Tax for Books Sold in Europe

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Taxes-in-Europe

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Amazon sent out an email two months ago, as they had to change their tax requirements in Europe.  Other European countries charge up to 21% tax (VAT) and contrary to the US and Canada, their tax is INCLUDED in the sales prices, NOT added, like in North America.  
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They paid almost no taxes there, setting up shop in Luxembourg, tax there is the lowest in the European Union. Amazon did for many years not pay the tax in countries of their shipments, where it is much higher, and therefore was ordered by European courts to pay the tax where the books where actually delivered.

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Add the Tax to Your Book’s Price
Amazon pays writers a revenue of 35% or 70% from the books net price. So if you set the price for your book for all other countries (not the US) for example to the equivalent of $2.99 – the net price in Europe would be approx. $2.30 or $2.50, depending on the country.  Amazon would only pay you 35% revenue as the net price is under $2.99 – instead of the 70% you used to get for a book priced at $2.99..

In their December 2014 email Amazon suggested authors to opt in, having their USD price automatically converted by them. If you took advantage of this courtesy offer, Amazon added VAT to the converted price – but only for those books that were already on Amazon before December 31, 2014.

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Books Uploaded After January 1, 2015
For all books uploaded from Jan 1, and your future ebooks, Amazon will convert the US Dollar price into Pounds Sterling (UK) and Euros and NOT add any VAT. It means that your future royalties will further decrease if you do not take the time to set your own European prices. These changes do not affect only Amazon, they affect all ebook sellers across the EU, such as Kobo, Barnes & Noble or Apple.

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Earn More
For future book price calculations, always keep in mind: Sales tax (VAT) is deducted before your European revenue is calculated – at all online book retailers and bookstores.  By taking the time in the future to set your own prices, you earn more. For more details, prices examples, charm prices and aggregator considerations check out these two articles by Michelle A. Demers, excerpts from her latest book The Global Indie Author:

http://mademers.com/globalindieauthor/2014/12/using-charm-pricing-to-increase-your-book-sales/

http://mademers.com/globalindieauthor/2015/01/understanding-kdps-new-vat-inclusive-pricing-and-how-to-work-it-to-your-advantage/

 

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