4 Replies Latest reply on Nov 20, 2015 12:42 PM by Nancy OShea

    EU VAT on Digital Goods

    Nancy OShea Adobe Community Professional & MVP

      I'm working on a project to sell digital downloads online.

      My client is a US based merchant with a good many customers in EU States where regional VAT rules apply.

      How do you handle this?

       

      Nancy O.

        • 1. Re: EU VAT on Digital Goods
          David_Powers Adobe Community Professional (Moderator)

          Nancy O. wrote:

           

          How do you handle this?

          With difficulty.

           

          I'm EU-based, so I don't know how you would set it up from the USA. But this has caused enormous pain for small businesses in the UK selling digital goods to other parts of the EU. Although I'm VAT-registered, I don't sell digital goods within the EU. But I do buy digital goods from the USA and other parts of the world. Some non-EU companies simply ignore the legal obligation to charge VAT. Because I'm not being charged VAT, I don't worry about such companies. But their lawyers should probably worry because the penalties could be quite high if the European Commission decided to take them to court.

           

          When I buy digital goods from a non-EU company that has registered, I still don't pay VAT. The vendor pays it instead under a system known as reverse charging. I simply supply my VAT registration number to the vendor. This avoids the need for me to pay the tax and then recover it from HMRC, the British tax authority. Although a non-EU entity can register in a single EU country for the purposes of administering the tax, the rate charged to the customer depends on the customer's country of residence. There are 28 members of the EU, and each charges its own rates on different categories of goods and services.

           

          If your head isn't already spinning, it will be if you try to handle this yourself. I think it's probably best to try to find an agency that deals with this sort of transaction. As a consumer of digital supplies, I know that Digital River is capable of handling it. There must also be other organizations in the States that do so too.

          • 2. Re: EU VAT on Digital Goods
            Nancy OShea Adobe Community Professional & MVP

            <There are 28 members of the EU, and each charges its own rates on different categories of goods and services.>

             

            I'm getting a sick headache .

             

             

            Nancy O.

            • 3. Re: EU VAT on Digital Goods
              pziecina Adobe Community Professional

              Hi Nancy

               

              Sent you a personal message. the message explains why.

               

              Paula

              • 4. Re: EU VAT on Digital Goods
                Nancy OShea Adobe Community Professional & MVP

                Got it.  And thanks much for your feedback.

                 

                Nancy O.