It's time for a super interesting guest blog post from our Team Captain, Becka!
Last month, Becka travelled to Brussels with Etsy to discuss VAT and has kindly written up and shared her experiences with us all!
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At the end of
September I was lucky enough to receive an email from Angela Steen,
the EU Policy Director for Etsy. I’d been chosen to fly out to
Brussels to discuss VAT and microbusinesses with policy makers within
the EU Parliament.
Initially I
was a bit daunted. Did I know enough about VAT? Did I understand
the EU and how it all worked properly? Was it relevant for me to be
involved, as a UK seller, given the Brexit situation?
Angela put my
mind at rest with several phonecalls, and explained that there would
be three other sellers from Europe present, and our presence was to
give policy makers a chance to discuss how new policy would affect
tiny businesses. Often policy is made considering SMEs (small and
medium enterprises), but an SME can consist of up to 250 employees –
a huge jump from the one-person kitchen table businesses which make
up most of Etsy’s 1.6 million sellers worldwide.
Flying out to
Brussels on Monday 17th
October was pretty exciting; I arrived quite late into Charlesroi
Airport and found my way to the bus which took me into the centre of
Brussels. Fortunately I discovered that my Uber app worked fine, and
within a matter of minutes I was in a taxi on my way to the hotel;
the Thon
EU, an eco-hotel in the centre of the European Quarter. Shortly
afterwards I was showered and in bed, ready for an early start the
next morning!
On the
Tuesday I had a free morning, and I decided I’d make the most of
it. I had some breakfast and then set off to explore Brussels. I
made my way to Mannekin Pis, the famous little boy statue, and on my
way browsed in the windows of the plentiful chocolate shops, making a
mental note of where I wanted to stop later. From here I walked the
short distance to the stunning Grand Place, and admired the ornate
gold buildings and the town hall. I stopped for a coffee in the
stunning Galeries St Hubert and did a spot of people watching. I
then wandered back to the hotel via the Cathedral of St Michael and
St Gudula.
In the lobby
I met with the other Etsy sellers who had just arrived and who would
be joining us on our trip. Nafsika
is an Athens-based jeweller – who I had already met at an Etsy
Captain’s Summit in Amsterdam. Timea
is a Hungarian vintage seller, based in Berlin. Pasi
and Susan are jewellers based in a small town in Finland. We
also met with Angela from Etsy, and we all went for lunch in the
hotel while we got to know each other a bit better.
Our first
meeting was in the European Commission, a short (but rainy) walk from
the hotel. We met with three policy-makers who were working on a new
directive concerning VAT for online sales. Currently there is a
threshold for each member state – in the UK until a company has a
turnover of over £83K they do not need to register for VAT. I was
surprised to learn that the threshold varies greatly from country to
country. Greece’s threshold is currently zero, so poor Nafsika has
to pay 24% VAT on every single sale she makes.
To give a
little background, in January 2015 a new law was introduced which
meant that VAT is chargeable on all digital sales within the EU, with
a zero threshold (including digital sales to your own home country),
and the VAT is chargeable based on the country of purchase – eg if
I sell a PDF download to Germany then I’d have to charge 19% VAT,
but if it was sold to someone in France the VAT rate is 21%. The law
also stipulated that the sales platform (ie Etsy) was responsible for
collecting and paying this VAT to the relevant member state.
The directive
we were discussing – which has not yet been written into a paper -
concerned rolling out this scheme to all physical sales, meaning that
there would be a VAT threshold of zero for all sales via a platform
like Etsy.
We all voiced
our concerns about this – as, for many microbusinesses, losing
around 20% or our income to VAT would be financially crippling. The
commissioners were very formal, and did not seem to understand that
putting our prices up by 20% would not be a solution in a global
marketplace, as this would make our products appeal much less
appealing to the customer. They did explain that direct sales –
for instance selling directly through our own websites – would be
subject to a threshold (substantially more than zero), but sales made
through a platform would be affected, and the platform would be
responsible for collecting and paying the VAT on our behalves.
This all came
as a bit of a surprise to all of us – and is concerning to say the
least. For businesses that are already extremely small scale, for
some Etsy sellers a hobby or part-time venture, it becomes less and
less viable to make a profit.
Angela had
explained to us that the European Commission are responsible for
writing regulations and directives that are then taken to parliament,
discussed (with input from lobbyists or “think tanks”) and then
they go on to be passed – or not – by the Member States.
So, our next
stop was an economics think tank called Bruegel. The two men we met
here were friendly, extremely empathetic and understanding, and
seemed genuinely interested in the issues we were discussing. They
asked a lot of questions about it all, and explained that they were
hosting an event about VAT the following week. We all felt a lot
more positive coming away from this meeting.
This
concluded our day of meetings – and we spent the evening eating
Belgian food, drinking Belgian beer and buying lots of Belgian
chocolate! We talked a lot about Etsy and our lives in our
respective countries. I felt humbled by everyone’s fluent English
– and extremely embarrassed that my command of French only really
extends to a mumbled “merci” or “Excusez-moi”!
The following
morning we had a bit more free time, so Nafsika and I ventured to the
Museum of Comic Book Art. It was great, lots of Smurfs and Tin Tin,
and was a welcome break from thinking about VAT! I came away feeling
really inspired and looking forward to doing a bit of drawing when I
get home.
Timea and
Angela had been to visit a Danish MEP in the European Parliament in
the morning, so we met up at lunchtime (for some traditional frites
and mayonnaise), and then got a taxi together to meet with the Member
States. We had a meeting with both the Maltese and Slovakian
Permanent Representatives for the EU. They are the people who will
be responsible – along with representatives from the rest of the 28
member states – for finally passing any new legislation about
e-commerce. They were approachable, receptive to what we had to say,
and seemed interested in hearing from us. They also told us that
this would be a lengthy process and would likely take a few years for
any new legislation to be passed – which set our minds at rest a
bit. It struck me that with Brexit likely to be happening within
this timeframe it may not affect UK sellers; however I still feel
very strongly that it should not happen for other EU sellers, and
worries me what impact it would have on platforms like Etsy.
After
this final meeting we all started to make our way to our respective
flights – Nafsika and I managed to sample some more Belgian
delicacies – waffles, and buy some more chocolate, of course!
On my flight
back I reflected on the trip and realised how very lucky I had been
to be selected to see a tiny glimpse inside the workings of the EU.
I’m so grateful to Etsy for giving me this opportunity, and love
that their business ethos allows grassroots sellers to connect
directly with top-level policy-makers – it’s so important! The
EU Parliament is a fascinating – if complex and beurocratic –
place, and I feel really privileged to have been able to learn and
experience so much. It’s certainly a whole world apart from
folding cheesy wrapping paper and stuffing envelopes!
Angela has
advised that she will keep us all posted; the final directive from
the European Commission should be due out in December, and it will be
interesting to see what happens for the future of e-commerce and micro businesses.
