I've been avoiding mentioning this on my blog as I was hoping that it would resolve itself before January 1st, but that's now looking increasingly unlikely. I think that most digital sellers are now aware of the changes in EU law that make it virtually impossible for small businesses to continue to sell their eBooks, patterns and digital products as of January, but for everyone else, I wanted to let you know that my patterns and eBooks will be taken off sale in the next week or so, so if there are any that you know you'd definitely like to own, now is a good time to buy them. You can find all the relevant links in my left-hand sidebar or on my Patterns page (I feel compelled to mention my favourite pattern here, as if you have a small person in your life, a bear or doll's sleeping bag makes a really wonderful Christmas gift - you can find the pattern here…and if you have any concerns about the correct sizing for your particular bear or doll you can find a post entitled Unwieldy Antlers and Other Sizing Issues, here! You will get to see a reindeer, guinea pig, sausage dog and other creatures being stuffed into a sleeping bag to trial sizing…it's every bit as fun as it sounds.)
To give you some background on this, EU legislation around VAT is changing from 1st January, but this doesn't just affect EU sellers, it affects all digital sellers worldwide. Currently, when you buy a digital product, the VAT is paid in seller's country - this means that big businesses can base themselves in tax havens and avoid paying VAT on their sales. To try and stop this kind of sneakiness, the EU have altered things so that VAT is now payable in the buyer's country too. While we have a very high VAT threshold in England (you'd have to earn around £81,000 before you started paying VAT here), in other countries it's set at all different rates, many of them at 0. This means that if I sell even one product to an EU country, I would require two pieces of evidence to ascertain the buyer's location (PayPal doesn't currently give me this kind of information about my buyers) and I would then need to submit a quarterly VAT return to every single country that I sold to. As a small business this is prohibitive in terms of both time and cost.
|My e-book: A Practical Guide to Machine Appliqué|
Unfortunately, whether they're part of the EU or not, this change affects ALL digital sellers worldwide. This will mean that from January it may be really difficult to buy many of the digital products that you usually buy.
The hope is that platforms like Craftsy, Etsy and Folksy, with their larger infrastructures and finance departments full of people who wouldn't be reduced to snivelling heaps attempting to put the structures in place to handle all these VAT payments, will step up and offer a solution - they have a vested interest in doing so as they stand to lose a huge amount of money if all their digital sellers withdraw their products from sale. If they aren't able to do this, it will mean the demise of literally thousands of small businesses. I'm really hopeful that they will make this happen, which is why I've held off mentioning this here on my blog, as I was hoping it would be a simple case of just transferring the location of my patterns. But it's now December 18th…and it's looking like this may not happen as we'd hoped, at least not in time for a smooth transition on January 1st.
There has been some talk that the changes affect online advertising too. While this might be the case, all of my sponsors are based within the UK only, so for this reason, I'm happy that this side of my business will survive, at least.
I'm really lucky that my main source of income - the business I run with my husband, making our educational Squeebles apps for children - isn't going to be affected by these change, as the VAT is paid at the point of sale. For that I'm hugely grateful, but I'm feeling sad that my own little pattern business is coming to an end for now. Even if I'm able to sell again through an online marketplace like Etsy at some point in the future, it feels a great shame that this change in VAT legislation means it will be very difficult to sell independently through our own websites or blogs - that feels like a step backwards. One of the incredible things about the internet has been the ability for cottage industries to spring up and for it to become viable for so many people to run their own businesses from home, working independently in their own niche areas. This doesn't just affect craftspeople - it affects everyone from people selling eBooks on how to do your own accountancy, to people producing paid-for webinars teaching people how to use Photoshop or Illustrator.
What I want to say more than anything at this point, is how incredibly grateful I am to everyone who has bought patterns from me over the last five years - I have really appreciated your support and it's a real delight to see what you've made with them. It was my blog readers who encouraged me to write my very first pattern and without your faith in me, I don't think it's something I ever would have ventured into. I can still remember the first time a confirmation email from PayPal landed in my inbox saying that I'd made a sale…it was the most incredible feeling and since that point, as I've added more patterns to my site, those emails have continued to land in my inbox daily. I am so grateful. Thank you.
If the situation doesn't look like it will be resolvable, my intention is to make my existing patterns available free of charge, as I'd much rather they were out there for people to enjoy than sitting unsewn on my laptop, but I hope you'll understand my need to hold off on that for a little longer to see how this unfolds, as financially it's not an easy prospect to suddenly lose this source of income.
Patterns aside, I have been doing a great deal of Christmas sewing and I'm looking forward to sharing some of it with you in my next post.