benefit from being VAT registered in that you can claim back any VAT spent on any products/services purchased that are used in producing the product/service you sell. |
On that statement I have a giant questionmark
I do not believe it will be that easy you know, but I stand to be corrected.
Scenario:
I have 5 people who purchase a MP3 from me for 5 Euro via an online website I provide. I charge them VAT on that.
Now I am eligable to go to a musicshop and purchase goods for 10k plus 1.900 Euro VAT, and can claim that back?
I think this will not be possible to be honest.
Scenario 2:
I sell you one print for 100 Euro plus VAT.
Then I go and purchase for 10,000 Euro camera equipmment and get all the VAT back?
See where I am going? |
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laughing_bear Platinum Member
Joined: 30 Jan 2002 Posts: 2970 Location: atlantic coast - northwest ireland
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Posted: Sat Jan 03, 2015 7:46 am Post subject: |
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Sharp wrote: | Meanwhile, the system is heading towards a complete crash regardless and the powers that be are pushing towards WWIII in order to press a reset button.
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+1
The priests of Austerity and their neoliberal agenda are shaping the future crisis theaters. Theaters of debt enslavement, subconsequent poverty and war. Social upheaval is likely to spread through Europe at one stage, and actually there is a real possibility that this might start sooner than later. If the Greeks vote left and against that idiotic austerity dictatorship, which of course is to be sabotaged by all means possible by the european overlords, there could be a domino effect reaching over to Italy and France, refusing Austerity as well, hence the system might crumble sooner than later.
As for Ireland, I remember, and I will never forget the Anglo tapes James, I still have a letter here from Alan Dukes, in reply to my letter to him, back in the days.
Next on the agenda.... Transatlantic free trade agreement to be forced down your throat.
Sickening! |
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