Selling digital goods (B2C) to EU Customers and VAT clarification

[BeeSanz]

Hi
I am trying to get clarification around VAT if I want to sell digital products (for example, a videogame, ebook, or similar) using my website to an EU Customer, so UK Business to EU Customer.

I've been told, that each EU Member state has its VAT registration thresholds,
https://www.avalara.com/vatlive/en/...lling/distance-selling-eu-vat-thresholds.html

This has left me very confused. Can someone clarify these questions?
- What's the meaning of those thresholds exactly? The website says those thresholds were no longer valid from 1 July 2021.
What is the meaning of this?

- If I open my online shop tomorrow and my first customer is from Spain (for example)? The client will pay me 20£ for my product, and this price includes VAT at 20% in Spain.
Do I have to return this VAT to Spain Government?

- In the example above, will I have to register in Spain to return that VAT collected? (Or to simply things register for non-union MOSS in Ireland in case I have more than 1 EU Customer)

I am very confused about how VAT works as I know in UK the threshold is 85K, and my business doesn't need to be registered for VAT, so my business would keep the 20£ price (in case the customer is from the UK)

Am I correct in thinking that I always have to collect VAT if the customer comes from the EU and then return that VAT, it doesn't matter if it's a unique sale or 100?

I apologise for my basic questions about VAT, but after talking to several people and researching all over the internet, I am still confused about this.

Thanks in advance.

 

[lesvatadvice]

VAT registration thresholds only apply to 'local' businesses, not to someone based elsewhere. This means, as a UK business, you cannot benefit from the thresholds in EU Member States.
So, you will have to join the One Stop Shop scheme as you say in Ireland. The OSS portal calculates VAT for each EU country where you sell products.
Where you sell to non-EU countries you will have to register and account for VAT there too.

 

[BeeSanz]

VAT registration thresholds only apply to 'local' businesses, not to someone based elsewhere. This means, as a UK business, you cannot benefit from the thresholds in EU Member States.
So, you will have to join the One Stop Shop scheme as you say in Ireland. The OSS portal calculates VAT for each EU country where you sell products.
Where you sell to non-EU countries you will have to register and account for VAT there too.

Thank you! This is problably the important clarification I needed: VAT registration thresholds only apply to 'local' businesses, not to someone based elsewhere.

 

[MrChris]

@lesvatadvice
An extra question which might be helpful for the original poster as well:

I am correct by saying that the NET sales values of those B2C transactions must also be included in BOX 6 of the UK VAT returns?

 

[Deleted member 335660]

If I open my online shop tomorrow and my first customer is from Spain (for example)? The client will pay me 20£ for my product, and this price includes VAT at 20% in Spain.
Do I have to return this VAT to Spain Government?

No VAT in Spain is 21% so customer will get call from courier and have to pay 21% vat and admin charges. We have found them to be around 15% depends on courier.

I understand there are some ways of getting around this but not sure what you do.

 

[Deleted member 335660]

Basically don’t worry about thresholds, it’s an internal issue.

You are exporting so you don’t have to charge VAT. However your client will be liable for VAT at the rate applicable to their country. They will also pay for any tariffs and admin charges.

 

[brucegreig]

OP is selling digital goods, so I don't think there are any physical goods being moved around. This makes a difference, doesn't it?

 

[BeeSanz]

OP is selling digital goods, so I don't think there are any physical goods being moved around. This makes a difference, doesn't it?

I am going to sell digital goods only. I know the client has to pay VAT, but because I am going to set my own online shop, the VAT will be included in the final price (the client will see the Total price = Net price + VAT)

I don't know if I understand this correctly.

 

[lesvatadvice]

@lesvatadvice
An extra question which might be helpful for the original poster as well:

I am correct by saying that the NET sales values of those B2C transactions must also be included in BOX 6 of the UK VAT returns?

I agree.

 

[BeeSanz]

In case anyone is looking for information about this, I found this website where tons of useful articles about VAT
In particular, this one talks about getting an EU-VAT number which is what I will need eventually

How to get a VAT number in Europe

Do you need a VAT ID number in Europe? Learn how to register, when it’s required, and how to stay compliant while selling across the EU.

www.quaderno.io