Sgt_BilkoOne massive problem I can see with all of this is that there will be no way for us to even show a clear price for products on the sales page before customers go to the shopping cart unless we pay the VAT ourselves. That will obviously kill our profits completely but even if we do that what happens if it turns out the location was spoofed by using a fake IP address etc?
For the approach we are proposing, the item prices you define in product settings would be presumed to include VAT, and no VAT would be calculated in the cart before checkout. Only after checkout, when we process the paid order, would we calculate what cut of the gross price(s) paid comprise VAT. This means you could set a gross price (incl. VAT) per product and display that single flat price in your site and advertising.
This also means you would need to raise your item price settings sufficient to cover the highest VAT rate you'd be subject to. Digital goods sold to lower-VAT or no-VAT countries would effectively give you a higher profit margin, as you'd be keeping more of the "VAT overhead" that you'd built into your gross prices. You can use the "Make all items unavailable for purchase until" setting in your Account Preferences to temporarily disable purchases while you update prices, then simply delete that setting when you're ready to take orders again.
We won't be going by GeoIP lookup alone to determine VAT, since the regulations will require 2 non-contradictory pieces of evidence. Moreover, there wouldn't be any motive for buyers to spoof their IP, as their gross price would remain the same regardless of their location. After checkout, we would attempt to find a 2-way match between GeoIP country, Billing country (PayPal Residence), and Shipping country; in the rare event no 2 of those items match, we would process the order without calculating VAT (or should we just pick one and provisionally calculate VAT according to that?) and email you a Suspected Tax/Shipping Fraud notification, so you can decide how to resolve the discrepancy.
oh2gWill E-Junkie be able to add in the ability for B2B customers based in the EU to add in their VAT Number at checkout so we don't need to pay VAT (zero rated) on those sales?
Not only that, but those that are based in the UK (as I am UK based) to be able to purchase as normal as I don't need to charge VAT to domestic customers (the rules for this changed just yesterday).
We have never supported VAT number lookups for B2B sales, so VAT would continue to be calculated presuming all sales are B2C, at least for the time being. If you get a B2B order and obtain a VAT number from them by other means (e.g. via email), you can refund any VAT we'd calculated for their order and disregard that order's calculated VAT when you prepare records to determine how much VAT you need to remit to gov't revenue agencies.
Likewise, if your revenues fall below the VAT threshold for the UK or any other EU country, you could simply disregard any VAT we'd calculated for such orders, and set your products' gross prices presuming you won't have any VAT overhead to cover therein.
ArpeggioI would be happy for a minimum amount of information to be required from the customer before purchase. For instance the post code and country of residence (from pull down menu), meaning they would only have to type the post code. Not sure whether that is sufficient to comply though.
We already request a country/postcode in the cart for orders requiring tax or shipping anyway, so we'd likely just continue doing so; however, it's dubious that any buyer-volunteered location, apart from their full billing and shipping address, would have any standing as sufficient evidence of VAT-relevant location. That said, in cases where we could not find a 2-way match between GeoIP, Billing, and Shipping countries, we might consider using the cart-specified location as a fallback recourse to get a 2-way match and calculate VAT on that provisional basis.
Moreover, we wouldn't even be calculating VAT in the cart before checkout, but rather only after checkout when we process the order with more complete address information to go by. The buyer's cart-specified location would not affect their gross price paid anyway, as it's apparent that VAT is meant to be "built in" to the listed/advertised gross price and calculated as a cut out of that, rather than "tacked on" and calculated as an extra surcharge on top of listed/advertised prices.
