If your business supplies digital services, you need to know if your services are being sold to individual consumers, to other businesses or to a mixture of both. You also need to know where each of your customers are located when they purchase your digitally delivered service or services.
If there is a chance that your potential customer is an individual or private consumer living or working in Europe, you also need to know the correct rate of EU VAT to charge on each individual sale item. And you need to evidence that the relevant sales tax has been calculated, collected and paid to the tax authority in each EU Member State.
What’s more, if you’re selling any digitally delivered service via an e-commerce-enabled website, you need to be able to answer all 3 questions before your customer places one or more items in their ‘shopping cart’.
What cost an abandoned shopping cart?
With transparent pricing, your customers can see the sale price plus the associated sales tax before they commit to the purchase. This way they are more likely move through the checkout process to make their payment.
Sadly, failure to confirm the actual price prior to checkout can lead to a higher than expected number of abandoned shopping carts. This can prove costly for your business.
Sourcing the right tools for your business
If you have a big budget and access to e-commerce expertise, you may be tempted to develop or commission the development of a suite of tools that can be integrated with your systems and business processes.
But software development can be costly and the constant introduction of new and better technologies can quickly make your bespoke solution appear out-dated. Maintenance can be time-consuming. And, in a global market where tax regulation is continuously changing, you may need to employ the services of an EU VAT expert to ensure that your solution remains compliant in the short, medium or long term.
Or, if you work for a small or medium sized business, you may decide to sell your services through an established eMarketplace or eTrading platform that is legally obliged to manage the calculation, collection and payment of sales tax on your behalf.
While attractive, using third party platform to sell goods and services can come at a hefty cost – with some providers charging a significant percentage of the sales value as their transaction fee.
One step integration
Alternatively, you can invest in cost-effective tools that help you overcome the many challenges of destination-based taxation rules!
For a one-off set-up fee plus an affordable monthly subscription, you can take advantage of vatmate® – a software-as-a-service solution (SaaS) that offers one-step integration with WorldPress and Joomla though custom vatmate® plugins and coded integration though our API services.
The solution quickly and easily removes the risk of non-compliance with EU VAT legislation and, at the same time, removes the need to pay the high costs associated with developing your own software or selling digital services via a third party eTrading platform.
Before you get started, you need to register for VAT and, to ease the administrative burden of EU VAT on your business, you should also register with your local tax authority for MOSS.
VAT MOSS is the Value-Added-Tax Mini-One-Stop-Shop scheme. It allows you to report and repay any EU VAT owed - to one or more of the 28 EU member states - to your local tax authority.
Once you have a VAT registration number, you can go ahead and set-up yourvatmate® account. If you’re registered for VAT MOSS, you can choose to a vatmate®|essential or vatmate®|extend subscription. more information here. You can sign up for the service of your choice here.