As a Canadian bootstrapped startup, we are not EU tax lawyers.

However, we do actually charge VAT for EU sales, and GST / HST for Canadian sales.  (We take care of collecting and remitting the VAT under the VAT MOSS program, which does apply to non-EU companies.)

We pay royalties on the price of the book before sales taxes are applied, since obviously the appropriate government gets to keep all the taxes they are owed.  This is the pre-VAT price for EU sales and the pre-GST / HST price for Canadian sales.

From our perspective, the money we pay our authors should be considered royalty income by those authors, and those authors should pay taxes appropriately to their respective country / countries.  We don't provide advice on how to do that.

But the big point for your accountant is:

VAT has already been collected and remitted, under the VAT MOSS program, by Leanpub.

We do the whole "collect and store three pieces of evidence, make sure that 2 of the 3 pieces match, etc" thing for you.  Us handling this for you is one of the big benefits of using the Leanpub storefront if you sell ebooks into the EU.

(Believe it or not, any merchant anywhere on the internet is responsible for complying with the VAT MOSS program, even if you have no physical presence in Europe.  The VAT MOSS program is not just for European citizens or companies--our understanding is that it even applies to small bootstrapped Canadian startups, and potentially even to individual self-published authors.)

By the way, if that wasn't fully clear, here's another way to think about it:

Regardless of whether you get the royalties as an individual author or as a company, they are royalties.  And if you sold on Kindle, your accountant would (probably) not think about emailing and asking them for their sales breakdowns on Kindle (since VAT has 3 pieces of evidence, see, so that they could figure out what to do.  Instead, your accountant would simply ensure the royalty income was reported correctly.

Did this answer your question?