EU VAT Compliance for Digital Products

If you have customers in the EU, it’s important to keep EU VAT legislation in mind, regardless of where your business is located ( Why’s this?). Here we'll review compliance as it applies to digital products.

In Taxes > Tax rates you’ll see all the EU tax rates you’re applying to your invoices. These will be automatically set up in your Quaderno account.

In this article:

VAT Registration

Quaderno does not offer VAT registration services. You can register for VAT or VAT MOSS with your local revenue or tax authority in your jurisdiction if you are based within the EU. We also have a list of partner accountants that could help with this.

We make it as easy as we can for you to comply with VATMOSS, but, as with registering for VAT and filing your tax return, there are some things Quaderno can't do for you.

If you are based outside of the EU, then you must register with an EU member state for VAT MOSS purposes. Here’s an example of how to get started: How to Submit an Irish VAT MOSS Return as a Non-EU Business


EU VAT Compliance

In order to be EU VAT compliant with Quaderno and our payment gateway integrations, you have to set the following fields:

Customer’s name
Customer’s billing country
IP address on charges and subscriptions

Quaderno will track these sources of evidence for your customer's location and let you know if at least two of them are non-contradictory, meaning that we can be reasonably sure that we know where the customer is.

VAT MOSS

For EU companies: If your business stays below €10,000 in cross-border sales of digital goods per year, throughout the EU, then you can charge the VAT rate of your home country on all those cross-border sales. As soon as you surpass the €10,000 threshold, you should declare VAT through MOSS and apply your the VAT rate of your customer’s country.

For non-EU companies: You should register in VAT MOSS.

VAT MOSS means that if you're selling digital products to an EU citizen then VAT is charged at the purchaser's (your customer) country rate instead of the seller's (yours).

VAT MOSS applies to digital products being sold to consumers only, so it does not apply if you are selling to other businesses.

It also does not apply to physical products like t-shirts, or to online courses that include a live element like a webinar, but it does apply for any digital files like images, text, e-books, music, etc, and for services like website supply or hosting, software updates and the like. It even applies to online courses that do not include a live component.

VAT MOSS was brought in in January 2015 in order to prevent large companies like Amazon from routing sales through low-VAT countries like Luxembourg to avoid paying proper sales tax, but it obviously makes life a lot harder for smaller companies and sole traders - exactly the kinds of people Quaderno is trying to help.

The good news is that we at Quaderno are all over this, and will automatically apply the correct sales tax to your invoices as long as you can supply us with the location evidence we need - which most payment gateways allow you to set up easily. For more information on VAT MOSS, check out our EU VAT guide.

VAT MOSS Report

To get the required information for your VAT MOSS settlements, click on Taxes in the left-side menu. 

From there, select VAT MOSS. Click on the “...” icon in the top right, and select Export as CSV.

Location Evidence

New EU VAT regulations make it easier for you to stay compliant if you’re a small business with less than €100,000 in cross-border sales in the EU as you only need to collect one piece of customer location evidence.

In this scenario, the types of qualifying evidence you can collect with Quaderno are:

  • IP address of the device used by the customer or any method of geolocation
  • Payment method country (e.g. thet BIN/INN for a credit card)

As soon as you pass the €100,000 mark for one calendar year, you must begin collecting two non-contradictory pieces of customer location evidence.In this case, the types of qualifying evidence you can collect with Quaderno are:

  • IP address of the device used by the customer
  • Payment method country (e.g. thet BIN/INN for a credit card)
  • Billing address provided by the customer

Quaderno will accept this information from the payment processors we integrate with (check the articles at the bottom of this page to learn about sending us things like IP address), as well as through our API, for custom calls. We'll also take into account the customer address info that you provide for the Quaderno customer record.

If we do not have two pieces of non-conflicting location evidence, we will alert you of this for the invoice in question, so that you can ask your customer for extra evidence.

In these cases, you should contact your customer right away and ask them for further proof of address.

What should you ask your customer to send? Here are a some items that work:

  • A bank statement that includes an address in the right country
  • Other utility bills (like electricity, gas, or internet)
  • An official document of where the business registered, for B2B buyers
  • The country code of the customer’s phone number, either mobile or landline

Once you’ve received the extra location evidence, you can edit the customer’s location evidence directly in the app.

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