From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private individuals and non-business customers will be taxable in the Member State of the customer.
You are also required to obtain two pieces of country evidence of the buyer's location. For every order, you can use the buyers billing address and the buyers IP address for the country as evidence.
Make your shop EU VAT compliant, fast and easy
The EU VAT Compliant extension allows you to collect and validate EU VAT numbers on your registration and checkout form, exempt businesses from VAT if neccessary, collect and validate user location in B2C transactions, and handle the EU Tax requirements for digital goods.
The EU VAT Compliant extension will adds a 'VAT number' custom field to the registation form and checkout form (both registration & guest). The buyer can select the type (Customer group): Customer/Private or Business and based on this type the VAT number field will be visible or hidden and will be validated if needed.
When type is Customer/Private, the VAT number field will not show. The buyer is generally charged for VAT taxes according to OpenCart standard config. In this case if they are an EU buyer they are charged with the VAT of their country, non EU buyers are not charged with VAT).
When type is Business, the VAT number field is visible, but optional. If the VAT number is filled in and validated, this buyer is not charged with VAT tax (Reverse charge - VAT exempt)
VAT number validation methods
EU VAT extension contains two methods of VAT number validations, online and offline validation. The online validation will use the free API from VIES
(ec.europa.eu/taxation_customs/vies) to validate the VAT number against the VIES VAT Number Database. The Offline validation uses dedicated algorithm for each country to validate the VAT number syntax. Which validation method is used can be configured in the extension settings, Offline, Online or both.
On every location and form, front-end and admin, the VAT number can be changed and will be validated.
VAT number validation when already registered
During each new order the VAT number will be validated again before the order can be completed, so when a VAT number of a registred buyer is no longer valid, the buyer will asked first to edit his VAT number before completing his order.
Collecting evidence of a buyer's location
The VAT on digital goods must be calculated based on the customer location, and you need to collect two pices of country evidence, the billing address and the country based on the IP address are the most easy ones. With the free Online IP address service from GEOplugin
(www.geoplugin.com), the billing country will be validated against the IP address country, if they match, the order can be completed.
When the country mismatch, the buyer will be noticed and aks to confirm their billing address is correct before completing the order. This confirmation will be logged in the 'Customer Activity'
log and in a special evidence logfile 'owc_euvat_ip_address_confirmed.log' in the system log folder.
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