New EU VAT Rules 2015

Posted by Paul on December 11, 2014

You may be aware that some rather onerous new tax rules will come in to force from January 1st 2015 to do with the way that VAT is charged in the EU. Unfortunately, whether you're VAT registered or not these will apply to you if you sell digital downloadable products or provide digital services such as web hosting or access to paywalled content.

If you sell digital downloads or access to a digital system of some kind, you'll need to charge a different rate of VAT for each of the 28 member states of the EU:

  1. Austria
  2. Belgium
  3. Bulgaria
  4. Croatia
  5. Cyprus
  6. Czech Republic
  7. Denmark
  8. Estonia
  9. Finland
  10. France
  11. Germany
  12. Greece
  13. Hungary
  14. Ireland
  15. Italy
  16. Latvia
  17. Lithuania
  18. Luxembourg
  19. Malta
  20. Netherlands
  21. Poland
  22. Portugal
  23. Romania
  24. Slovakia
  25. Slovenia
  26. Spain
  27. Sweden
  28. United Kingdom

If you're not VAT registered and you want to sell something digital and automated to someone in any of these countries, you'll need to register either in the UK and then use HMRC's MOSS service, or register for VAT in each country you sell to.

Whether you're registered or not, you'll need to be able to split out your sales at the end of each quarter by customer location based on 2 pieces of information, such as their physical address and IP address.

What are the options?

  • The rules only apply to customers who are themselves not VAT registered so you could only deal with VAT registered customers if that suits your business.
  • You could stop selling to these countries.
  • You can make the necessary changes to charge the right amount of VAT, record where all your customers are and then either pay the VAT in the countries that you supply to or use the MOSS service after registering for UK VAT.

Another complex piece of EU legislation much like the EU Cookie Laws that were rushed in with very little time for people to make the required changes. The cookie laws pretty much amounted to nothing - no one was prosecuted and it's now acceptable just to mention cookies in your terms and conditions/privacy statement.

It may be more difficult for the EU to renege on these rules but hopefully that's what will happen if the level of complexity and disruption is too high and the level of compliance is too low.

We're currently working on an OpenCart extension that will provide sales reports split in to customer country, containing address and IP address as for now, all sellers of digital products and affected services must comply.

More info here at this very long link:

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