it’ll be interesting to see how it works out, hopefully everything will be ok
Envato, what’s the answer regarding support, for themes/plugins us buyers have bought, if the seller now leaves envato marketplace due to this?
Many of us bought many themes and built sites w/reasonable expectation that theme author will update w/current WP release, and answer support related questions, eg at least for 4-6 months following purchase. It’s a big issue. Will there be a lot of ‘dead themes no longer supported’ if authors leave?
It’s not an issue for after effects templates, audio files and photos, but it’s a big concern for Wordpress themes and plugins, which need to be updated w/current WP releases. What’s the policy? From a buyers’ standpoint, I’m now quite concerned about WP theme/plugin related support, since some authors may now leave envato; I’ve spent a lot of money on those, buying multiple licenses in some cases, what’s the situation now?
as a buyer, now I worry about getting support for things I’ve bought here moving forward, if there’s a mass exodus of sellers I’ve bought from in months past (like wp themes and plugins).
Since it appears Envato does do regular ACCC filings; the people there may be able to clarify correct reporting structure regarding these issues?:https://www.accc.gov.au/search/accc-funnelback/envato http://registers.accc.gov.au/content/index.phtml/itemId/1181497/fromItemId/1133393 http://registers.accc.gov.au/content/index.phtml/itemId/1110651/fromItemId/1107038
The ACCC is the regulatory agency governing business in Australia. Envato, any word from the ACCC regarding these and related issues?
I am Canadian (and run a incorporated business) so many of the present tax issues don’t effect our business, but I wanted to comment as we’ve contacted our lawyers about the “authors are the direct sellers” issue. This was necessary as (should things be that way) it complicates things in Canada. Thought I would post our findings here to shed additional light on the subject.
The Nitty Gritty
Our lawyers say (putting their words into simple language) regardless of the current language used by Envato to suggest authors are selling directly to buyers, the Canadian government views the flow of money as final authority in determining who the actual “seller” is.
Knowing about Envato already, and understanding the marketplace from dealings in the past, they say there is overwhelming evidence that authors are not selling directly to buyers, and that Envato’s argument would absolutely not hold up in a court of law if push came to shove.
Harmonized Sales Tax
Beyond this, there is an argument that Canadian authors would also be required to be charging and collecting a Harmonized Sales Tax from Canadian customers (which is different for every province – 13% where we operate), remitting that money to the government monthly. In Canada, selling digital goods can fall between “Services” and “Intellectual Property” depending on the agreement and what is done with the goods. In some cases no tax is required, in other cases it is. Whether or not HST must be charged depends on a number of things which is too long to get into here.
Retroactive Tax Payments
If we have always been the direct “seller”, though that is clearly not the case, the government will be very likely to request retroactive HST payments dating back to the creation of accounts. Not only will they want the tax, but they would include interest fees and a penalty for each year missed.
If that should happen, and the government decides to pursue money that it believes it’s owed, we have a extremely serious problem here. A very serious legal problem that will likely end in a lawsuit against Envato as no one is going to let the fact that we have not been the direct sellers slide. Unfortunately this position puts authors in a corner and the only way out is to show the government who the real seller has been.
Simply put, to say that authors have been selling directly to buyers all along is deceptive and untrue. Such a claim is the most dangerous claim I have heard since joining Envato and it threatens this entire marketplace.
As noted by some already, the very role that Envato plays clearly indicates that they are in fact the seller:
If I am the direct seller, I need to collect HST from Canadian customers – IMMEDIATELY. I need to have access to all customer information. Regardless of what is being said, we neither have the tools or power to be that.
- Envato sets & controls the prices
- Envato sets & controls the terms
- Envato controls the flow of information
- Envato controls & stores customer information
- Envato issues the licenses
- Envato receives funds directly from buyers
- Envato provides receipts to buyers
- Envato pays authors
+1 that makes sense above. in my opinion Envato is the direct seller from all the evidence I’ve seen, and they pay authors commissions/royalty income.
It may be worth contacting the ACCC for clarification if necessary; they’re the equivalent of the FTC in the US; they govern Au-based companies:https://www.accc.gov.au/
Envato and/or authors may be able to get clarification by contacting those agencies as well as individual tax professionals.
I would check with CPA/tax professionals, as some seem to have been doing, and report back here what they’re collectively saying, re:
a) USA: double reporting envato vs paypal 1099s b) EU: VAT-related responsibilities (since Envato is the point of sale/marketplace, aren’t they VAT-responsible, like microstock sites that sell author’s works may be?) check it. c) are you being paid commissions by envato? or is there a different working relationship? d) what’s industry-standard accepted practice, as case precedent, for how royalty free authors’ working relationship is defined, for other RF sites? That’s likely what would hold up in tax court/legal/IRS/VAT related actions & inquiries.
Since year-end is fast approaching, a timely inquiry and response from both envato and what you’re collectively finding re discussions w/your tax professionals would be helpful. Odds are you’ll hear similar things, collectively; so things like “I’m in the USA and my CPA said….” would be more useful than speculation
one type of Explainer Template I’d like, is something that helps those of us who sell online courses & downloadable how-to videos.
For example part of it would show bullet-points like a powerpoint slide, with corporate/professional typography look…
...and show “What You’ll Learn” ...
visit a good site like Lynda.com and figure out, how would you do a promo video for a course like one of theirs? is what I’m looking for.
there’s a Big market, a lot of us who sell instructional how-to videos (downloads/dvds/online courses), an Explainer template in that category should sell well for you.
contacting a good CPA/tax authority in wherever you’re located is probably a good idea. as a buyer I hope we don’t see a mass exodus of EU/USA-based authors now.
How do other royalty-free microstock places handle this? That would establish legal precedent, which is more binding than anything else. What’s industry standard practice? That’s what holds up. Do other places collect VAT on author behalf and that’s part of their cost they absorb prior to paying you? How are 1099s typically reported? Inclusive of refunds/bundles/discounts or not? etc.
btw I’d suggest you screencap/save forum threads and prior tos/agreements/licenses/agreements that were in place for documentation.
It would be helpful for Envato to post detailed FAQ after consulting with both Europe and USA CPA/tax professionals, to answer important questions, asap.
best wishes with clarifying all this, it appears to be causing a lot of concern
although it sounds cheesy, just coming here to see all the great creative works on Videohive, Themeforest and similar is inspiring, and lifts my spirits …seeing how talented you all are and hard working has been a Big personal motivation to me for so many years, from the early flashden days… Look around at all the brilliant creative (and useful) work here regularly… that’s something to be happy about, I visit here daily to see what you’ve all done lately.