EU VAT Settings
You can charge EU VAT for your customers from the EU by turning it On from your EU VAT Settings. The EU includes all European Union countries (excludes UK).
You also have the option to reduce your tax burden by letting Zenler handle the EU VAT reporting and payment to tax authorities.
To enable tax collection during checkout go to Site->Tax and Enable EU VAT. If you Enable this option, EU VAT will be collected when applicable.
If you opt for the option for Zenler to pay the EU VAT tax for you, Zenler will act as a seller on your behalf and collect, report and pay EU VAT to tax authorities (VAT MOSS ROS: https://www.ros.ie/vatmoss-web/vatmoss.html ).
EU VAT comes under 3 categories below -
Digital - Apply EU VAT based on the Customer’s location
Physical / Services - Apply VAT based on the Seller’s location
Tax Category can be set with each pricing plan of a product (Course/Live Class/ Live Webinar)
If you have enabled EU VAT there will be an option to set the Tax category while adding or editing a pricing plan.
EU VAT is calculated based on the buyer's country. If the buyer is from an EU country tax is calculated based on his country. (i.e., Digital Category does Not depend on sellers location)
Physical / Services :
For Physical / Services VAT is calculated based on the seller's country. If the seller is from an EU country, tax is calculated. In this case, even if the buyer is from an EU or not, tax is calculated based on the seller's country tax percent.
Online Courses with full fledged Live human interaction like live sessions may fall into this category but it is your responsibility to decide which category your product belongs to, as Zenler cannot advise you on tax matters, you would need to discuss with your tax consultant.
If this category is chosen NO tax is calculated.
Important: It is your responsibility to select the correct Tax Category.
If a seller in France sells a product and wants the customers in the EU to be charged 20% VAT (their local rate) and not the local rate of their customers, then they have to set the product tax category to “Physical / Services”.
Few scenarios of how EU VAT is calculated:
Digital products from the Non EU/UK to EU = Customers location used to apply VAT
Digital products from the EU to EU = Customers location used to apply VAT
Digital products from Non EU to EU = Customers location used to apply VAT
Digital products from Non EU to UK = No VAT applied
Digital products from the EU to UK = No VAT applied
Digital products from the EU to Non EU = No VAT applied
Physical tax from the EU to UK = VAT calculated based on vendor location
Physical tax from the EU to EU = VAT calculated based on vendor location
Physical tax from EU to Non EU = VAT calculated based on vendor location
Physical tax from Non EU to UK = No VAT applied
Physical tax from Non EU to EU = no VAT applied
Physical tax from the UK to EU = no VAT applied
If a buyer is from an EU country, there will be an option to add a VAT ID for all Tax categories.
If the purchase is tax applicable and if the user submits VAT ID, they will be exempted from tax.
If the buyer and vendor is from the same EU country and if the buyer submits a VAT ID, VAT is not zero-rated.
i.e, for sales within the same EU country VAT is charged even with a valid VAT ID.
What information does Zenler collect?
We detect (geo-locate) the country from students and collect the country details from EU customers. We collect this info so that we can report VAT to MOSS.
Do you charge EU VAT to customers outside the EU?
No, we only charge EU VAT if we detect that your customer is based in an EU country. Otherwise, no VAT will be added to the transaction.
Can I choose to make EU VAT included in the price or over the top of the price?
Yes, you'll be able to set this up on your EU VAT from your EU VAT Tax settings.
Important: Once again, it is your responsibility to select the correct Tax Category.