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QuoteHas anyone come up with an easy solution to the requirement to account for VAT on the supply of digital products to customers in EU member states?
I know we have to do it, just wondering if there is an app/plugin/other gizmo that helps, without costing a fortune or surprising customers with an additional charge at check out?
3:09 pm
June 9, 2011
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Hi Deb,
Steve here. Unfortunately I believe all of the responsibility for VAT rests on the seller. Check out this Paypal community thread for more clarification:
https://www.paypal-community.c.....uage=en-gb
The first reply gives a brief explanation, but also gives you a few reference links.
Let us know how you make out.
Hi Steve
Thanks for the link. It seems to refer to VAT (value added tax) on the actual paypal fee. You're right that the complication that we have to deal with in the UK (and probably in other EU member states) is that we are required to charge VAT on all transactions for the supply of digital products to customers in other EU member states.
Usually VAT wouldn't be an issue because businesses don't have to account for it until turnover exceeds £85k, but this particular rule applies to all transactions for the supply of digital products (and definitely includes music) regardless of the scale of the business. I understand that the rules may be changing next year, to place a lower limit of £10k on the value of sales, but for now there's a tax implication. Brexit might change this but - hey, Brexit....
I'm seeing our accountants on Monday so I'll find out from them how best to make this work. Unless any of your other EU-based folks have already implemented a nice, easy to manage solution.
If you like reading government websites, here's a link that explains it:
12:25 am
June 7, 2011
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Hi Deb,
This is NOT advice but simply an observation... From what I have seen most small independent online retailers seem to be ignoring it and I have not heard of anyone having any issues. That said, these are mostly retailers in the US that I am referring to. Your accountant would definitely be the one to talk to. But the reality is that there will likely be a gap between the law, and the enforced law on this issue.
Disclaimer: I am in no way qualified to give legal or financial advice and you should always seek such advice from a qualified individual 😉
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