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What you should know about VAT and selling internationally

June 28, 2016 - 9 Comments

Today’s post comes to us from Jennifer Sokolowsky at Avalara. AvaTax for WooCommerce is a seamless integration for Avalara’s tax calculation services. Automatically calculate tax rates, submit documents to Avalara for transactions, and enable address validation at checkout for supported countries. Give it a try today to get tax right no matter where you’re selling.

International markets can offer big opportunities for store owners. Selling across borders can offer growth potential when local sales have plateaued, as well as a way to get an edge on competitors. It can also offer a way to diversify your business.

However, selling internationally can be more complicated than doing business domestically. One of the major considerations to keep in mind is how to deal with taxes — specifically VAT.

Here’s what you should know about the value added tax (or VAT), when and where it applies, and how you can make sure you get VAT right when you begin selling internationally.

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WooCommerce and the 2015 EU VAT Changes to Digital Goods

December 18, 2014 - 110 Comments

You may (or may not) have heard by now that the EU are introducing new rules surrounding VAT on digital goods from the 1st Jan 2015. We’ve been aware of these changes for a while now and have been working on some solutions in order to make these changes a little easier to handle. If you’ve not heard about these new rules, this sums them up:

On 1 January 2015 the VAT rules for cross-border B2C supplies of ‘digital services’ (i.e. broadcasting, telecoms and e-services) will change. From that date, VAT must be accounted for in the member state where the customer normally lives, rather than where the supplier of the service is established. – HMRC, Brief 46

And as John McCarthy, CEO of Taxamo puts it, “These new rules flip EU VAT on its head”.

The new EU VAT rules on the supply of digital services affect all companies (EU and non-EU) that sell to consumers inside the EU.

To be compliant you’ll need to do the following:

  • Charge the correct country VAT rates based on customer’s location.
  • Validate the customer’s location and ensure there are 2 pieces of non-conflicting evidence stored (e.g. a billing address and a matching IP Address).
  • Report your VAT to each EU state, or use a MOSS (Mini-One-Stop-Shop) which reports to each EU state on your behalf.

To help you become compliant, we’ve developed a Taxamo extension to integrate with their service, and also updated our EU VAT Numbers extension.

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