More #EUVAT Irritation

Over the past couple of days I have been working on adjusting the prices of Wizard’s Tower books in various stores to take account of the new VAT laws. It isn’t as easy as it sounds.

A major issue is that the stores don’t all work the same way. Amazon and Kobo expect you to enter a VAT-inclusive price, while Nook wants a VAT-exclusive price and Google allows you to do either.

On the face of it, VAT-exclusive is the right thing to do, because VAT rates are different in each country, but there’s a problem with that because you can’t know where a customer is located until they supply a physical address and that may not happen until checkout. EU law requires stores to quote a tax-inclusive price, which may be why Amazon has chosen the method it has.

In any case, one can’t argue with what Amazon does, because they account for the vast majority of sales, so I have to go along with them.

Then there’s the question of individual country prices. Amazon has stores in many different countries, and as it requires VAT-inclusive pricing in theory I should know the rate for each country, and keep track of changes, so that I can price books correctly. It is actually much easier to set a single price for the whole Euro zone and accept that you’ll get more money for sales in low-VAT countries than in high-VAT countries.

All of the stores have some means of calculating prices in other countries based on a core price and current exchange rates. That’s fine if you can enter the price in US$ — you only have to add different prices for countries in the EU. But Kobo wants me to enter the core price in GBP, and because that price is VAT-inclusive I can’t use it for the basis of any other country prices. I have to do each one by hand.

And then there’s Nook, with their seemingly sensible VAT-exclusive pricing. I was happy with that, until I read this blog post. Apparently some EU countries have fixed pricing laws than mean you can’t offer the same book for different prices in different stores. So I’d have to make sure that whatever VAT-exclusive price I entered for the Nook exactly matched the VAT-inclusive price entered for Amazon and Kobo, and again I’d need to keep track of rates. I’ve ended up restricting Nook sales to the USA (because the only options are USA and USA + EU).

I suspect that a lot of people will just give up and sell exclusively through Amazon. Which, you know, might just be what Amazon’s lobbyists wanted.

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3 Responses to More #EUVAT Irritation

  1. Pingback: January 2015 – where we are and where we’re going | Digital Microbusiness Action Group

  2. Isha says:

    I may be having a stupid moment; the EU VAT 2015 rules are about non-physical products, ie not about real hard-copy books, and the Kindle platform itself is handling the new rules https://kdp.amazon.com/help?topicId=A30464Q6OVH578

    I’ve googled for any other kinds of ebook at Amazon and haven’t come up with anything, so I’m curious to know what form of book you sell through Amazon that requires to do the EU VAT 2015 work for it?

    • Cheryl says:

      Amazon does handle VAT on ebooks that it sells. But it does so in an unhelpful way (expecting you to enter VAT-inclusive prices). Also the way Amazon does things is inconsistent with the way that other ebook stories handle their VAT. As I explained above, fixed pricing laws in some EU countries mean that you have to offer books at the same price through all stores, which further complicates matters when you are setting prices. If stores are calculating prices for you in inconsistent ways you can’t rely on their automatic price setting. It would doubtless be fine if you only sold through Amazon, which I am sure is exactly what Amazon wants.

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