Updated: New Tax Rules Affect Those Selling Digital Media in the EU (But Not Bandcamp Users)

Updated 12/30/14 1:30 PM PST: Within the past hour, Bandcamp has changed their policy. Bandcamp will now handle all VAT payments and reporting, and the additional steps that they said users would need to take are no longer needed.

A change in European Union tax regulation will affect everyone that sells digital products online to customers in the EU.

As of January 1st 2015, VAT (value-added tax) will be based on the country of the buyer, not of the seller. The change was meant to address tech companies that base their operations in countries with low VAT rates, like Luxembourg .

However, this will affect everyone that sells music, films, games, e-books, and other digital items to customers in the region directly online.

Previously, there were exemption rates for those that don’t sell massive amounts of product. These exemption rates will no longer apply when the buyer and seller are in different EU countries.

This change will also affect musicians who sell their work on Bandcamp, as money goes directly from the buyer to the seller. The VAT will be automatically added on by Bandcamp.

Bandcamp is updating their policies to make the change as easy as possible for sellers. In March 2015 Bandcamp will provide downloadable VAT reports, but there arestill other hoops to go through.

Sellers will have to sign up for MOSS (Mini One Stop Shop) to report and pay the VAT. Sellers have to turn in the report and pay the taxes every quarter. Bandcamp users will be able to download a report, but those selling their music directly will have a lot more work to do.

Bandcamp plans to eventually route money for digital sales through their platform, which would allow them to handle VAT payments for sellers.

Nina Ulloa covers breaking news, tech, and more. Follow her on Twitter: @nine_u

Image by PT Money, licensed under Creative Commons Attribution 2.0 Generic (CC BY 2.0).