Collecting location evidence
Sellers of digital products must collect and store the customer's location they have used to calculate the tax rate of each sale, in order to comply with tax legislations around the world.
Most countries accept the billing country, IP address, and bank country as valid evidence to determine customer location. These pieces of information are called location evidence.
Location evidence is required for digital product sales worldwide, and is generally wise to keep on record for all transactions.
The number of location evidence you need to collect varies over the world (and over time). For instance, according to the latest EU VAT regulations:
- When you’re a small business in the EU with less than €100,000 in cross-border sales in the EU, you would only need to collect one piece of customer location evidence.
- However, non-EU sellers must always gather two non-contradictory pieces of evidence.
The good news: Quaderno collects and stores that evidence for you!
When available, Quaderno will register the following details to be used as evidence to determine customer location:
- The customer’s billing country.
- The IP address of the buyer’s device.
- The country that issued the customer’s card or bank account.
Managing location evidence conflicts
For the rare cases when necessary evidence for your sales cannot be collected, or the evidence is contradictory, Quaderno will notify you and you'll need to contact your customer for an extra evidence.
Most cases of conflicting evidence are automatically resolved for you, for example:
For a sale's customer who has a billing address in the UK and a bank account and IP address from Spain, Quaderno will determine the customer's location to be Spain and the evidence would appear as confirmed.
We'll notify the administrator user on your account for the very few cases needing manual intervention, you’ll need to request an extra evidence to your customer, as in:
- 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 to confirm it. On some cases, you might need to correct the invoice because it might have applied an incorrect tax rate based on the previous location.
When conflicting evidence alerts happens often, please check out our Integrations docs to make sure that your platform is correctly configured for sending location evidence to Quaderno.