Digital Seller? New 2015 EU Digital VAT Affects You

wilt:

Hi.

Have scheduled a join.me meeting

https://join.me/994-880-642

This is for tomorrow Jan 30th at 7:00 gmt.
Would appreciate it if you are interested in attending meeting to ping here so I know how many to expect, and whether to wait before getting started.

Like I said earlier, I'll be there

I'd like to be there too, not very techy but a 'marketplace' store owner.

7am GMT = 9am South African time? Will try and be there but I cannot provide tech info - just a small store owner user

Hi, I dont' know if there's a better place where to discuss the public documentation written by wilt about this matter, so I'm writing here (please give me the right direction if any).
About determining tax rate and specially 'The only real way to help mitigate this, is to do some initial geoIP', we could expand the solution to something similar to the cookie law snippet, where the store give advice about prices and just ask to select which is the customer country (maybe using geoIP to prefill the selection, so just asking a confirmation) and keep this value in session.
Include opt out by country? I too don't believe it's needed.
Identify B2B or B2C: I'm the co-mantainer of Zen Cart Italy and I modified core to manage customers VAT since we have always had the obligation to acquire VAT number of customers (if any of course) and another fiscal information named fiscal code in Italy. I'm available to share my code (already available on github and sourceforge as full zen cart distribution for italian market) and / or my thoughts about the matter. Regarding the possibility to validate VAT number, there's VIES, but it's not reliable (ie: it depends on national systems (which may be offline) and there's no guarantee that informations provided are correct. So if implemented, a fallback must be implemented and it must be very clear that the validation is provided as is, without warranty nor responsability.
About reporting, again I too think its not needed at the moment.

Hi,

Thanks to those who made it to the conference call. Apologies to those who had problems accessing join.me. I recorded the full session, and will try to precis everything shortly.

Ian

Thank you for hosting it, sounds like promising progress :-)

Totally off topic but just noticed my profile thing says I joined in 2014...I've been on here since about 2008 :-/

Hi All,

I'm still working on a precis of the conference, and also some workflows that might help those to work around the Digital VAT.

We talked about using email to make the system more 'manual' and thought the information below might be useful.

What is “minimal human intervention”?

This is where the sale of the digital content is mostly automatic but the small amount of manual process involved does not change the nature of the supply from an e-service - for example a customer clicks “Buy Now” button on website and

  vendor receives notification and clicks a button, which produces an email pre-populated with the customer’s details and containing content which is sent to the customer; or
  vendor receives notification and clicks a button which produces an e mail pre-populated with the customer’s details. Vendor attaches content and sends customer e-mail by clicking “Send”

In both cases these would constitute an e-service

When does the “human intervention” exceed “minimal”

This is where the amount of manual process involved in the sale means that the service ceases to be an e-service. In these cases the website functions as a “shop window” for the sale rather than also providing the mechanism by which the sale is made – for example

 a customer clicks “Buy Now” button on website and is added to a list.  At end of day the vendor takes list, manually completes an e-mail with each customer’s details, attaches the relevant content and hits “Send”;  or
 a customer emails vendor with details of the products they wish to purchase.  Vendor manually replies to email and attaches the content.

So what the above suggests is that to accommodate the new VAT rules we cannot simply change Zen Cart to automatically generate emails to Customers, that attaches digital content.

What we would need to do, is add options to Zen Cart to disable the automatic download of digital goods.
The order system in admin would need to have filters added to easily identify Digital Sales.
Shop owners would then need to manually send emails to customers providing links to downloadable content.

Note here, my reading is that those links could still be to the Customer Account area, which is where previously customers would have downloaded stuff.
It's the actual manual part of sending the email that is important.

Ian

I have seen a few people mention Payhip is an option which made me think about payment processors which may collect and remit the VAT on our behalf. Does taxamo do this? (at least if it were to integrate with Zencart. I see it works with Paypal. I only use Paypal as a payment processor on my zencart site. Is it an option to use Taxamo to process payments via Paypal when using Zencart? I currently have EU countries blocked using Selectable Countries. I was going to upgrade my store but ran out of time, so did the plugin instead.

If there was a payment processor that could be added, to force EU customers to use this processor (rather than blocking them completely) and have the processor remit the vat on our behalf, that would be an awesome way to do it.

clikchic:

I have seen a few people mention Payhip is an option which made me think about payment processors which may collect and remit the VAT on our behalf. Does taxamo do this? (at least if it were to integrate with Zencart. I see it works with Paypal. I only use Paypal as a payment processor on my zencart site. Is it an option to use Taxamo to process payments via Paypal when using Zencart? I currently have EU countries blocked using Selectable Countries. I was going to upgrade my store but ran out of time, so did the plugin instead.

If there was a payment processor that could be added, to force EU customers to use this processor (rather than blocking them completely) and have the processor remit the vat on our behalf, that would be an awesome way to do it.
Hi.

Payment processors, eg paypal, authorize.net etc. will never have anything to do with remitting your vat. Even systems like Taxamo will not remit your vat (although they may make remitting easier)

The only way to have someone else remit your VAT correctly is to use a marketplace system (well almost)
e.g. If you sell e-books via Amazon, then it's Amazons responsibility to remit the EU Digital VAT on your behalf.

I said 'Well Almost' earlier, because marketplaces like Etsy are trying to wriggle out of compliance, by using their Terms & conditions to push EU Vat compliance back on to their supplier/partners. Which then begs the question of why then use Etsy at all.

Taxamo provide an API that when integrated into a shopping cart allows for the storage/collection of the relevant information for an order, reports that can then be used to submit VAT to the correct authority via MOSS etc.

Hi.

I've made a precis of the recent conference call we had, discussing EU Digital VAT.

You can see the precis here. http://docs.zen-cart.com/EU_Digital_VAT/master/conference_call_2014_12_30

The site is a test bed for a new documentation system that we will be using for Zen Cart.

I've also moved over the Confluence documentation for EU Digital VAT as well. The root for this is http://docs.zen-cart.com/EU_Digital_VAT/

The benefit of the new documentation system is that anyone can contribute to the documentation by forking the github repository at https://github.com/zencart/documentation and doing pull requests on that repo.

wilt:

Hi.

Payment processors, eg paypal, authorize.net etc. will never have anything to do with remitting your vat. Even systems like Taxamo will not remit your vat (although they may make remitting easier)

The only way to have someone else remit your VAT correctly is to use a marketplace system (well almost)
e.g. If you sell e-books via Amazon, then it's Amazons responsibility to remit the EU Digital VAT on your behalf.

I said 'Well Almost' earlier, because marketplaces like Etsy are trying to wriggle out of compliance, by using their Terms & conditions to push EU Vat compliance back on to their supplier/partners. Which then begs the question of why then use Etsy at all.

Taxamo provide an API that when integrated into a shopping cart allows for the storage/collection of the relevant information for an order, reports that can then be used to submit VAT to the correct authority via MOSS etc.

Thanks for the info. I found it hard to work out what the taxamo site actually did from their website. (I have fibromyalgia and suffer a lot of brain fog so concentrating is often difficult)

Tell me about Etsy! UGH My primary store is on Etsy as I sell more there. By the EU's definition Etsy is considered a marketplace and therefore liable for the VAT, so I am just carrying on there. HMRC has stated that Etsy will be held liable rather than the sellers.

Hi Wilt, how things are going about this matter? Is there a plugin in development? If so, is there a repo where to look at and eventually contribute?

s_p_ike:

Hi Wilt, how things are going about this matter? Is there a plugin in development? If so, is there a repo where to look at and eventually contribute?

Yeah...we are coming up to the end of the grace period (June)...any progress?

I've been absorbing EU VAT as and when I get an EU customer, but need to get to grips with this.

wilt:

I've also moved over the Confluence documentation for EU Digital VAT as well. The root for this is http://docs.zen-cart.com/EU_Digital_VAT/

1. Regarding the Opt Out section/existing contribution: the following article suggests geo-blocking will not be an option going forward

EU Commission VP Andrus Ansip has officially announced that VATMOSS will be extended to all online sales (i.e. even those with more than minimal human intervention or that would currently be considered non-digital) and that he wants to prevent geo-blocking, perhaps as early as 2016.
http://euvataction.org/2015/05/14/eu-vat-tech-solution-hackathon/

2. Also, as we have said before, this is not going to be just an EU thing, it's going to be global and probably on hard goods too in time
   (https://www.taxamo.com/eu-vat-rules-global-plans/) but at least it looks like there might be a threshold for EU at least?

5. Reducing VAT related burden and obstacles when selling across borders
   What has been proposed in the Strategy concerning VAT?
   The Commission will make legislative proposals in 2016 to reduce the administrative burden on businesses arising from different VAT regimes including:

•  Extending the current single electronic registration and payment mechanism to cross-border online sales of **physical goods**.
  

•  Introducing a common EU-wide simplification measure - **VAT threshold** - to help small start-up e-commerce businesses.
  

http://europa.eu/rapid/press-release_MEMO-15-4920_en.htm

3. So, I don't use the ZC tax features at all (yet) but does all this suggest, for the future, we need something 'as standard' building into ZC, i.e. the evidence required for proof, displaying correct VAT etc. because everyone, everywhere will need to use it? Or rely on third party external stuff?

Right now I'm not sure how to approach this...carry on doing it all manually, try something like Taxamo either personally or integrated by ZC team? What would it cost?

enlightened:

1. Regarding the Opt Out section/existing contribution: the following article suggests geo-blocking will not be an option going forward

http://euvataction.org/2015/05/14/eu-vat-tech-solution-hackathon/

2. Also, as we have said before, this is not going to be just an EU thing, it's going to be global and probably on hard goods too in time
   (https://www.taxamo.com/eu-vat-rules-global-plans/) but at least it looks like there might be a threshold for EU at least?

http://europa.eu/rapid/press-release_MEMO-15-4920_en.htm

3. So, I don't use the ZC tax features at all (yet) but does all this suggest, for the future, we need something 'as standard' building into ZC, i.e. the evidence required for proof, displaying correct VAT etc. because everyone, everywhere will need to use it? Or rely on third party external stuff?

Right now I'm not sure how to approach this...carry on doing it all manually, try something like Taxamo either personally or integrated by ZC team? What would it cost?

Last week the Dutch government declared there will be a threshold, but it will not be enforced before 2016.

"Switzerland is abolishing its existing threshold of CHF100,000 (circa €95,000) as of January 1, 2016."

I know this is non-EU, but it's a bit disappointing for those of us hoping for a threshold. It's taken from Taxamo's blog about 'globalisation' of their service, covering the countries who are or will be introducing their own variations of digital taxes: reiterating what we have been saying about it not being an isolated issue...we need to think about how we deal with these issues long-term, worldwide.

So I initially resisted the extra expense of Taxamo but right now, I think it's the easiest way to go? I just would love some tech help on how to integrate it all within ZC (tried and failed).

enlightened:

"Switzerland is abolishing its existing threshold of CHF100,000 (circa €95,000) as of January 1, 2016."

I know this is non-EU, but it's a bit disappointing for those of us hoping for a threshold. It's taken from Taxamo's blog about 'globalisation' of their service, covering the countries who are or will be introducing their own variations of digital taxes: reiterating what we have been saying about it not being an isolated issue...we need to think about how we deal with these issues long-term, worldwide.

So I initially resisted the extra expense of Taxamo but right now, I think it's the easiest way to go? I just would love some tech help on how to integrate it all within ZC (tried and failed).

The same is true for The Netherlands, our government also declared there will be a threshold, so small shops swill not be affected by the new law

Reading the threat, I notice than one important point is missed: the requirement to validate the customer country with two different methods and also save guard this evidence for a period of 10 YEARS !!