Thread

Hiya,

Not sure if this best belongs in the Lounge or in here but please feel free to move if you feel it would be more appropriate somewhere else.

I was just wondering if anyone else over here in the UK, or indeed anyone who has ever had to work on a site for a UK business has ever come across the kind of situation I find myself in now?

Basically I have a site which is going to sell items to people. These items are non-tangible and as such are just files for download.

All well and good so far…

… until!!!

Speaking to an accountant about a UK based business and selling files online for immediate download they mentioned that there is something in some Rule 5 or something which states that if your company goes into the tax-bracket (which I think is around £70,000) then you have to apply to become VAT registered.

That is all fine and dandy, no problem there.

The problem comes when you show prices on the internet and want to sell internationally. The way I understand it is that by law if you are a UK business then you have to show the price with VAT included so that any UK VAT registered customers can get the VAT back on the goods but if say an American or anyone outside of the EU were to purchase you have to show the price without the VAT. This is specifically aimed at files for download.

I aim to use the Simple Commerce Module for this job as it will do what I need fine but just wondering what I can do about this problem in that I will need to show prices with VAT to EU based customers but show a price without VAT to non-EU customers!

I want to be able to have them see the price before they register for the site to hopefully entice them in so the prices will show before they even register it will just be the buy now or add to cart buttons that will stay hidden until they are registered and logged-in and that is then when they can add the item(s) to their Paypal shopping cart.

I have also found out that we have to supply a receipt to the customer with the VAT on it if they are EU based but not if they are outside the EU.

As Paypal is going to be handling all the payment side of things is there anything I can do to make things easier for myself. I really don’t understand all this Rule 5 stuff and the accountant said he was going to have to do a lot of reading up to make head or tail of it too so just thought I would ask if anyone in here had ever come across the same sort of thing?

Thanks for any help on this one.

Best wishes,

Mark

The problem comes when you show prices on the internet and want to sell internationally. The way I understand it is that by law if you are a UK business then you have to show the price with VAT included so that any UK VAT registered customers can get the VAT back on the goods but if say an American or anyone outside of the EU were to purchase you have to show the price without the VAT. This is specifically aimed at files for download.

Yes. Well, the easiest way, if you want to use the SCM, is to have two articles, one with and one without added tax. You could show them on different sites, and let the users choose, or even try to determine their geographcial whereabouts automatically.

Please note that this is not legal advice, and I have no experience with UK tax law whatsoever, but it gets even more complicated once you cross a certain threshhold per country (100,000€ per year in the case of Austria): You’ll then have to apply local tax rates (destination VAT principle) which vary from country to country.

I aim to use the Simple Commerce Module for this job as it will do what I need fine but just wondering what I can do about this problem in that I will need to show prices with VAT to EU based customers but show a price without VAT to non-EU customers!

That’s not a given. You might simply sell for one price, letting your customers know that this price contains all applicable taxes. Non-Europeans, not subject to this tax, would effecitvely pay the tax in your pocket—put the other way, you would be paying the taxes for your customers where needed.

But, yes, tax law is complicated and you certainly should get legal and professional advice in this matter.

That’s not a given. You might simply sell for one price, letting your customers know that this price contains all applicable taxes. Non-Europeans, not subject to this tax, would effecitvely pay the tax in your pocket—put the other way, you would be paying the taxes for your customers where needed.

Hi Ingmar,

Thanks for the input on this one. Seems to be a right mine-field this one!! It’s so much easier if you sell a T-Shirt or something of a more tangible nature. All seems a little silly to me.

What you mentioned above was something that I was actually thinking about because if say a person over here in the UK bought an item and legally we have to show it with VAT added on to it and charge them that VAT they have no way of getting the VAT back just the same as someone outside the EU wouldn’t too.

Do you think that having a note on the site stating that the price contains these taxes would be okay and then if a person outside the EU purchases then it is their own choice really isn’t it?

I think this is also a bit ridiculous as you can’t really prove (in this case anyway using the Simple Commerce Module) where a person is from. You can use their IP to hopefully find where they are located but this can very easily be fooled so even if it looked to the site as if a person was from America say they may actually be in the UK trying to get a cheaper price and the only time you would find that out is once they have actually purchased the image whereby at that point it would be too late.

Thanks for any help on this one it’s much appreciated.

Best wishes,

Mark