The VAT on your first European ebook sale, if you live outside Europe

This is a practical overview, not tax advice. The rules differ by country and change. If you're about to register anywhere, talk to an accountant who handles digital sales.

On Amazon, VAT is something that happens to the price before you see it. Amazon sells the book to the reader, Amazon charges and pays the VAT, and your royalty is worked out on what's left. You never register for anything.

When you sell from your own shop, that stops being true, and most guides to selling direct don't mention it until you've already made the sale.

Why it's yours now

The person who owes VAT on a sale is the seller, and on a direct sale the seller is you. You're the merchant of record: your name is on the buyer's card statement, the money settles into your payment account, and the tax obligation comes with it. The chargeback is yours now covers the other half of what that means.

Some platforms take this off you by becoming the merchant of record themselves. Paddle, Lemon Squeezy and Leanpub work this way. The buyer is buying from them, they handle VAT everywhere, and you get paid out of their balance after their cut. It's a real convenience. It also means every sale passes through someone else's account first, which is the thing a lot of authors are selling direct to get away from.

Inkwharf doesn't do this. Card payments go straight to your own Stripe account, so the sale and the VAT on it are yours.

Where an ebook sale is taxed

For a digital product sold to a consumer, VAT is due where the buyer is, not where you are. A reader in France pays French VAT, one in Ireland pays Irish VAT. Ebooks get a reduced rate in many EU countries but not all, and the rates differ, so a single book can carry a different amount of tax in every country it sells to.

The threshold you probably don't get

EU sellers have a small-business allowance: a business based in one member state can charge its home VAT rate on cross-border digital sales until it sells more than €10,000 a year to consumers in other EU countries.

That allowance only exists for sellers established in the EU. If you're in the US, Canada, Australia or anywhere else outside it, there's no threshold. VAT is technically due on your first $9.99 sale to a reader in Spain.

The UK is the same. A seller based outside the UK selling digital products to UK consumers owes UK VAT from the first sale; the UK's registration threshold is for UK businesses.

Two honest points about that:

• Enforcement against a small foreign seller is rare. Plenty of authors sell a handful of copies into Europe and never register. That's a description of what happens, not a recommendation. "Rare" isn't "never", and the first time a European sale matters to you is a bad time to find out.
• It's less work than it sounds. You don't register in 27 countries.

One registration, one return

The EU runs a scheme for exactly this case, the non-Union One Stop Shop. A seller based outside the EU registers in one member state of their choice, and that one registration covers digital sales to consumers in every member state. You file one VAT return a quarter, listing what you sold to each country and the VAT you collected, make one payment, and that country passes each share on.

The UK needs its own registration with HMRC, because it's no longer part of the EU scheme.

Only sales to consumers count. A company buying a site licence for its team is a business sale, handled differently, and usually not your VAT to charge.

What can be automatic

Once you're registered, the per-sale work is mechanical, and that's the part software should do.

On Inkwharf, switching Stripe Tax on in shop settings means every card checkout:

• asks for the buyer's billing address, so their location is evidence, not a guess from their IP address,
• works out the correct rate for a digital book in their country,
• and collects it as part of the payment.

Prices are tax-inclusive, because the EU and UK require the price a consumer sees to be the price they pay. You set $9.99 and every buyer pays $9.99. What changes by country is how much of it is VAT, so a sale to Hungary leaves you less than a sale to Luxembourg. That's worth knowing when you price, and it's the same thing retailers do on your behalf without telling you.

Stripe also offers filing for the places you're registered, as a separate service you set up with them. What no software can do is register you. That step is yours, and it's the one thing nothing short of a merchant-of-record platform can take away.

If you leave tax collection off, checkout works exactly as before and charges no tax. That's a legitimate choice while sales are small, as long as it's one you've made on purpose.

Bitcoin sales

A bitcoin payment goes from the buyer's wallet to yours with nothing in between that could add a tax line. So a bitcoin order records the buyer's country and nothing else, and the VAT on it, if any, is yours to work out from that record. The country is collected because a digital sale without one can't be reasoned about later. What happens when a reader pays in bitcoin has the rest of that flow.

And at home?

In the US, sales tax on digital goods is set state by state, some states don't tax ebooks at all, and a state's rules only reach an out-of-state seller after an economic-nexus threshold, typically $100,000 a year in sales into that state or more. Most independent authors are nowhere near one. Other countries have their own rules, often with a registration threshold for local sellers. Check yours.

The short version: if you sell into Europe or the UK from outside them, VAT is part of selling direct, it starts at the first sale, and it's one registration and four forms a year. Worth knowing before the first European order rather than after the hundredth.

For the full list of decisions that come with selling from your own site, how to sell ebooks from your own website walks through them in order.

Open a shop: payments to your own Stripe account, with tax collection a switch in settings when you need it.