Digital Seller? New 2015 EU Digital VAT Affects You

[enlightened]

I'm in touch with some very small businesses who are using Zencart to sell digital downloads, worried that they will have to cease trading or move storefront due to the complexity of the new EU VAT rules (and a lot have only just found out, with a few weeks to go).

To be able to use the new MOSS system, you need to be registered for VAT already and most digital sellers do not meet that threshold, by a long way! So, if they do not want to register for VAT and all the extra cost and hassle that brings, they can simply block EU countries from being able to shop (not ideal but at least it's do-able, at least in the short-term).

If a digi seller does decide to voluntarily register for VAT, they can apply the VAT at each EU rate by setting up zones...does anyone know of any tutorials on this, and whether there are/will likely be any mods/updates to zencart that will auto update on any changes in rates across EU zones.

Also, does PayPal apply it's fees to the total, including VAT?

Thanks in advance, apologies if this is covered elsewhere, I did search first

[DrByte]

Also, does PayPal apply it's fees to the total, including VAT?

PayPal, like any payment processor, assesses their fees on the total amount of the transaction, regardless of whether there is any tax component in the transaction.

[Design75]

Sorry, didn't make it last night, went to bed early for a change.

This is the sql I use for my Dutch customers. I is the most basic set-up. but easy to expand.
There are three zones definitions

• the first is for the country the shop is located in
• the second for all countries in the EU (except your own)
• the third for the rest of the world

In this basic there is one Tax class

For each zone definition you need a tax rate (in the Netherlands it is):

• 21% for the Netherlands
• 21% for all EU countries
• 0% for the rest of the world

If you are also selling to companies with a valid VAT number inside the EU you can use this old addon. (I will post an updated version for 1.5.x later this week)
It will set the VAT for companies inside the EU to Zero when a valid tax number is used during registration.

--
-- Table structure for table `geo_zones`
--

DROP TABLE IF EXISTS `geo_zones`;
CREATE TABLE IF NOT EXISTS `geo_zones` (
`geo_zone_id` int(11) NOT NULL,
  `geo_zone_name` varchar(32) NOT NULL DEFAULT '',
  `geo_zone_description` varchar(255) NOT NULL DEFAULT '',
  `last_modified` datetime DEFAULT NULL,
  `date_added` datetime NOT NULL DEFAULT '0001-01-01 00:00:00'
) ENGINE=MyISAM AUTO_INCREMENT=4 DEFAULT CHARSET=utf8;

--
-- Dumping data for table `geo_zones`
--

INSERT INTO `geo_zones` (`geo_zone_id`, `geo_zone_name`, `geo_zone_description`)
VALUES
(1, 'Nederland', 'Nederlandse btw'),
(2, 'Alle landen binnen de EU', 'Intracommunicataire landen'),
(3, 'Alle landen buiten EU', 'De rest van de wereld');

-- --------------------------------------------------------

--
-- Table structure for table `tax_class`
--

DROP TABLE IF EXISTS `tax_class`;
CREATE TABLE IF NOT EXISTS `tax_class` (
`tax_class_id` int(11) NOT NULL,
  `tax_class_title` varchar(32) NOT NULL DEFAULT '',
  `tax_class_description` varchar(255) NOT NULL DEFAULT '',
  `last_modified` datetime DEFAULT NULL,
  `date_added` datetime NOT NULL DEFAULT '0001-01-01 00:00:00'
) ENGINE=MyISAM AUTO_INCREMENT=2 DEFAULT CHARSET=utf8;

--
-- Dumping data for table `tax_class`
--

INSERT INTO `tax_class` (`tax_class_id`, `tax_class_title`, `tax_class_description`)
VALUES
(1, 'BTW Tarief hoog', 'BTW Tarief hoog');

-- --------------------------------------------------------

--
-- Table structure for table `tax_rates`
--

DROP TABLE IF EXISTS `tax_rates`;
CREATE TABLE IF NOT EXISTS `tax_rates` (
`tax_rates_id` int(11) NOT NULL,
  `tax_zone_id` int(11) NOT NULL DEFAULT '0',
  `tax_class_id` int(11) NOT NULL DEFAULT '0',
  `tax_priority` int(5) DEFAULT '1',
  `tax_rate` decimal(7,4) NOT NULL DEFAULT '0.0000',
  `tax_description` varchar(255) NOT NULL DEFAULT '',
  `last_modified` datetime DEFAULT NULL,
  `date_added` datetime NOT NULL DEFAULT '0001-01-01 00:00:00'
) ENGINE=MyISAM AUTO_INCREMENT=4 DEFAULT CHARSET=utf8;

--
-- Dumping data for table `tax_rates`
--

INSERT INTO `tax_rates` (`tax_rates_id`, `tax_zone_id`, `tax_class_id`, `tax_priority`, `tax_rate`, `tax_description`)
VALUES
(1, 1, 1, 1, 21.0000, 'Btw 21%'),
(2, 2, 1, 2, 21.0000, 'Btw 21%'),
(3, 3, 1, 3, 0.0000, 'Btw 0%');

-- --------------------------------------------------------

--
-- Table structure for table `zones_to_geo_zones`
--

DROP TABLE IF EXISTS `zones_to_geo_zones`;
CREATE TABLE IF NOT EXISTS `zones_to_geo_zones` (
`association_id` int(11) NOT NULL,
  `zone_country_id` int(11) NOT NULL DEFAULT '0',
  `zone_id` int(11) DEFAULT NULL,
  `geo_zone_id` int(11) DEFAULT NULL,
  `last_modified` datetime DEFAULT NULL,
  `date_added` datetime NOT NULL DEFAULT '0001-01-01 00:00:00'
) ENGINE=MyISAM AUTO_INCREMENT=242 DEFAULT CHARSET=utf8;

--
-- Dumping data for table `zones_to_geo_zones`
--

INSERT INTO `zones_to_geo_zones` (`association_id`, `zone_country_id`, `zone_id`, `geo_zone_id`)
VALUES
(1, 150, NULL, 1),
(2, 14, 0, 2),
(3, 21, 0, 2),
(4, 240, 0, 3),
(5, 57, 0, 2),
(6, 73, 0, 2),
(7, 81, 0, 2),
(8, 27, 0, 2),
(9, 33, 0, 2),
(10, 55, 0, 2),
(11, 67, 0, 2),
(12, 72, 0, 2),
(13, 84, 0, 2),
(14, 97, 0, 2),
(15, 103, 0, 2),
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(17, 53, 0, 2),
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[lat9]

Thanks, Design75!

[clikchic]

I'm in touch with some very small businesses who are using Zencart to sell digital downloads, worried that they will have to cease trading or move storefront due to the complexity of the new EU VAT rules (and a lot have only just found out, with a few weeks to go).

To be able to use the new MOSS system, you need to be registered for VAT already and most digital sellers do not meet that threshold, by a long way! So, if they do not want to register for VAT and all the extra cost and hassle that brings, they can simply block EU countries from being able to shop (not ideal but at least it's do-able, at least in the short-term).

I sell such a small amount on my zencart site that dealing with VAT is not even remotely worth messing with. I would like to be able to block selling to the EU, or will have to shut my personal store down. Does anyone know of a way to do this?

[Design75]

I sell such a small amount on my zencart site that dealing with VAT is not even remotely worth messing with. I would like to be able to block selling to the EU, or will have to shut my personal store down. Does anyone know of a way to do this?

Just disable all EU countries, so people from those countries can not create an account.

[lat9]

Just disable all EU countries, so people from those countries can not create an account.

Especially easy with Zen Cart v1.5.3, where the "Selectable Countries" plugin has been incorporated. If you're running an earlier version of Zen Cart, just install that plugin and you can selectively disable a country.

[enlightened]

Especially easy with Zen Cart v1.5.3, where the "Selectable Countries" plugin has been incorporated. If you're running an earlier version of Zen Cart, just install that plugin and you can selectively disable a country.

...except, it would seem blocking EU countries is "discrimination" under other EU legislation

So, there are specific requirements for collecting the 2 non-conflicting pieces of data, and a third if there's a problem...does Zencart already capture sources of this evidence? I am not a techie, I am not a tax or compliance expert, but reading up from those who are it seems a bit of a nightmare, having to reprogramme their systems to collect this data as well as add the VAT (but ZC seems to have the tax covered nicely).

@Design75 what do we do with that code? Where do we put it? Do we repeat the code for every EU state?

Thanks in advance, and apologies for any dumb questions!

[lat9]

I'm looking at a solution (since I'll need one for my website) that doesn't "block" EU customers per se but would require them to contact me for an "alternate delivery method" for any commercial digital downloads. Unfortunately, the licensing for the ip-to-country interface that I've found isn't GPLv2 so it won't be available from the Zen Cart plugins area when it's finished ...

[clikchic]

...except, it would seem blocking EU countries is "discrimination" under other EU legislation

So, there are specific requirements for collecting the 2 non-conflicting pieces of data, and a third if there's a problem...does Zencart already capture sources of this evidence? I am not a techie, I am not a tax or compliance expert, but reading up from those who are it seems a bit of a nightmare, having to reprogramme their systems to collect this data as well as add the VAT (but ZC seems to have the tax covered nicely).

@Design75 what do we do with that code? Where do we put it? Do we repeat the code for every EU state?

Thanks in advance, and apologies for any dumb questions!

I think the 2 non-conflicting and in reality it should be 3 pieces of data is a major problem. We have the ip address, so that is one, but the customer entered address from what I can see doesn't qualify. It has to be a bank address, or credit card address which if you only accept credit cards via Paypal may not be provided. Paypal from what I have read has stated that they will not be providing this information. Not to mention the privacy issues with retaining such data. I for one don't WANT someones credit card information or bank details.

This new legislation really is completely unworkable for nano and micro business.

Thanks for the suggestions above in regards to blocking countries. There are some thoughts places I have been reading that the high administrative burden for nano businesses will be sufficient reason to block the EU countries without going against the discriminatory regulations. I must do more of my own research on that. I am running zencart 1.5.1 but will look into the selectable countries plugin mentioned. I probably should upgrade my site but have been putting it off due to modifications and not wanting to have to mess with all the mods again.