We actually had to make rather significant changes to our code and write entirely new routines to accommodate the new EU VAT directives, the exact details of which really only came to broad awareness among the ecommerce development community around November, so our Development staff had to burn the midnight oil for several weeks straight, right down to the end-of-year wire, to get the changes ready to roll out in time.
Responding to your summary points in order:
- We do perform VAT rate lookups for the buyer's location when appropriate -- i.e., on digital goods for EU sellers, and on all goods for non-EU sellers (presuming those sellers have VAT calculation enabled for their account and relevant products);
- We do calculate different VAT rates for different items in the same order when relevant, such as when an EU buyer's order contains a combination of tangible and digital items;
- We do keep track of the current VAT rate for each EU country, as well as special VAT rates on ebooks for countries that have one, so it's not necessary for sellers to specify their own VAT rates manually, and doing so would just open the potential for needless mistakes with no upside in that tradeoff;
- We do require buyers to select their country and postal code in the cart whenever their order contains taxable items, regardless of whether they're in the EU or not; however, that alone is insufficient to conclusively determine the buyer's "place of supply" under the new VAT regulations.
Unfortunately, the new EU VAT rules require that all prices sellers display must be the buyer's final price including VAT, and since VAT on digital goods has now become a variable amount depending on the buyer's verified "place of supply", only two approaches can satisfy that requirement:
A) Simple method: set a flat gross price for all buyers that includes VAT overhead;
B) Complex method: conclusively determine each buyer's place of supply before dynamically calculating their final price incl. VAT to display on your sales pages.
The new VAT rules specify that "place of supply" on digital items must be verified by collecting at least 3 unrelated pieces of location data, only 1 of which can be arbitrarily self-declared by the buyer, and identifying a country match between at least 2 of those data points. For web-based sales, this effectively means obtaining a 2-way match between a GeoIP country lookup of the buyer's connection IP, the Billing/Residence address registered to the buyer's payment account, and any buyer self-declared location such as a Shipping address or cart-selected country, and that's exactly how we do it.
Therefore, the complex method B described above would effectively require full-featured traditional ecommerce software installed on your server, which not only provides shopping cart functionality but also generates your site's storefront pages and manages checkout as a self-contained process; in this scenario, buyers would need to register for a customer profile account on your site and provide address details to verify their place of supply, so they can be logged into that account before shopping where your storefront could calculate final prices incl. VAT to display to each buyer.
That method simply cannot work with E-junkie, as we provide neither storefront-generation nor customer profile functionality. We merely provide purchase buttons to paste into your own, independent sales site, and we are only provided with sufficient buyer information to verify their place of supply after checkout has already been completed, so the simple method A described above, which was proposed and strongly demanded by sellers in the earlier VAT thread here, was the only feasible approach left for us to implement.
We frankly agree that this whole situation is onerous and absurd, but please direct your grievance to the parties responsible for deciding and imposing these new requirements, and who also have the power to change them, namely your representatives in national and EU government.
We have no operational presence based in the EU and thus have no representation nor influence with EU decision makers, so we can only do our best to accommodate these new regulations as they have already been enacted, as a convenience for our clientele. Although we are not operating within EU jurisdiction, our sellers are obliged to comply with EU VAT directives when selling to buyers in the EU, so we have to facilitate that.
This site is one of the most clearly informative resources for laymen that we've found explaining the new VAT rules, and seems to be the foremost in organizing the effort at redress:
http://euvataction.org/
Mar '15
Apr '15
