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22nd December, 2014

Changes to pricing and VAT in January 2015

Breakfast Quay is a very small operation: it is the trading name used for audio and metadata software by a two-person company, Particular Programs Ltd, with zero full-time employees. We have pootled along for some years providing a few bits of useful software to a small but happy array of customers. Our turnover is tiny and we're content with it that way.

This means that, until the present day, we have been able to operate without needing to be registered to collect VAT (sales tax). The UK has a fairly generous limit below which a company does not need to register for VAT, and we have never been anywhere near it.

That's about to change. From January 2015, a new European Union VAT structure for digital products means that we will need to register for VAT, and collect this tax on all our sales to eligible territories. (The alternative is to block sales to other countries within the EU, which we don't want to do.)

The effect of this is that, from 1 January 2015, our prices will be changing to take into account VAT. The amount of the increase depends on where you, our customer, are based: if you are in the UK, it will be 20% because that is the UK VAT rate; elsewhere in the EU, it will be the rate levelled by your own country; outside the EU we usually will not have to add VAT at all.

So, if you are outside the EU, this probably won't change anything.

If you are a VAT-registered business within the EU, this will probably be a welcome change: previously we were unable to provide you with a VAT number, which some countries consider to be suspicious behaviour for B2B transactions; now we will be able to, and you can reclaim the tax, so the price to you will ultimately remain the same.

But if you are an individual or a non-VAT-registered microbusiness within the EU, then I'm afraid this change means our prices to you go up. Sorry! We don't get to keep the extra, it goes straight to the government of whichever country you reside in.

(Note: this article has been edited since posting, to reflect the true situation for customers outside the EU)