On January 1, 2015, the EU in its infinite wisdom enacted the VATMOSS ruling which is intended to force companies such as Amazon and Apple to pay taxes on sales of electronically downloaded products. Unfortunately, this far reaching tax law also affects individuals selling knitting patterns online. Even more crazy, this law affects sales to individuals living in the EU, even if said knitting pattern designer lives and works in the U.S. or anywhere else in the world. If you thought the U.S. was an overbearing bully of a country, well, the EU as a group of countries has just joined that club.
Over on Ravelry, Casey and team have been working around the clock to come up with a solution for all the thousands of pattern sales that take place via their site. No, Ravelry is not selling the patterns. They are only the vehicle which allows hundreds of independent people to sell their work. If you want all the details about how Ravelry has come up with a (hopefully temporary) solution, please go here.
What is completely insane about this situation is that there is no threshold for small independent sellers, like me. I read a lot about the situation in the UK, mainly because it’s so much easier to read about this subject in English, but also because there seems to be much more of an uproar in the UK about this. The Dutch press, and people, seem much quieter about it. But anyway, in the UK there is talk of convincing the government that there should be a threshold under which you are exempt form this nonsense. Currently, in the Netherlands, the threshold is zero. ZERO. Sell a digital pattern for 1 euro and you are subject to this tax burden. And it’s not so much the burden of paying the taxes – I’m fine to pay tax on what is owed – but the administrative burden is just awesome.
We are now required to 1) charge VAT according to the tax rate in the country of the buyer of our patterns; 2) provide at least TWO forms of proof of the residence of said buyer!; 3) file tax returns in those EU countries. And this is true even if you live in Australia or Canada or Botswana and sell digital products to people in all 28 member countries for 1 euro a pop.
Some designers on Ravelry have gone with the solution to sell via LoveKnitting, a site in the UK that will handle this VAT mess for you. But after a 6 month grace period, this will cost you .20p per item plus 20% of the sales price. Plus you have to pay PayPal fees. Plus take the VAT of an average of 20% off the top. Pattern sales are hard enough to come by and this will mean that the price of a $5 pattern bought from an American designer jumps to $6.05 for me, and said designer will get $5 less 20% less 20p less PayPal fees.
Some designers have decided to stop selling to customers in Europe. This makes me incredibly sad. In the happy knitting world we have been open to everyone everywhere and via Ravelry we shared our craft and our lives (via images and forums) across all borders. Now, thanks to the EU bureaucrats, we are separated, segregated, different. Not to mention how angry I will be when I see a lovely pattern on Ravelry and try to buy it, only to find myself locked out because of this ruling.
Some designers have decided to set all their patterns to FREE on Ravelry. The gorgeous patterns of Julia Mueller are now all free.
I decided to do the same. After all, my pattern sales have been almost nothing the past years. I sell, on average, a pattern a month. That’s it. So, on January 1, I set them all to FREE. And as of this morning, 2 January, 2015, over 2,000 copies of my patterns have been downloaded. This morning I have 3 patterns on the Hot Right Now page in the pattern search on Ravelry.
While I love the fact that people are discovering my patterns, I have real mixed feelings about how this has happened. This tells me a few things, that frankly, I think Ysolda has already known and talked about on her blog before. First, most people think that knitting patterns should be free and aren’t willing to pay for them. Most people think that your time, as a designer, is worth nothing. And that they deserve to get stuff for free.
Second, people will download free patterns just to have them. They will most likely never use them or knit them. But since they are free, they will download them and store them on their hard drive with no intention of ever bringing them to life, which, frankly, I don’t like at all. If you are going to the trouble of downloading them, then make them. I spent hours working on these patterns because I wanted to see them made and enjoyed and USED! This irks me more than point one about expecting to get them for free!
Anyway, the world has changed and we have to adapt and change with it. Even Trent Reznor puts music online for free. Some authors have offered their books for free. And by “free” I mean given away, not pirated or stolen. So, my patterns are free, but I’m going to try something different too, that I’ve seen on other sites such as podcast sites and others offering information and entertainment on a small scale. I’m putting up a DONATE button. I’m also going to add all my patterns to the blog so that you don’t have to be a member of Ravelry to see them or download them. This might take a few days so bear with me. I have no idea if anyone will donate a penny because they have downloaded a pattern or knitted one of my free patterns. But I have to believe that most people play fair, even if “fair” means different things to different people.
Please continue to support small, micro businesses in this new economic world. Whether from an Etsy shop, or Ravelry, or from their own web sites, the micro economy should not be ignored by us consumers, nor by the big heads in government who set policy we all need to follow. Since the 1970’s I’ve seen bumper stickers and posters reading “Buy Local, Think Global”, encouraging consumers to support local businesses without forgetting that we are part of one world environmentally and economically. This needs to be changed to “Buy Small, Think Big”. Support the individuals who make your world more interesting and rich. And don’t forget that rules and regulations affect us in ways that might not be obvious at first. Think bigger than your own self interest.