A few words on VAT and pricing

As you may or may not know, from January 1 on, the European Union has changed the way that VAT (value added tax, similar to sales tax in the US) is calculated for cross-border transactions, including online sales. Previously, VAT was charged according to the applicable rate in the seller’s country, now it’s charged according to the applicable rate in the buyer’s country.

Now this change does not affect the average consumer (and indeed this very long lists of German laws changing on January 1, 2015, never once mentions the VAT changes), but it is a big deal for online vendors, freelancers and any business trading across European borders, because it makes online sales a lot more complicated and/or not viable for smaller vendors. For more from a UK perspective, see these posts by Juliet E. McKenna and Hannah Kate as well as this article from the Telegraph. For more from a German perspective, see this post at the German e-reader news site Lesen.net.

The reactions among indies ranged from a complete lack of understanding (which wasn’t helped by the badly formulated e-mails sent out by the big vendors) via sheer panic to sputtering hatred of the European Union (one dude even claimed that a massive war would wipe out all of Europe within five years at most anyway and got huffy when I pointed out that he was rather offensive, not to mention wrong). A lot of indie authors also vowed that they would raise their prices to offset the projected income loss due to the VAT changes. And since Amazon still isn’t able to grasp the principle of VAT inclusive prices, they also randomly raised everybody’s prices in the various European Kindle stores, forcing me to waste two hours to reset all my prices to the previous level.

Because we will not raise the prices of our e-books to account for the changed VAT rates. The prices for all Pegasus Pulp e-books will remain the same as before, only that they are now VAT inclusive.

If you are a European customer buying via Amazon.com rather than via one of the European stores, Amazon will probably still slap the applicable VAT in your country as well as the two US-dollar international surcharge on top of the list price. Unfortunately, we cannot prevent them from doing this. In this case, we will point you to one of the many other fine retailers, where Pegasus Pulp e-books are available. And since all Pegasus Pulp e-books do not have DRM, you can even convert them to your desired format.

*The example the VAT mess always reminds me of is how in the mid 1990s, the German government raised the taxes levied on artists, musicians, actors and other performers, who are not German residents, for performances given in Germany. The background was that some successful German entertainers had taken up residence in countries with lower tax rates, most notably one Margarethe Schreinemakers who hosted a then massively popular TV talkshow and who had a very public fight with the German tax authorities (Ms. Schreinemakers insisted that the tax authorities were after her, because she had interviewed the ex-wife of the then German secretary of finance on her show, where that lady had some rather uncomplimentary things to say about her husband). Ms. Schreinemakers’ popularity soon faded, but the law her tax antics had helped to bring into being had the unintended effect of making performing in Germany drastically more expensive for all non-German actors, artists and musicians. As a result, the big international stars stopped coming or gave fewer performance, if they did, whereas unknown artists and musicians were taxed so highly that they could barely make a living wage with their performances. In the end, the cultural scene in Germany was greatly diminished because of the quarrels of one host of a (very bad) talkshow with the German tax authorities.

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