Changes to EU regulations on sale of digital products

On 1st January 2015 new regulations regarding the sale of digital products will take effect. Essentially what is happening is that VAT will now have to be added to the cost of any digital product purchases - including video guitar lessons.

If you want to read the full details of what's happening you can visit this page on the UK government website: https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers

What it essentially means is that anybody that sells digital products to anybody in the EU now has to charge VAT at the local rate of the purchaser. So the way things have to work form 1st January 2015 is that anyone in the EU who buys your guitar lesson will also have to pay VAT. If the VAT rate of your country is 20%, then 20% needs to be added to the cost of your purchases.

If you don’t live in the EU then you can ignore all of this!

vat rates 2015

It’s potentially a big headache for anyone that sells directly to their customers but the good news is that if you sell your guitar lessons or any other related digital products using the L4G Marketplace then you don't need to worry about any of this because we will take care of the new VAT rules for you. This is official statement from the government's link above:

“If you supply e-services to consumers through an internet portal, gateway or marketplace, you need to determine whether you are making the supply to the consumer or to the platform operator. If the platform operator identifies you as the seller but sets the general terms and conditions, or authorises payment, or handles delivery/download of the digital service, the platform is considered to be supplying the consumer. They are therefore responsible for accounting for the VAT payment that is charged to the consumer.”

As you know, there are two ways that you can buy lessons from Live4guitar marketplace, and the new VAT rule will work slightly differently depending on which method you use:

If you pay for a single lesson

If you make a one-off lesson purchase, there is a small Paypal fee that is added. From 1st January 2015, VAT at your local rate will be added to the cost of the lesson and this Paypal fee. So, if the guitar lesson costs $5 and there is a $0.50 Paypal fee, then VAT will be applied to the $5.50 total.

If you pay a deposit into your L4G account

If you make a deposit payment into your L4G account, there is no Paypal charge. VAT will be added to your deposit payment at the time you make the deposit. So, if you want to deposit $20 and your local VAT rate is 20% then the total charge will be $24. Your account will be credited with $20. You will then purchase guitar lessons at the prices shown on the website with no further VAT to pay.