Online business and VAT (Value Added Tax) on Internet Sales ?

[Ivan100]

Hi,

I am about to launch a new online business, where I will sell through Internet a virtual (downloadable) product internationally.

I am confused now, if I am obliged to add a VAT (Value Added Tax) to the price of the product ? For all countries or only for some and which ?

Do you have any tips ?

 

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[Digamma]

You have to apply the VAT of the country your customer is physically in (NOT where he is a citizen).
If you ask me, the right reaction is "LOL" followed by a search for a payment platform that takes care of that.

 

[Ikke]

Whether or not you have to charge VAT heavily depends on your and your customers location and whether your customer is has a VAT number or not.

In broad lines the following can be applied. But it is best to get professional advise.

B2C (within EEC)
When you (or you corporate entity) resides in a country within the EEC and you sell to a private person in the EEC. You are responsible for paying and thus charging the VAT. But only if you stay below the threshold specified by the relevant tax authority.
You have to register a business in each country where you pass the threshold.

B2B (within EEC)
When you (or you corporate entity) resides in the Netherlands and you sell to a business (registared VAT number) in the EEC. You have to move the the duty to pay VAT to the buying party. This is called reverse charged VAT (if translations serves correctly) and it means that the buying business has to pay the VAT which in most cases they can get back.

B2C (outside EEC)
You do not charge VAT.

B2B (outside EEC)
You do not charge VAT.

Off course there are many small refinements but in broad lines this should cover it. Please note I am not a professional on this matter and I will not be liable for any consequences this may have.