2015 EU VAT Changes to Digital Goods
As of January 1st 2015 the EU introduces new VAT rules for people selling digital services to EU customers. Previously if you were registered for VAT then you charged all EU customers the rate of your country. Now the rate is determined by where the customer lives.
I won’t go into all the details of the new directives, you can read more about them here, and their impact on small business here. However, we are pleased to announce we have added support for this in Sellwire.
We have previously supported tax registered companies in the EU, including reverse charge EC sales to EU Businesses. Now when an EU customer goes to purchase a product, without a valid VAT number, they will be asked to confirm their billing address. We will match the billing country to the country of the IP address and if they don’t match ask the customer to declare they based in the country they provided. HMRC have made this not very clear, but based on other the implementation in other systems and advice from our accountants this seems the most acceptable approach for handling country discrepancies.
There will be a new Tax VAT MOSS report under the ‘Report’ menu that will allow you to view and export the EU purchases (excluding those from customer in your tax registered country) for any given period, or all time. This will allow you to submit your VAT MOSS return and stored your customer VAT data in order to be compliant with the new directive. We will be looking at improving the CSV export to match the VAT MOSS return format to make it even easier for submission when HMRC release the format.
If you are a tax registered company selling goods in a currency different to the one you will submit the tax return for, we now handle the conversions of PayPal transactions for the correct amounts to appear on the VAT reports. So for example, you are tax registered in the United Kingdom, but you sell goods in USD. The VAT MOSS report and EC Sales list will now show the converted GBP amount. If for any reason the conversion fails (because you know, PayPal) then we will alert you to this in the report screen so you can manually edit the order to add the conversion details.