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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.

eu vat reporting

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.

eu vat reporting

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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About the author

Geoff Austin

Geoff Austin

I talk and write a lot. Some of it about ecommerce, selling online, startups, SEO, digital marketing.

Currently, head of analytics for an automotive business in Sydney, facilitating a culture of data-driven decisions. Delivering data-based insights and intelligence.

Chauffeur to twin daughters and a pizza chef master.

13 comments

  1. Gavin

    Great work on this new feature – very simple and straight forward to implement.

    As a minor bit of feedback: it would be great if, after the name and email address, the country was the first thing someone selected so that if they picked a country outside the EU they didn’t have to enter their address, city, state, and zip code.

    Also, even providing a PWYW ‘free’ download, if someone chooses to download for free with this feature activated the ‘purchaser’ still has to enter their physical address. I know it’s a new feature and it’s a real pain of a new law, but thought I’d give that feedback as I could see myself not even bothering downloading something for free if I have to give my physical address. Hey, even if there was a “Why is this information needed?” hover over that ‘popped-up’ to explain why the address is needed could alleviate some abandonment.

    With all that said though, again very nice work on this!

    1. Segia

      Great options, although I definitely agree with Gavin. Having to enter an address for a digital product is a huge threshold that I feel should be avoided whenever not absolutely necessary. In addition to the options mentioned above, I would suggest that limiting sales to one country should also do away with the requirement to fill out the address form.

      1. Gavin

        Further reading on this topic also creates additional problems with delightful new law – in at least Ireland (where I’m based) and Germany you are required to display the price inclusive of VAT before the purchasers clicks the ‘buy’ / ‘get it now’ button.

        So calculating VAT after they’ve entered their address is technically against the law in at least these two EU countries – I have read that Spain and France may have similar requirements but cannot locate a source. This isn’t a critique of the Selz solution, more of an observation really.

        I have also read that in Italy the price presented to the purchaser before they click the ‘buy’ / ‘get it now’ button is effectively a contract you as the seller are entering into with the purchaser – so again changing the price after they’ve clicked the buttons to account for VAT is also technically illegal.

        This is a nightmare of a new law…

      2. Selz

        Melissa

        Hi Gavin, thanks for reading! We don’t actually add VAT to the purchase price, so the price that you set for that product is what the buyer will pay. What our VAT feature provides you with is a clear breakdown of VAT within that purchase price for your records. As a seller, it’s up to you as to whether you would like to raise your prices to cover yourselves for these new fees but we leave this up to you.

      3. Selz

        Melissa

        Hey Segia, yep, we feel you on that one, but we have made it so you can block continents/regions, so if you don’t want to take the risk of selling in the EU then you can block it if you like.

      4. Segia

        Right, I am aware of that option, but what I was suggesting is that if I were to block all countries except my own, it wouldn’t ask for an address because the customer is by definition in that country.

        (E.g.: as a Dutch author of a Dutch-language novel, I have no intention to sell outside of the Netherlands, but having to fill out the address would pose quite a threshold to my readers. I could imagine a large share of users won’t be selling abroad, so it might apply to quite a lot of people. )

      5. Gavin

        Hi Segia – I can’t reply to your post below as the comments system doesn’t seem to allow it but if you go to “Settings > Digital” you can use the Selz geo restrictions to limit sales only to the Netherlands and not activate the VAT option – in this way you will know all sales came from the Netherlands and won’t have to force purchasers to enter their address. This is what I’m currently doing for Ireland and it works a treat (though still hoping for some movement from the EU on the new digital goods rules to open up to Europe!).

      6. Segia

        Brilliant, that should suit my purpose just fine – thanks a lot!

  2. Geoff Chalmers

    I would also really appreciate a way to filter out non EU customers before they reach the point of having to enter their address as that will harm conversions. That would be a huge benefit as the Selz checkout is so good.

    My plan is to offer my prices inclusive of VAT to all customers within and outside the EU. Can you clarify for me that once the customer enter their address that there won’t be VAT added to their order. I’m hoping to set inclusive prices and absorb the extra vat payment for EU customers.
    Thanks Geoff

    1. Selz

      Melissa

      Thanks for the feedback Geoff! We actually don’t ask for address details unless the buyer is in the EU. And yes, even though we calculate for VAT, the actual sale price does not change. All we do is provide you with a tidy report of the VAT that needs to be accounted for within price that you set for the product :)

      1. Gavin

        That makes a lot of sense – must admit though that for the conversion sensitive (I’m included in that pile) I didn’t get that the address fields are only shown to EU visitors from the blog post about this feature.

        Also got the sense that the mentioning of VAT inclusive/exclusive options implied the VAT was added at the checkout stage rather than included in the price by default (can’t actually see an option to activate a VAT exclusive option). Glad though that’s the way it’s setup as that’s ideal (even though I’m not going for it and waiting out the EU with fingers crossed they’ll create at least a reasonable VAT registration theshold).

  3. Martin Gartner

    Hello Melissa,

    you wrote in a post above:
    “…even though we calculate for VAT, the actual sale price does not change”

    The problem is, your TAX Invoices App doesn’t work like this. It always adds the VAT TAX to the product price. This will produce wrong Invoices or wrong reports.

    It would be nice to have a switch/option to either add or include the VAT TAX to the product price on TAX Invoices.

    Another big problem is that regarding to the EU VAT TAX rules you need to display the product price including the specific VAT TAX of the buyers country through the whole purchase process. This begins when the customer visits the digital shop and not only within the checkout!
    I think it will rain cease and desist letters for EU based sellers in the future…

    Btw. I already sent a support mail a few days ago but didn’t receive an answer.

    Greetings,
    Martin Gartner, bitego

    1. Selz

      Melissa

      Hi Martin, thanks for commenting. Our developers are working on this at the moment and realise that we need to make a few changes here. Fingers crossed the change won’t take too long.

Comments are closed.