Category Archives: Amazon

Amazon and Apple targeted by new EEC rules on ebook tax

Amazon and Apple, amongst other corporate giants in the ebook marketplace, have located themselves for EEC tax purposes in Luxembourg for the last few years. With a local rate of VAT (Sales tax) of 3% this is much lower than the 20%+ payable in most EEC countries. Now action has been taken to close this loophole but it does mean that every publisher selling to consumers in the EEC must be aware of the changes and take appropriate action.

Sales of ebooks from businesses to consumers (B2C sales) must have VAT added when the purchaser is located in any of the 28 EEC countries. Until the start of 2015 this VAT has been added at the rate applicable in the Publishers/Suppliers home country, not the Purchasers. As a result, companies like Amazon have been able to add 3% instead of 20%+ to their prices and substantially undercut similar publishers based in the targeted countries. To close this loophole the EEC now requires VAT to be charged at the rate applicable in the customer’s country, not the suppliers. This means applying the correct rate for each country for the product sold, and ensuring that the home country of the purchaser is known and recorded.

To avoid a publisher or service provider having to register with the tax authorities in all 28 EEC countries, a system known as VAT MOSS (Mini One Stop Shop) has been introduced. With this system we now add VAT at the appropriate rate to sales of secure PDFs made via our Managed Services facilities within the EEC. We then report the amount, country-by-country, via the MOSS service in the UK, and the UK tax authoriities will reconcile the taxes due to each EEC member state. What this means is that customers of our Managed Services will not have to worry about the new regulations, but DIY service publishers will need to register for the VAT MOSS service and account for VAT if they are selling to EEC consumers.

The UK VAT people (HMRC) expected 5000+ businesses to register for VAT MOSS – it is claimed that c.350,000 have done so!

If you would like to discuss our managed services please contact us

There has been a massive amount of discussion about the introduction of these charges, as evidenced by topics on Twitter #VATMESS and press articles. For more information on the UK implementation of VAT MOSS please click here

Amazon Kindle Direct Publishing (KDP) and new European VAT rules for eBooks

In an email just issued to European Community-based KDP customers, Amazon have taken the decision to change the ebook pricing model they apply in order to cater for new European Community VAT rules coming into force on January 1st 2015. Essentially they are asking all publishers to adopt a VAT “inclusive” pricing model for their publications or they will impose one automatically. We at Drumlin Security have already requested that our customers do likewise, where their publications are sold to European-based consumer customers. For publishers who sell all or almost all of their publications outside the EEC the problem does not apply.

The core text from Amazon is shown below. More details from Amazon can be found here

“On January 1, 2015, European Union (EU) tax laws regarding the taxation of digital products (including eBooks) will change: previously, Value Added Tax (VAT) was applied based on the seller’s country – as of January 1st, VAT will be applied based on the buyer’s country. As a result, starting on January 1st, KDP authors must set list prices to be inclusive of VAT. We will also make a one-time adjustment for existing books published through KDP to move from VAT-exclusive list prices to list prices which include VAT. We’ll put these changes into effect starting January 1st; you may always change your prices at any time, but you do not need to take any action unless you wish to do so.

Starting January 1st, for any titles already published in KDP, we will make a one-time adjustment to convert VAT-exclusive list prices provided to us to VAT-inclusive list prices. Subject to minimum and maximum thresholds, we will add the applicable VAT based on the primary country of the marketplace to the VAT-exclusive list price provided. For example, if an author had previously set £5.00 as the VAT-exclusive list price for amazon.co.uk, the new VAT-inclusive list price will be £6.00 because the applicable VAT rate in the UK is 20%. Please note, if an author had set a consistent VAT-exclusive list price for all Euro based Kindle stores, those prices will now be different due to varying VAT rates for the primary country of each Kindle store. For example, if an author had previously provided a €6.00 VAT-exclusive list price for amazon.de, amazon.fr, amazon.es, and amazon.it Kindle stores, the list prices including VAT will be €7.14 (19% VAT), €6.33 (5.5% VAT), €7.26 (21% VAT), and €7.32 (22% VAT) respectively.

Minimum and maximum list prices for the 35% and 70% royalty plans will now also include VAT. For books published before January 1st that would fall outside these new limits after VAT is included, we will adjust the list price to ensure the book remains in the same royalty plan that was previously selected.”

Kindle Fire HD – test drive for PDFs and secure PDFs

The Kindle Fire range of devices is Amazon’s answer to demands for a more functional device than the basic Kindle. All the more recent versions run an amended variant of the Android operating system, tailored to be Kindle-like, but also capable of running a wide range of applications. However, these applications are generally only available from the Amazon app store, not from Google Play or other Android app stores. Furthermore, Amazon’s terms and conditions for apps hosted on their App Store include requirements to pay them a substantial royalty if an app from the store is used to “sell” an item, such as a publication or training course materials. So what is the solution for PDF publishers? Well, Javelin for Android will run on Kindle Fire devices – see below for more details.

kindlefire

Javelin for Kindle

The Javelin secure PDF reader for Android is compatible with Kindle Fire (KF) and  is easy to install and run…  The screen resolution on the KF 7inch model is 800×1280, so not bad (much cheaper but not nearly as good as the new iPADs), and its dual 1.5Ghz processor is fast enough for even the most demanding of PDFs. We tested it on a couple of the largest documents distributed by our customers. These books have around 1000-2000+ pages and a large number of images and links. They load in a couple of seconds from completion of downloading, and because the entire document is held in virtual memory, they are almost instant when accessing any page.

Screenshot_2014-10-11-12-33-22

Installing and running the Javelin app

Installation of Javelin on the Kindle is quick and simple – full details are provided here. To run the app you simply touch the Javelin icon and the Home page opens. For many users the documents they wish to view will be included within a catalog, either the built-in Catalog or a separate downloadable catalog of books, training materials or other documents. The publisher creates these and explains to end users how to download them. Touching the cover of a title in a catalog then downloads that book or document.For standard PDFs the file may then be opened immediately, whilst for secure PDFs (drmz files) an authorization code is usually required, after which the file may be opened and read.

Conclusion

If the Kindle Fire is your preferred reading device for ePUB books, newspapers and other materials, it can also be used for standard and secured PDF reading. As most Kindle Fire devices are quite small and not very high resolution it is best used for PDFs where the font is larger, the page sizes are smaller than standard, and/or the materials are graphical. It is also good for holding reference documents, where the user wishes to select an item and can zoom in to check details, rather than reading lengthy blocks of text.