Last week on the podcast, Allison and I talked about the upcoming change to VAT regulations in the EU in regards to the sales of digital goods, and interviewed Louise Zass-Bangham of Inspiration Knits to get an overview of what's happening. Things have continued to change since the interview (and even since the podcast was released!), but here's the issues, from my perspective and current state of understanding:

As of 1 January 2015, sales of digital goods (e.g. pdf knitting patterns) will be taxed based on the location of the BUYER, not the SELLER. So if you live in Germany and buy a knitting pattern from any independent knitwear designer anywhere in the world, someone is responsible for paying the appropriate VAT to the German government for that sale.
The threshold for being required to remit VAT varies depending on the country AND the product being purchased. Some countries have a zero threshold for VAT on digital goods, which means that VAT must be charged from the very first sale in that country.
There is an EU-wide online portal, called MOSS (mini one stop shop), to allow businesses to handle all of the fuss of remitting VAT payments to EU member states using one website. This is all good. Except...
In order to use MOSS, you have to be VAT registered.
In the UK, the threshold for being required to register for VAT is high (£81,000) as compared to many other EU countries, so a huge number of micro-businesses are not VAT-registered. And therefore can't use VAT MOSS (as of recently - this may change. It may have already changed in fact, but I've read so much stuff about this craziness that my brain is broken).

So the bottom line for independent knitwear designers like yours truly is that sales of my patterns are going to get a bit more complicated in a couple of weeks. Here's what I'm planning to do to address these issues:

All of my patterns will be available to EU residents in at least a couple of ways. First off: Casey at Ravelry has worked an absolute miracle with the help of the fabulous people at Loveknitting to allow designers to redirect EU customers to the Loveknitting website where they will be able to buy the patterns; the pattern pdfs will still go into customer's Ravelry libraries. There are a couple of issues with this solution: prices on Loveknitting have to be listed in GBP, and they will be VAT-exclusive. That means that VAT will be added on to the pattern price dependent on the location of the buyer - the final price of the pattern will be the listed price PLUS VAT.
My patterns will also be available via the Designs page of my website. One of the workarounds for this whole mess is for sellers to individually attached pdf files to emails and send them on to the buyer. As long as the email isn't automatically generated, and the pdf isn't automatically attached, the transaction will be VAT-exempt. I will very gladly also gift you a copy of the pdf into your Ravelry library if you have a Ravelry account.

If you are in the UK, or anywhere else in the rest of the world that is not part of the EU, nothing will change for you. I'm well under the UK VAT threshold, so UK purchases are still VAT-exempt. If you are in the EU, but outside of the UK, you'll have two choices: if you need instant pattern access, you can go to the Loveknitting pattern listing from Ravelry and get the pattern immediately. If you're willing to wait a little while (probably well under 24 hrs in most instances), you can come here and buy the pattern. I'll email you the pdf. The first case will be more expensive, as you'll be paying VAT on top of the pattern price. The second case will mean that more of the pattern price comes directly back to me, the designer.

If anyone has any questions or concerns, there are a number of resources online you can access. First off, there is a huge long thread on the UK Shopkeepers group about the whole mess, and a much shorter thread from Casey about changes that Ravelry is making and various updates as they occur. Ysolda has blogged about this issue, and Louise has a number of posts on her blog for knitters and designers. Please bear in mind that this is new for (I would venture to say) all of us, and there are bound to be some growing pains in the first few months. Please don't hesitate to get in touch if you have any questions or problems with purchasing my patterns, and thanks for your patience as we get this all sorted out!

Porpoise Fur