If your answer’s yes, you may be one of the many businesses who have thought that if you’re paying your taxes in your home country, there’s no more to it. Unfortunately, that’s not true.
The truth is If you supply any products (digital included) to customers in the EU, you’re responsible for charging, filing, collecting and paying European tax. This applies to ALL 27 member states.
Here’s some information you need to know.
How much VAT should be added?
The simple answer is that it depends on where your customer is located because rates range from 17-27% based on locations. It’s possible to source up-to-date information from here: https://ec.europa.eu/taxation_customs/business/vat/telecommunications-broadcasting-electronic-services/vat-rates_en
What do you need to do to register your company for EU VAT?
- From 28 EU countries you can choose where to register for VAT. You register for a VAT with that country’s local tax authority this is know as One-stop-shop (OSS) here’s the link: https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce/oss_en
- Look for the non-union scheme
- Register
- Receive your VAT number
Verify who your customer is and where they’re located
Ask your customer where they live and request their buyer’s VAT number. Businesses will have one, a private individual won’t.
Request proof of location by asking the following:
- Billing address
- Location of the customer’s bank
- Country which issued the credit card
- The IP address location of the buyer’s device
- Country of the SIM card (in cases where the purchase was made on a mobile device)
Verify who your customer is and where they’re located
- Your business’ name and address
- Your business’ VAT number
- Invoice date
- Invoice sequencing number
- Buyer’s name and address
- Buyer’s VAT number.
- VAT (amount and rate) applied to each item
- Final amount after tax is added
Submit your quarterly returns
At the end of each quarter submit your VAT return to your OSS. The OSS website will automatically calculate how much tax you owe and send instructions for payment
Note: if you made sales in countries using a different currency that you’ll need to convert the sales to euros.
The deadlines for filing your returns are as follows:
20 April, for first-quarter ending 31 March
20 July, for second-quarter ending 30 June
20 October, for third-quarter ending 30 September
20 January, for fourth-quarter ending 31 December
Note: Each invoice must be kept on record for 5 years. If requested by the Tax Authority you have 30 days in which to submit it.