A VAT Plan

Over the last few weeks, the various designer groups on Ravelry have been going crazy with all this talk of the European Union's (EU) changes to VAT (value added tax). Around the Internet there's an overwhelming amount of information, Ravelry threads and blog posts to read on the subject. What it basically boils down to is this:

The change means that regardless of where seller lives, if the buyer is in the EU, the VAT has to be collected. It's kind of like sales tax. And the rates vary depending on the country. As a one-person small business in the United States, you can imagine the nightmare of trying to VAT register, collect the tax, etc.

Fortunately for the knitting and crochet designers, Ravelry has worked hard to find a solution. My patterns are now available through loveknitting.com. So if you're in the EU, when you go to checkout on Ravelry, you will be routed through Love Knitting, which is VAT registered and will handle the collecting of the tax. A great solution!

The unfortunate thing is Craftsy hasn't come up with a solution yet. They are working on it, but for the time being I've decided to close my Craftsy pattern shop. If/when there is a workable solution, I will definitely be adding my patterns back to Craftsy!

It may seem a little crazy that businesses in the United States (and all other parts of the world) are worrying about this. I spent many hours debating what I was going to do. Are the EU VAT people really going to come after me? Probably not, but I'm not willing to take the chance. Like Stacey said in her blog post, I've decided that the best course of action for me is to follow the rules, even if they seem weird :)

As I am not a lawyer or accountant, this post is not meant to give anyone else legal or tax advice. I respect whatever choice other designers make for their business. I know everyone is weighing the options carefully and making the best decision for them. I just felt that it was important to explain the decision I made for my business. A large percentage of my pattern sales come from EU countries and I want to make sure that the knitters know that I've done something to come up with a workable solution for all!

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