Opencart - multi-currency VAT

laguna · Oct 4, 2010

Opencart has multi-currency capabilities but how to deal with European sales for VAT registered customers?

European customers who are VAT registered have the option to pay own VAT. How does Opencart deal with this?

Maybe the only solution is to exclude VAT using multi-stores?
It would certainly simplify things especially from having to keep abreast of the rate changes for different countries.

Thanks
Chris

laguna · Oct 5, 2010

Anyone use Opencart for European trade customer?

Deleted member 84466 · Oct 5, 2010

I have the same problem. I have a client who wants to sell to EU and also outside. Handling EU VAT payments seems to be a real headache.

See HMRC document "The single market"

(sorry, the forum won't let me include the link)

So far, I can't find any info anywhere on how to handle it in Opencart.

MartCactus · Oct 6, 2010

Its possible to do this with a webshop, but not sure about OpenCart. Our cart software handles this and I'm sure there are others out there too... works like this

1) store owner sets up info about where he is (lets assume UK here).

2) store owner sets configuration on the site to tell it he charges vat (obviously some smaller merchants don't)

3) when a customer orders from within the EU (but outside of UK) a vat reg number box appears on the order form. If they fill this in then the transaction is zero rated (ie no vat). They are then supposed to pay the vat at their end, at their local rate.

If they don't fill it in, then they are charged UK vat at UK rate (they are probably a consumer).

4) we have 2 ways to validate the number. We attempt to use an online web service provided by the EU - this will tell us whether the number was valid, and who its registered to.

If this fails, we are at least able to syntactically check the number (ie ensure its valid for the customer's country - vat number format changes in each state).

The vat system is a complete mess. Whoever came up with it obviously never ran a business. Its crazy that its easier to sell outside the EU (no vat) than to customers within (where you have to check vat numbers etc). There are also problems because some places you'd think are in the EU aren't. For example a business in Tenerife - you might think that is spain and hence EU. But Tenerife (like the Channel Islands, Isle of Man) isn't in EU and hence shouldn't be charged vat (and most probably won't have vat numbers to give).

Deleted member 84466 · Oct 6, 2010

Hi Mart,

Many thanks for your feedback. This is pretty much exactly what my client is asking for. As far as I can see, Opencart does not do this so I guess I need to dig into Opencart a bit to see if I can figure out if it can be modified easily to incorporate the EU VAT number box option.

Reading the HMRC VAT guidelines though this is only part of what needs to be done. Verifying the VAT provided is actually real and belongs to that customer seems to be another great can of worms plus all the other documentation you have to have.

webgeek · Oct 6, 2010

It's always fun seeing companies on quick-burn mode who come and go like lightning. While they're in play, they charge no VAT, and suddenly they've got a 17.5%++ price advantage for consumers anyway. Before they hit the VAT cap, whoosh, they're gone....

Hard to compete when someone has a 20% or so discount over your business, not taking into account any other factors.

laguna · Oct 6, 2010

MartCactus said:
Its possible to do this with a webshop, but not sure about OpenCart. Our cart software handles this and I'm sure there are others out there too... works like this

1) store owner sets up info about where he is (lets assume UK here).

2) store owner sets configuration on the site to tell it he charges vat (obviously some smaller merchants don't)

3) when a customer orders from within the EU (but outside of UK) a vat reg number box appears on the order form. If they fill this in then the transaction is zero rated (ie no vat). They are then supposed to pay the vat at their end, at their local rate.

If they don't fill it in, then they are charged UK vat at UK rate (they are probably a consumer).

4) we have 2 ways to validate the number. We attempt to use an online web service provided by the EU - this will tell us whether the number was valid, and who its registered to.

If this fails, we are at least able to syntactically check the number (ie ensure its valid for the customer's country - vat number format changes in each state).

Its not exactly automated is it but what alternatives do we have?
What cart do you use?

The vat system is a complete mess. Whoever came up with it obviously never ran a business. Its crazy that its easier to sell outside the EU (no vat) than to customers within (where you have to check vat numbers etc). There are also problems because some places you'd think are in the EU aren't. For example a business in Tenerife - you might think that is spain and hence EU. But Tenerife (like the Channel Islands, Isle of Man) isn't in EU and hence shouldn't be charged vat (and most probably won't have vat numbers to give).

I agree it's a complete mess alright, a few years ago I helped set my daughter up in her wholesale apparel business and couldn't believe how stupid a system it was. Luckily her order processing at the time was a manual affair selling bulk lots and so she had the time to physically check if these VAT No.'s were indeed cosha.
I didn't believe at the time that such a system would be left wide open to abuse like that for anyone to chance their luck!
How many companies actually check these VIES numbers but instead take it at face value and ship out? quite a few I would imagine, especially new-starts selling into Europe for the first time who are even more bewildered than the rest of us.

http://ec.europa.eu/taxation_customs/taxation/vat/traders/vat_number/index_en.htm

Then there is the problem, as you rightly point out in which member states are/not in the EU and either are/not charged VAT?
Very confusing indeed!

I read HERE too that intra-Community trade fraud may account for around 10%

Many thanks
Chris

MartCactus · Oct 7, 2010

laguna said:
Its not exactly automated is it but what alternatives do we have?
What cart do you use?

We're a shopping cart creator - we have a classic asp one, and a newer .net one (see my signature for that!). But I doubt we're the only shopping cart to deal with this vat issue - I'd imagine most of the major ones do.

We did have some problems with customers entering dodgy vat numbers, eg a customer in ireland (web developer who wasn't vat registered) entering the vat number of his parents newsagents, etc. Of course, if the newsagents business had bought the software, there would have been no problem.

laguna · Oct 7, 2010

MartCactus said:
We're a shopping cart creator - we have a classic asp one, and a newer .net one (see my signature for that!). But I doubt we're the only shopping cart to deal with this vat issue - I'd imagine most of the major ones do.

We did have some problems with customers entering dodgy vat numbers, eg a customer in ireland (web developer who wasn't vat registered) entering the vat number of his parents newsagents, etc. Of course, if the newsagents business had bought the software, there would have been no problem.

Our site will be hosted on a Unix server so the asp one link in your sig is out.
Do you have a link for the .net one?

Thank for your reply.

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Opencart - multi-currency VAT

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