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EU VAT Taxes

Chase Cook
Updated

Adding EU VAT

Adding EU VAT collection to your store is easy:

  1. Click on Settings, then Store Setup in the left menu
  2. Enter your Business Country and Business VAT Identification Number. We recommend entering your full VAT number including the two-letter prefix.
  3. Click on Taxes in the left menu
  4. Verify that the  box is enabled
  5. Click on Edit next to the tax class that you wish to add VAT collection to
  6. Click on Add next to the EU VAT Rates tax method
  7. Verify that the Enabled box is checked and click on Save
  8. Repeat steps 3-7 for any other tax classes that EU VAT should apply to

 

Enable the VAT ID Field in the Cart Theme

  1. Log in to DPD
  2. For the store you want to enable VAT support on, go to Settings>Checkout in the left menu
  3. Check the box to show the VAT field.  Optionally, you can check the box to show the phone number and company name fields also.  Save your changes.

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VAT Reporting

A VAT report is available so that you can report sales to MOSS. This report gives VAT collected by country and can be saved to a CSV. DPD does not automatically report your sales to MOSS–this is your responsibility.

  1. Click on Reports in the left menu
  2. Click on VAT Report on the top right
  3. Enter the date range you wish to generate the report for and click on Apply Filters

How EU VAT Collection Works

As of January 1, 2015, EU VAT is taxed at the rate of the buyer's country. When the EU VAT tax method is enabled, DPD will collect the buyer's address and compute the VAT based on the buyer's country. Current rates are displayed on the EU VAT Rates tax method configuration page. The EU VAT tax method only supports standard rates.

VAT Rule Compliance

Identify the location of their customers and collect evidence

DPD collects the shipping address for the customer and IP address and stores them with the transaction in DPD. This meets VAT location identification requirements.

Validate VAT numbers for B2B transactions

DPD verifies that VAT IDs are valid using VIES when they are entered in the cart.

Apply the correct VAT rate and display it on invoices in destination currency

Automatic currency conversion is applied using Open Exchange Rates for the VAT amount charged at the time of sale to put the VAT amount charged in the destination country’s currency. A note is added stating that the local currency amount is an estimate and may change due to fluctuations.

VAT Reverse Charges

If the buyer enters a valid VAT Identification Number and the goods are being sent to another country within the EU (a "dispatch") the VAT rate will be discounted to 0% and a note added to the invoice stating that reverse charges have been applied to the purchase.

Non-EU Business

Non-EU businesses that wish to collect EU VAT should follow the above steps to add the EU VAT rules to their account.

Non-EU Purchases

Non-EU purchases will not be charged VAT.

Non-Standard VAT Rates

The EU VAT tax method only supports standard VAT rates. If you are selling a good that uses reduced rates you will need to manually enter the VAT tax rates into a table tax method. The Europa website has a database with current VAT rates.

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