Why content creators need to understand VAT laws

 

From artists and musicians to bloggers and podcasters, millions of content creators are now using digital subscription platforms to turn their passion into a viable business! 

But it’s important to remember that some platforms are not handling VAT in line with EU and UK regulations. 

Digital subscription platforms have become hugely popular in recent months. Unlike on ordinary social media, creators on these platforms can make money by inviting their fans to pay a monthly fee to see exclusive content they create, such as photos, videos, audio recordings, live streams, and direct messages.

Be clear on the rules

Creators are responsible for declaring their earnings to the relevant authorities and handling their own income tax. 

However, no matter where in the world it operates, the digital platform is solely responsible for collecting and remitting VAT on UK and EU sales to fans.

Many creators were understandably confused when one of the most popular platforms, which launched in 2016, announced it was to suddenly start collecting VAT in July this year(2020) – despite no recent changes to VAT rules.

This set alarm bells off for many creators. If the platform has not been collecting VAT, it could soon be hit with a massive backdated VAT bill. And some of these platforms will not be big enough to survive the fines.

This is a big reason why it’s so important that creators understand what’s expected from digital subscription platforms when it comes to VAT. Before they even think about signing up to a platform, they should check the platform complies with the law. Creators need to think about what would happen to their content, their earnings, and the fanbase they’ve worked so hard to build if the platform they’re using went bust.

The safe choice

SoSpoilt is a subscription platform that has always collected applicable VAT on sales. And, for creators who earn above the £85,000 VAT-registration threshold, they offer the option to easily submit VAT invoices for payment.

We’ve always had the financial wellbeing of our creators in mind. We’ve worked hard to make sure we handle VAT the right way, so our creators can focus on the important thing: creating content that means something to them and their fans.