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VAT changes on digital downloads

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smartcom View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote smartcom Quote  Post ReplyReply Direct Link To This Post Topic: VAT changes on digital downloads
    Posted: 10 November 2014 at 5:36pm
Hi,
Can you tell us what changes you intend to make for the new VAT rules on digital downloads that are coming into force in January? (See http://www.hmrc.gov.uk/news/one-stop-shop.pdf?WT.ac=VAT_POSjun for details).
This seems a real nightmare for anyone selling digital products across the EU, so the more support you can offer for this, the better.
Tim
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Support James Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 5:41pm
Hi,

Tax must be setup by the merchant. The easiest way to make this change is to edit your products in the product manager and enter the tax rate (percentage) in the tax field on the main product proerties ection. Click on the itemcode to see this field.

if you are using advanced tax then you must edit your tax rates and tax bands under 'configure > tax > advanced tax'. See here for more info...

https://admin.romancart.com/v111/info/screencast.asp?topic=tax

Thanks

James [Support]
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Post Options Post Options   Thanks (0) Thanks(0)   Quote smartcom Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 5:54pm
James, thanks for this.
So, to comply with the legislation on the tax side, you will be modifying the product manager so that an item can have a different VAT rate for each EU country that the customer may come from (required for B2C sales), as well as supporting the existing B2B VAT requirements?

This seems very tortuous - even if a site only sells 4 products that will require over 100 new data values to be entered.

And what about the customer providing the required 2 items of customer ID to ascertain which country they are based in?

And will you be doing anything to collate the sales data for MOSS?

I suggest you or a product manager may want to read the forthcoming regulations in the link I supplied before giving a fuller answer.

Tim
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Support Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 6:14pm
Hi,

As per the previous post, the cart provides the ability to charge tax according to the address of the customer. This has always been the case with our 'Advanced Tax' feature.

With regard to identifying the customer, you can already obtain the ip address of the customer and the billing address.

MOSS is out of scope of our current accounting features. Aside from that, it may be that a report showing the breakdown of tax across regions would be useful for this.

If you have specific enhancements that you would like to see in RomanCart which will help you with your sccounting, please do let us know.

Many Thanks
Support

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Post Options Post Options   Thanks (0) Thanks(0)   Quote smartcom Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 6:35pm
I'm afraid it isn't that simple.

The VAT treatment is not just dependent on the item sold.
If it is a B2B sale then the place of supply is deemed to be that of the supplier, and VAT may or may not be charged depending on whether the customer is VAT registered, as at present.
If it is a B2C sale, then VAT has to be charged at the rate of the customer's country for that product, and reported to that country's VAT body (through MOSS in the UK).
Thus a product may have the following VAT treatments for an EU based supplier:
- supplier and customer in the same country - VAT charged at normal national rate
- customer outside of EU: no VAT
- business customer in another EU country, VAT number supplied: no VAT
- business customer in another EU country, no VAT number supplied: standard UK VAT rate
- consumer customer in another EU country: VAT charged at the rate applicable in the customer's country (note that there is no minimum threshold for this in any country, unlike for VAT registration in one's own country)
I apologise if I've got it wrong, but I don't see how the current system can cope with this

The IP address is not seen as satisfactory evidence of the place of residence - the acceptable evidence is given in the HMRC document I pointed you to

I would like RomanCart to be able to support this, as it is a legal requirement for digital media sales from 1st Jan 2015
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Support James Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 6:51pm
Hi,

The main issue here I guess is determining who you would consider a business and who you would consider a consumer. There is no way for romancart to reliabley guess who of your customers is a consumer and who is a business. For this you would really need two romancart accounts, one for business and one for consumers with seperate sections on your website for both. If you had two romancart accounts then this would let you setup different prices and tax rates, if you are selling B2B and B2C then you should really have two carts for this and this is what we always recommend.

Quote The IP address is not seen as satisfactory evidence of the place of residence - the acceptable evidence is given in the HMRC document I pointed you to


This is what the documentation you sent us specifies, sorry for the poor formatting, the text from the document doesnt copy well...


1.6 Evidence required to support taxing decisions

If the pre s u m pt i ons r e f er r ed abo v e do not app l y , y ou w il l be ex pe c ted to obta i n and to k eep i n y our r e c ords two p i e c es o f no n - c o ntrad ic tory e v i den c e f r om the f o l l ow i ng l is t to s upp o r t y our ta xi ng de ci s i on s . E x a m p l es i n c l ude:

 the billing add ress of the customer

 the Internet Protocol (IP) address of the device used by the customer

 location of the bank  the country code of SIM card used by the customer

 the location of the customer’s fixed land line through which the service is supplied to him

 other commercially relevant information (e.g. product coding information which electronically links the sale to a particular jurisdiction)


Thanks

James
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Post Options Post Options   Thanks (0) Thanks(0)   Quote smartcom Quote  Post ReplyReply Direct Link To This Post Posted: 10 November 2014 at 7:00pm
OK, so if they are buying from the one web site I then have to direct them to the appropriate cart, and pay you double the subscription.
Thanks for clarifying this.
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