If you’re selling stuff online, especially digital goods, you can’t have missed this. European VAT laws will change January 1st 2015. Starting January 1st, VAT must be paid at the ‘place of supply’. This basically means that you have to charge VAT based on the country of your consumer, so a Dutch consumer will have to pay Dutch VAT (21%) in your webshop regardless of where your webshop is based.
There’s a lot of good information already written around the web about what you should do to comply to the new rules. I like this GitHub Page that contains a lot of useful information and links. I also recommend reading this blog post to get a default understanding of what these changes mean and how they will impact you.
At WooCommerce we’re working on multiple solutions on how you can comply with new rules in the form of extensions. I know that other e-commerce platforms are also working on this, so if you own an online (WordPress) shop there should be tools for you to make your website compliant. If the plugin/software you’re using doesn’t offer you these tools, it might be time to move to a proper solution like WooCommerce.
How will this affect online shops based in non EU countries
The EU states that the new VAT rules apply to everyone that sell telecommunications, broadcasting and electronic services to EU countries. And with everyone they mean everyone, also non EU countries. But it’s up to the shop to comply to these new rules, not up to the consumer. This raises the question
How will the EU enforce this rule on non EU countries?
I don’t have the answer to this question (if you do please leave a comment below) but I am curious to see if and how this will happen.
Finally I suggest you give the hashtag #VATMOSS a look if you want to laugh and cry at the same time. I’d love to hear what you think on the EU VAT changes or if you feel like I’m missing something in this post by leaving a comment.
Earlier this year the same rules came into affect for South Africa http://www.thesait.org.za/news/170960/VAT-and-e-Commerce.htm
It has mostly been ignored by everyone though as there is really no way to enforce this, as I see it, if you are registered in a non EU country, then they have no jurisdiction to pursue or enforce this, I might be wrong as I am no law expert but that is how I see it.
I agree, I can’t see how they will do it but I’m curious to see their attempts 🙂
Hi Barry,
at the end of the day it will be your local tax authority which will enforce this. Of course the EC has no jurisdiction, but it has agreements concerning tax with a whole bunch of countries outside EC. Only chance to escape this long term is to find a country without any such agreement. Sure, if you just ignore this you might get away with it for a couple of years. But it might come that day….