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, the IP address, and the bank country as valid evidence to determine customer location.
The good news: Quaderno collects and stores that evidence for you!
Once the payment has been processed, the payment processor sends the details of the transaction to Quaderno, either directly or through a native integration (read How Quaderno works with other platforms to learn more).
Quaderno can 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.
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.
Two pieces of non-conflicting evidence are generally required.
That said, it varies over the world (and over time). For instance, the latest EU VAT regulations make it easier to stay compliant if you’re a small business in the EU with less than €100,000 in cross-border sales in the EU, as you only need to collect one piece of customer location evidence.
Well, except for non-EU sellers, who must always gather two non-contradictory pieces of evidence. But hey, you know what? You really don't need to know any of this. Rest assured that Quaderno has your back collecting location evidence for you, whatever your case may be, forever.
For the rare cases when necessary evidence for your sales cannot be collected, Quaderno will notify you, and you'll need to contact your customer for an extra evidence. If this happens often, please check out Platforms and integrations to make sure that your platform is correctly configured for sending location evidence to Quaderno.
Occasionally you may see cases of conflicting 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. The evidence would appear as confirmed.
We'll notify your for the very few cases needing manual intervention, and then you can follow these simple guides:Editing location evidenceRequesting extra location evidence
If I have less than 100K in cross-border EU sales and only need one piece of evidence, which piece of evidence has priority?
In this case, Quaderno would always use the bank country (if available). This data is the most reliable when compared to an IP country or billing country selected by the customer.
Do I need to refund the customer if I charged them a tax rate that doesn't correspond to their location?
We'd recommend checking with your accountant on this, and choosing an option to correct the invoice if necessary.