We’re pleased to announce we’ve released several new features that will help our digital sellers to comply with the EU VAT rules that come into effect 1 Jan 2015.
The new features released this week are:
- EU VAT Reporting
- Order exports include EU VAT data
- Ability to block specific countries / zones
We’ve already made our views about the “wardrobe malfunction” in this legislation clear in a previous blog post on EU VAT MOSS for digital products. I recommend reading our post if you’re not aware of the new European Union rules on collecting sales tax (Value Added Tax or VAT) on digital sales. The new rules will apply to all digital goods sold to EU consumers, even if the seller is based outside the EU.
EU VAT Reporting
These are the first of several new features we have planned to make it painless for our sellers to comply with the new EU VAT rules. The next features we will release are Pricing and Invoicing.
The new EU VAT Reporting feature will:
- Identify your customer’s location using a number of data points
- Apply the correct the VAT rate across the 28 EU states (for VAT inclusive pricing)
- Collect and store the evidence to verify the customer’s location
- Allow you to export your order list with the EU VAT liability for each sale for quarterly EU MOSS returns
Using EU VAT reporting
If you choose to use the new EU VAT Reporting, it’s as simple as choosing ‘Settings’ in your dashboard, then select ‘Tax’. Choose your tax settings and be sure to check that Europe has been added to your region list.
Note: UK sellers do not pay VAT on UK Sales
There is some good news if you’re in the UK. The HMRC have recently said that UK based sellers will not need to pay VAT on UK sales and just pay VAT on sales to other EU countries if they are below the registration threshold VAT. To do this, set the UK rate to 0% and it will override the default EU rate. UK customers will then be charged your tax rate of 0%.
For more information, check out the HMRC additional guidance on VAT MOSS published 10 Dec 2014
Identifying the customer’s location during the checkout process
We’ve kept the checkout process as streamlined as possible, so you don’t lose any sales. Some changes have been made to accommodate the EU VAT rules, since the new EU rules require businesses to capture, and record, a minimum of two non-contradictory pieces of evidence to identify the place where the consumer is established, or normally resides. Turning on EU VAT Reporting means that customers purchasing a digital product will now be asked for their billing address. The system will also automatically capture the IP address and the location of the credit card issuer. It will also apply the relevant VAT rate to estimate the VAT liable on that sale.
Don’t worry if you’re using our PayPal App – you can still continue to offer customers the choice of buying with PayPal.
The country evidence for a sale will be recorded and stored for 10 years in accordance with the EU VAT rules.
Exporting Orders including EU VAT liability
Any exports of your order list now include additional columns of data relating to the tax paid for each sale, and you can filter this out by region. This information can be used in preparing your quarterly VAT returns using VAT MOSS.
A quick refresher about VAT MOSS
The EU have implemented an online portal called Mini One-Stop Shop (MOSS) as an alternative to registering with each of the EU member states separately. If based in the EU, you register with your country’s MOSS online service. If outside of the EU, you can register for the UK’s non-union VAT MOSS online service.
You submit your quarterly returns to the MOSS, and this takes care of sending what is owed to the appropriate countries.
In the future we’ll be automating as much of the formatting of the data needed for MOSS reporting as possible. We can’t say how this will work yet, because the EU hasn’t told anyone (we’re not kidding). Hopefully, the EU will provide this in advance of March 2015 and it we can make it as easy as possible.
Visit Selz Support for more detailed instructions on using the EU VAT Reporting feature.
Can I exclude selling to specific countries?
We think our features will make selling into the EU and complying with EU VAT pretty simple. But if you want to opt out altogether we’ve built a new feature to allow you to exclude from selling to specific countries or zones. Just remember: you’re giving up on 507,000,000 potential customers!
To use this feature, go to ’Settings’ in your Selz dashboard and then ‘Digital’ and select the countries or zones you wish to block.
We’re here to help
You can be confident that we’re working very hard to make it as easy as possible for digital sellers to comply with the new EU VAT rules.
There is still a lot of discussion and lobbying going on between the industry and the EU and the different governments. Hopefully common sense will prevail; in the meantime, we’re keeping it real and keeping you selling.
What to do now
If you sell eBooks, PDFs, software, training materials, tutorials, or music files to EU consumers, you don’t have to wait until the 1 Jan 2015 before you do anything.
Make a start now with getting compliant. Sign in to Selz and turn on your EU VAT Reporting.
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