new notation in Royalty History reports

[WHS_Designs]

just made a sale on the NZD domain, and I noticed that there is now a new notation (++) after the currency.

(the explanation being: ++ Domains that include VAT (and other sales related taxes) will have 20% deducted from Sale Price before royalties are calculated).

so it sounds like countries in the EU as well as Canada may now also have this deduction.

[J32Design]

Yes, a sale from Germany shows the same ++

[ColsCreations]

++ Domains that include VAT (and other sales related taxes) will have 20% deducted from Sale Price before royalties are calculated

What??? That's ALL 15 non-US domains. So all earnings from all international sales are reduced now. 😲
The part in parenthesis has me worried as without clarification that could include US sales too.

Here's what a minor sale to the UK looks like before & after this new 20% deduction.

 
And here's how a sale of a more expensive item compares:

Well, it is what it is i guess. Good eye on spotting this and thanks for letting us all know about it.

If one or some of you all could do a screenshot of the line on your royalty report and a link to the product I'd appreciate it. I'd like to figure out if they are deducting the 20% before or after the discounts for any advertised sale discounts. From the wording I suspect it's after but I'd like to know for sure as this is a pretty significant change I'd like to incorporate into my spreadsheet for calculating earnings.

[ievaj]

@ColsCreations Can you please help me figure out what are these 5% ? 

 Gothic Skull Personalized Birthday Card | Zazzle

Gothic Glam Floral Skull Classic Round Sticker | Zazzle

[ColsCreations]

@ievaj 

For the stickers, it appears they got them at 40% off, and the User Option was upgrading to matte at 0.35 per sheet for total User Option cost of $1.40.  For customers, the entire order including User Options is discounted by whatever amount their promo code is for so this customer paid a total of $18.24. But in the back-end calculations, Zazzle applies the 5% rate to the full non-discounted amount of the User Option. They subtract the full non-discounted amount of the User Option from the total the customer paid and that remaining balance is what they apply your set royalty to. In this case that remaining balance is 16.84. So your earnings report line shows 16.84 @ 10% and $1.40 @ 5% for a total royalty paid of $1.76.

The math works the same way for your card, where the cost for the envelope and the cost to remove the designer credit are both treated as User Options subject to the 5% formula.

[ievaj]

Thanks so much for such a detailed explanation🌷

[WHS_Designs]

@ColsCreations 

Thank you so much for your calculations!
Here's another example for you.



https://www.zazzle.com/elegant_25th_silver_wedding_anniversary_pouf-256228724364458416

[ColsCreations]

@WHS_Designs 

That checks out. The list price for your pouf on the NZ site is $261.00.
With a 20% off discount they paid Zazzle 208.80 as shown on your report.
With the VAT fee and the 3rd-party fee, it works out to the $19.91 shown on your report.

I am assuming the referrer stills get 15/35% of the total the customer actually paid (208.80) and not the reduced total on the designer's side (167.04) so that's what my referral numbers here reflect. Odd though because the 20% carve-out on designer's side is thankfully based on the reduced royalty amount (24.89) after the VAT fee and not the pre-fee 31.11 so that part is fair.

There's nothing in #4 here in the Associates Program Agreement that points to referral pay-outs being calculated on anything other than the amount the customer actually pays for the product. So just like User Options at 5%, the VAT fee is only dinging Creators, making it seem more and more to me that referring is more lucrative than designing. In this case, you the designer made $19.91 but the referrer made $31.32 (208.80 x 15%).  🤔

The line item on your royalty report only shows $208.80 @ 14.9%. Which would be $31.11, not the $19.91 shown that you're actually getting. It's amazing that there aren't fifty posts a day from people asking why their royalty doesn't match up. I know people have been asking for more details on the reports forever, but boy, I think they would be doing everyone including themselves a favor if they itemized the fees deducted to arrive at that net paid out.

[WHS_Designs]

@ColsCreations 

Thank you so very much for your calculations and explanations.

Yes, like you, I wish the itemizations did a better job into taking into consideration the fees that are deducted.

Re: the VAT "carveout" fee ... ohhhh well; I guess it's another CODB, and, most of my sales are from the U.S. anyway. I am glad I joined the Promoter 2.0 program. Didn't get the referral here, but I am doing better in the past 2 months with PP referrals than I have done in the past two years!

[J32Design]

@ColsCreations  Will this work?

https://www.zazzle.com/modern_red_fire_department_firefighter_id_badge-256664508547056733

[ColsCreations]

@J32Design  I think it does.

If we go to the product page on the German site, we can deduce they paid an extra .69 for a band or clip, bringing the list price to 5.52, for a total paid of 4.42 after the 20% off sale discount, which matches the 4.42 shown on your report.

 If we deduct 20% from that 4.42 for the new VAT fee, we're left with 3.54 to calculate your royalty on. For a third-party sale that works out to 0.42 which matches what is shown on your report.

The numbers work out perfect here showing they take the actual total the customer paid after any discounts (which is the amount shown on the royalty report) and then reduce that by 20% before figuring the royalty. This is only one example case but it's probably safe to say there's going to be a lot more posts with people asking "why is my $ royalty earned not matching the % shown?".  Well, because inbetween the amount the customer paid and the amount Z is paying you there are a number of possible deductions that aren't being shown and broken down for you on the report.

Thanks for sharing a sale to work this out.

Also - sidenote:
Interesting that the addition of a band or clip for the 0.69 isn't treated as a 5% upcharge. I'd like to start a list of User Options that have been confirmed as being or not being calculated as upcharges when figuring our earnings 'cause those things really complicate calculations but that's another subject.

[J32Design]

Thanks for posting the details. Your calculation sheet visualizes it very well. The whole thing is however a ripoff by Zazzle. They charging 20% flat if any VAT or sales tax is involved. In Germany, Goods and Services Tax or Mehrwertsteuer is 19%. In New Zealand, Goods and Services Tax (GST) is 15%.

[ColsCreations]

Yeah, I looked up VATs for all 15 domain countries and they range from 5% (Canada) to 25% (Sweden). Initially I was flabbergasted by this, thinking how can it even be legal to pass on the tax obligation to the Creator instead of the end consumer?  The end consumer pays the tax to merchant, merchant remits it to whatever agency. If you put something in your cart on a international domain you can see tax is still be adding to what the customer pays. So ok, whew, nothing goofy going on there as far as I can see, we're not helping cover the tax for the buyer. I see this as being a processing fee on international orders to help offset Zazzle's cost of collecting, processing, reporting, remitting etc the various VATs. It's a bummer having another fee ding our earnings but if it helps keep Zazzle in the black, well, it is what it is.

[J32Design]

I guess I am just tired seeing my slice of the pie getting smaller and smaller by the year.

[Barbara]

It makes me glad my foreign sales have gone down.

Colorwash's Home

[Sara_H]

Am in the UK and got dinged for 20% VAT for UK sale. Wut? Why haven't we had an email to explain these extra charges at least?

[almdrs]

Japan has joined the club too:

[MadjackGG]

Just got pinged the 20% sales tax on a sale to someone in North Carolina. According to Google, NC has a sales tax of 4.75%.

I wouldn't have even realized what was going on until I started looking into what my actual royalty rate was for most of my sales, and found that my earnings are being chiseled away by a 20% third party referral fee and a 20% flat sales tax.

Not happy.

[ColsCreations]

@MadjackGG  What 20% flat sales tax are you talking about?? We don't pay sales tax, the customer making the purchase does. Could you post a screenshot of the sale from your Royalty History report (with customer's name blocked out) so we can make sense of this?

[MadjackGG]

Apologies - made a mistake. VAT wasn't charged on the sale price of this particular sale.

It did however include a 20% referral fee (the sale was referred by a third party), meaning my actual royalty rate was ~10% rather than a default 12.5%.
 

[Fiorenzo]

For the ones who don't know: The display of sales taxes (VAT) works differently in the EU than in the States. In Europe, by law, customer prices have to be displayed WITH the resp. VAT % already included. So, if a product costs 100€, you have to add the VAT amount, e.g. of 20%, in this case 20€, and you list the product for 120€.

Royalties are of course counted on the sales prices without VAT. So in that specific case, a product listed for 120€ on an Euro domain contains 20€ VAT, and you get your 10% royalties from 100€. VAT differs between EU countries, but if things still work as in the "old days", Zazzle as a US company may have one VAT rate valid for the whole EU, depending on the EU country they chose to open their EU VAT No. Not sure if this works still the same and not checked further.

So, the royalty procedure is correct from Zazzle's side, since VAT is included in the end-user prices on local domains. At least the EU ones, don't know how other countries like AUS, CAN, or JAP work.