Posted by freatida on December 8, 2009 at 8:39am
Hello everyone,
I'm setting up a store based in the EU that will sell internationally. VAT rules are really complicated. Our accountants tell us we have to ask for customers VAT reg no., validate it, and whether we charge depends on which country they're in, etc.
But whenever I've bought stuff online, whether as a business customer or a consumer, I've never had to give VAT reg details, or anything like that. And I've always just been charged VAT, even in some cases when I shouldn't have been.
So I'm wondering what's the secret for keeping it simple? Do you just charge VAT to everyone and let them recover if from their local tax authority if they're not liable. Do you validate VAT reg numbers? I'd really appreciate your experience. Thanks!
Comments
EU tax fun
http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/art...
The below is only for intangible goods (digital goods and services). Tangible (physical) goods fall under Distance Sales rules and also may also get Small Consignment exemptions, so they may be different based on your business situation.
http://www.revenue.ie/en/tax/vat/leaflets/distance-sales-eu.html
http://www.out-law.com/page-7512
A. For B2C operations, you have to charge your local VAT whenever delivering to another EU state.
B. If your operations is B2B, you have to do the same as the previous unless (C) applies.
C. If your operation is B2B, and the customer has deliverance outside the supplier country, and he had been registered in his country as a InterEuropean operator, with a validated VAT number, then you exempt him from my tax, and he should be able to charge his VAT by himself in his own country. This is called the reverse charge (self-assessment) mechanism.
D. For buyers outside the EU, zero-rate the VAT.
As a EU member, the only time you're not charged VAT is a) if you're buying from a small business that isn't registered or b) if you're buying from another EU state as a registered business (but then you have to pay it out yourself to your home state).
I also remember there being some threshold rules too where you need to register in a target member state.
It's complicated. But you have it easy. Non-EU companies have it worse when dealing with VAT.
Disclaimer: This is not legal advice. You should talk to your accountant and possibly tax lawyer to figure out your responsibilities because each business is different. This is just provided as a primer so you at least have a grounding on asking the right questions.
More details
http://drupal.org/node/23402#comment-328723
Note that answers by tedlchen above are general rules, BUT there are exceptions t: in some cases VAT is charged in the buyer's country (cars, for instance) upon import, not by the supplier.
Best advice is further down: you need an accountant in the country of establishment.
Thanks fgm, Since it's been
Thanks fgm,
Since it's been a, while since that thread and the europa site's been moved around, the full fun and complete list is at the new EU commission's site
http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_s...
Despite the url name, it covers goods as well as services.