How I Learned To Hate The VAT

My fellow self-published authors have no doubt already been bombarded by emails from Amazon in regards to changes in the VAT, but I thought I’d take a moment to tell my readers why prices are going to suddenly change on a number of books and how this change affects authors.  These changes take place on 1 January, 2015.

You see, the way the VAT used to work, it applied based on the seller’s country. So an author in the UK had a 20% VAT on top of the price of their book, off each sale. Now, however, it is based off the customer’s country. So when I sell a book in, oh, say Ireland, there’s 23% tax on top of the price of the book. This means for a book that is €5, the tax is an additional dollar, making the book €6.15. The way Amazon is resolving this is that the tax comes off the top… and my royalties, therefore are still as if the book sold for €5. What this means, is that either I lower prices (IE, to €4.12) which then should make that same book €5 to the customer or it goes for €6, which pushes me up around where some of the well-established authors are, and makes it less likely for a new reader to buy my book.

Now, since I get roughly €3.42 (70% royalty minus some delivery fees and such) off the sale of a €5 book, the difference, as far as I can tell through my projections, is that I get €3 now for a book that sells for the same price. Basically, a foreign country gets a dollar off each of my book sales while I lose forty cents per sale. Not a lot, individually, but that’s around €200 a month that I won’t get (and  €500 that some other nation does get). Keep in mind, writing is my second job, I still work full time. How would you feel if your boss told you that your pay is getting cut €200 a month to pay taxes in a country you don’t live in?

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