I might be forced to halt purchases of Lenna’s Inception through itch.io in January due to new EU laws. The details of why (in my rant below) are quite tedious, but please be assured that:

• I’m still absolutely committed to finishing the game!
• I’m currently investigating other ways to make it available (several other stores look like possibilities).
• If you’ve already purchased it, your itch.io download page will still work, and you will still be able to access all future updates through there.
• I still think itch.io is bloody amazing and want it to succeed.

As I write this, you can still get it on itch.io. If you want it soon, buy it before the 31st December:

The owner/operator of itch.io has said that he is working on EU VAT compliance, so it’s possible that nothing might change for Lenna’s Inception come January. Although it is still quite hard for me to imagine what he would be able to do.

If you’re reading this in January, while the game is unavailable, and you really can’t wait for it:

• Press, youtubers and twitch streamers – shoot me an email
• Otherwise, have you got an awesome piece of original Lenna’s Inception fanart to share? :)

Rant

Starting 1st January, the EU is introducing new rules for VAT on digital products. Previously, I’ve been below the threshold for VAT eligibility in the UK, but with the new regulations, I do have to register for it (in almost every EU country).

But the major issues for a sole trader like me center around the rules determining the “place of supply.” Each EU country has its own VAT rates and collects VAT separately, so in order to charge you the right amount of VAT and send it to the right member state, I need to know where the “place of supply” is. Previously, this was wherever the business was (for me this is the UK). But now the “place of supply” has been redefined to wherever the customer is (with some weird caveats that apply if they are in transit or on holiday).

When I sell you a game, the new regulations mean that I have to collect and store two (and sometimes three) of the following pieces of information about you as evidence indicating which member state you’re located in:

• Your billing address.
• Your IP address.
• Your bank account details.
• The country code of your SIM card.
• Your land line telephone number.

This information has to be stored in a spreadsheet on a server in the EU for 10 years, and uploaded to HMRC quarterly. Of course, Paypal are doing nothing to help collect this data.

Now, if sharing that information with me scares you, you have every right to be afraid! In fact, this personally-identifying data is so sensitive that in order to store and process this data in the UK I would have to register as a “data controller” with the ICO under the Data Protection Act, and comply with everything that that entails.

On top of that (if I understand correctly), when I display the price of the game, advertising laws mean I have to include the VAT rate in the price advertised… which depends on knowing the place of supply before taking that information from you!

Supposedly these rules also apply to all foreign companies selling to EU consumers, although I have no idea how they expect to enforce that.

Comic by Dave Walker

My business isn’t completely screwed by this. It’s still possible for me to sell Lenna’s Inception through a middleman store like Steam, Humble, etc. and let them handle the VAT, but consider what that means: if you create something other people like and want to buy, there are so many hoops to jump through that you can’t just sell it directly to them. Instead, you have to sell to a large, established business who takes a hefty percentage and then sell it on to your customer at a higher price.

The Internet has been a wonderful transformative power in many industries: it removes unnecessary middlemen, reducing prices for consumers, as well as improving the compensation for creators. It’s already made much of the travel industry obsolete, put print publishers in a very tight place, and has started to force change for good out of video game publishers. It even looks like there could be a shake-up of the finance and banking industry in a few decades. But while VATMOSS remains as complex and burdensome as it is now, we aren’t going to see monopolistic stores like Amazon, Steam, Google Play, and the iOS App Store supplanted by new models like itch.io (a marketplace for direct developer-to-consumer sales). The EU has secured a place in the future for big businesses to act as gatekeepers – to decide which games are noteworthy and worth selling.

If you’re outraged like I am and you’re in the UK, you can sign this petition which seeks to uphold the VAT threshold for digital businesses in the UK. Unfortunately, the previous petition about VATMOSS failed to get an actual response besides “the rules have been on display since 2008.”

Personally, I have a feeling the notice was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying ‘Beware of the Leopard’… 😀

Disclaimer

I’m not a lawyer and I’m not an accountant, I’m just a pissed off programmer. Assume I’m wrong about everything here. If you need actual advice about this stuff, I don’t know where to point you. But here are some links to at least help you ask the right questions:

• HMRC VAT: businesses supplying digital services to private consumers (UK)
• Revenue and Customs Brief 46 (2014): VAT rule change and the VAT Mini One Stop Shop – additional guidance (UK)
• “Why I’m stopping sales of my Consumer Rights Directive compliance guide”
• “What you need to know, if you’re relying on your payment processor to dig you out of the VAT-MOSS mess”