Don’t let EU VAT kill your business!


There has been a lot of ranting about the new EU’s new VAT MOSS law, as it threatens so many small businesses around the world, here are a few tweets on the subject:

I was thinking of starting a little digital business, but it looks as if new #EUVAT rules would kill it stone dead

Just received email from @ComicsyUK regarding changes to the #VATMOSS situation. *sigh* There goes my business expansion to Europe – #EUVAT

The new #EUVAT rules are coming On Dec.31, I may be forced to close my business or break the law. Very worrying!

Looking like I’ll be closing part of my business in Jan. New #EUVAT means it’s no longer feasible. Thanks! #VATMOSS #VATMESS

The people complaining have good reason to complain, however complaining won’t solve anything and neither will shutting down your business. In this blog post we will explain what EU VAT is and what you as a business can do about it.

What is EU VAT?

In short, EU VAT is a nightmare or a huge amount of admin for any small business planning on selling digital goods anywhere in Europe. Before now VAT was charged based on the sellers location, however, now VAT will be collected by the EU based on the buyers location.

This means if you’re a small business in the US, and you sell online goods on your website, you’re supposed to file EU VAT fees in the designated country. You will have to figure out where each online shopper is to file taxes for the correct country (because yes every EU country has a different tax rate, enjoy!)

This is all the business owners responsibility (hence the huge amount of admin work), this is an unfair law which attacks small businesses and is bound to have a negative effect on Europe trading.

What can I do about this?

So many businesses either stop trading with Europe, shut down, or trade through another company. Below we will let you know of some solutions for WordPress and Magento sites.

If you’re running a website on the Magento platform, Firebear Studio has as extensive list of plugins you can use to handle EU VAT regulations, it has a plugin called EU VAT Enhanced extension, which costs €99 (around £78 at the current exchange rate)

If you’re running a website on the WordPress platform you can use Easy Digital Download for WordPress, with it’s plugin VAT for Easy Digital Download, this supports EU VAT digital service regulations, and reports the info for quarterly VAT sales. You can also use Quaderno integration (and soon Taxomo and TaxCloud ) as well as services to just block those EU people (Which isn’t recommended).

For those of you using WooCommerce with WordPress, WooCommerce is releasing a new extension that integrates with Taxamo, as well as an update to their current EU VAT Number extension. The update will collect where the buyer is located and provid users with a CSV file with the correct EU tax info, to prevent the need of entering it manually.

There is also a third party WooCommerce plugin called WooCommerce EU VAT Compliance, you can download this for free right now, and a premium version will also be available soon.