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Selling Digital Products
The beauty about selling digital products is that you have a global audience and you can sell your products whilst you sleep. What’s not to love? I absolutely love digital products and I sell them on Etsy and Teachable. I chose both of these marketplaces very deliberately to cover myself in regards to online business legal requirements. Specifically, an EU law that affects sellers worldwide, even if you don’t live in the EU.
Disclaimer: I am not a lawyer and this post does not constitute legal advice.
What is this law about?
If you sell a digital product to any customer that lives in the European Union you have to charge them VAT at the rate of the country in which they live. You also have to submit that VAT to each individual country. WHAT A HEADACHE – I hear you cry and I’m with you on that one! I spent a lot of time stressing about this law when I found out about it.
You have to collect and report on the tax you have collected on behalf of each EU country. You then have to submit your report to a VAT MOSS collector. VAT MOSS (VAT Mini One Stop Shop) was set up by the UK government to make submitting VAT by each EU country a bit easier. You also have to submit your VAT report by each EU country and pay your tax bill.
Selling digital products through your own shopping cart
If you are selling digital products through your own website you will have to submit your VAT moss report and pay your bill every quarter. It’s probably worth the admin if you bring a really decent revenue in to your business. But, what if you’re just starting out? VAT moss sounds a little complicated for newbies who are only making the odd sale here and there. Plus, truth be told – it wasn’t introduced with small businesses in mind.
The Good News
The good news is that certain sites have implemented VAT moss capability into their operations.
Small Digital Products
Etsy submits VAT moss on your behalf as they are classed as the seller rather than you. They collect all of the information that is required and they submit the tax bill. You don’t need to worry about it. So if you are getting started selling small digital products like PDF files I would recommend doing it through Etsy.
If you would like to open an Etsy shop to sell digital products, you can do so here and you’ll receive 40 free listings to help get you started.
I tested out the free versions of Thinkific and Teachable before I decided to go with Teachable. They are both really similar but I decided to go with Teachable because like Etsy they deal with VAT moss on my behalf. Like Etsy, they are seen as the seller, they submit the reports and they pay the tax. Easy peasy!
If you didn’t know about VAT moss, I apologise for being the bearer of bad news! Knowledge is power. Now you know how to operate within the law by choosing your business software service providers wisely.
To Find out more about this online business legal requirement
If you do decide to go it alone, you can read more about VAT moss here.
If you know of any other services that deal with paying EU VAT bills on your behalf, please do share in the comments!
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