EU VAT follow-up

[olle]

Hi everybody,



I've read through the huge thread about EU VAT problems and now that the system has been in place for a few weeks, it would be interesting to hear what people have to say about how it all works with e-Junkie. According to the FAQ, e-Junkie looks for a two-way match between:



1) Buyer's connection IP

2) Billing address (or Residence country for PayPal checkouts)

3) Buyer's self-declared address



According to the local tax authorities, these three seem to constitute proof of the buyer's location. However, if no two-way match is found, there will be serious problems (it will be impossible to register properly and therefore illegal). If things are working properly, this should be quite rare. Sure, someone can be using an account abroad, in which case their billing address and IP won't match, but in that case, one of the countries will still match the self-declared address given in the cart (is that mandatory?). So how does this work in practise? Does it work? Do you end up with "??" for some country matches or am I worrying too much? What do you do if there is no two-way match?



I know that this isn't e-Junkie's fault, but it seems that I can end up with selling things illegally without being able to stop it.

[E-junkie_Guru]

We do require buyers to declare their location in the cart before checkout for orders subject to VAT; when we look for the two-way match after checkout, the buyer's self-declared address would be either their Shipping address (if provided for tangible items in the same order) or otherwise their cart-declared country.



In the rare event that no two-way match can be established, we process the order as usual without calculating VAT on affected items and email you a Suspected Tax/Shipping Fraud notification, so you can decide for yourself how to resolve the situation (e.g., by contacting the buyer to clarify their location). When you download your Transaction Log to file quarterly VAT returns, you can open that file in a spreadsheet program and manually edit the VAT details for such no-match transactions.



We have recently updated our Sales Tax & VAT help page to explain our new VAT calculation behavior and the new Transaction Log fields that report data for VAT purposes:

http://www.e-junkie.com/ej/help.tax.htm

[vannatx]

this whole thing makes my head spin. So if we select this button in ejunkie to charge VAT where does the VAT money collected go? Does it vanish into thin air or does it go to my PayPal account where I will then have to calculate it again and send it off somewhere?



I'm so confused.



Will enabling this feature confuse my predominately US/AUS buyers who are already easily confused?

[E-junkie_Guru]

When you enable VAT calculation, we just calculate what portion of the total prices paid would constitute VAT, so VAT is already included in your gross revenues (e.g., in your PayPal account balance if you use PayPal for checkout). This calculation occurs when we process the order after the buyer has already paid you in full at checkout.



It's up to you to file and pay for VAT on your own, out of your own pocket, using the records we provide in your Transaction Log. As far as we can tell, sellers outside the EU can file and pay all EU VAT with any single VAT MOSS in the EU, such as the UK VAT MOSS, which would then redistribute any VAT due to other EU nations. That said, we're hard pressed to fathom any actual consequences that a low-volume seller operating outside EU jurisdiction could be made to suffer for failure to pay VAT on sales of digital goods to EU buyers.



VAT only pertains to purchases by buyers located in the EU, so buyers outside the EU would not see anything related to VAT in the course of their purchase. If you'd rather just block sales to EU buyers to avoid any VAT concerns at all, you can enable Shipping/Buyer's Address in the settings of each product, then go to Seller Admin > Cart Shipping Settings, specify your country and ZIP code, then in the Shipping Destinations list select every country you're willing to sell to*. Then click Next to apply changes and proceed to the following screen, where you can disregard any settings there and just click Back to Admin. Make sure you're using your E-junkie Add to Cart buttons (not Buy Now buttons), as this method restricts the countries available for buyers to select in your shopping cart.



* When selecting Shipping Destinations, if you're willing to sell to any country outside the EU, click the first country in the list, then scroll to the end, hold down your Shift key and click the last country in the list to should select everything; then hold your Ctrl key (on PC) or Command key (on Mac) and click each EU country to deselect them (see https://en.wikipedia.org/wiki/EUStates for a list).

[E-junkie_Guru]

One more idea if you're only using PayPal Payments Standard for checkout and might consider limiting sales to US buyers only, the simplest and most effective thing you could do is block non-US checkouts in PayPal. To do this, log into your PayPal account and to to Profile (person-silhouette icon if you're using the new PayPal Business interface) > My Selling Tools > Block Payments > Block payments from users who: Have non-U.S. PayPal accounts (BTW, this also applies to card-based checkouts without a PayPal account on PayPal's checkout site).



On that same screen, you can also block non-US shipping addresses if you're selling any tangible goods; in this case, you should also select United States as the sole permissible Shipping Destination in your E-junkie Seller Admin > Cart Shipping Settings -- from there, you'd click Next to apply changes, then on the following screen just click Back to Admin.