VAT on digital sales in the European Union follows intricate rules. How much to charge and when to pay it that all depends on where you’re located, where you’re customer is located, and how much you sell each year.
To get into the nitty gritty, please check out our article on what you must know about VAT if you have customers in Europe.
The general rule is that you must charge VAT for the member country you’re selling to, not the one you’re selling from.
This rule is meant to prevent web giants like Apple, Amazon, and Google from funneling their gigantic revenues for the whole EU through low-VAT Luxembourg. The result is that VAT compliance can be a complex burden for businesses who can’t really afford the administrative hassle of 28 different tax rates.
The good news is that for digital sales made via some platforms, businesses don’t need to worry about VAT. The e-commerce platforms handle charging, collecting, and remitting taxes on your behalf!
The trick is simply to figure out which platforms comply with European tax law. While some take care of everything for you, others simply provide tax calculation tools, which you must configure on your own to ensure your business complies. Still other platforms don’t offer any tax compliance help at all.
We’ve combed the web for the best e-commerce platforms and check their VAT compliance, and here they are:
Of course you should choose the e-commerce platforms that best fits all of your needs. But if you’re selling digital goods in the EU, it would be a huge help if the service offers comprehensive VAT support.
In the case that your ideal platform does not take care of VAT on your behalf, you can find an automated tax compliance software to integrate with your account. Quaderno is exactly that!
Quaderno can do all of the following:
- Calculate the right amount of tax to charge each customer, right on your checkout page.
- Automatically verify the VAT numbers you receive from customers.
- Collect and store the customer location evidence that you need to get from every sale.
- Create and send invoices in multiple languages and currencies.
Send EU VAT invoices automatically.
- Provide instant EU VAT tax reports that allow you to file returns in a few minutes.
- Notify you when any tax policies or tax rates change, so that you’re always in the loop.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.