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Sales tax (VAT) and country of origin

Even though the ChrisTrains webshop is based in America, I still need to collect sales tax, and four times a year, I need to distribute that tax to each country in the EU (which, trust me, is not easy).

In Europe, customers are used to seeing the price of any item with sales tax included. The problem is that my webshop needs to be available in every country, and because of the General Data Protection Regulation (GDPR), my webshop cannot ask your browser which country you are located in. This means that my webshop doesn't know where you are, and cannot display the price with tax included. The ONLY time that the 'complete' price is available is after you - as a customer - have volunteered the country information during checkout. That is the only time the webshop can 'know' how much tax to add.

Confusion during checkout.

A few customers have asked why the price they paid didn't seem to include the discount codes they used. It's all because of tax.

For example if you purchase three items at €1.75 each and use the 15% discount code, it works out like this:

€1.75+€1.75+€1.75 = €5.25.  15% discount brings the total to €4.46. But now you need to add tax, which in the Netherlands is 21%, so the final price is €5.39.

VAT Law.

VAT law in place since 2003 requires a US business that is not tax resident in the EU (a nonresident seller) to collect and pay VAT on all digital goods and services sold in the EU consumer market.  The VAT is due at the VAT rate of the European country in which the consumer is located. You can see the EU ruling on this matter here : VAT on digital services - frequently asked questions

The important section is this : "For the non-EU supplier whose EU customers are non-business individuals or organisations, there will now be an obligation to charge and account for VAT on these sales just as EU suppliers have to do."

Forbes has a good article on all of this, if you are interested : European VAT: 10 Things Online Sellers Need To Know About Taxes On Digital Goods And Services

 

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Article ID:
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Date added:
2020-08-23 10:16:00
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