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About the VAT rules

Sometimes people ask me questions like:
  • Why do you have so many options in your order pages?
  • Why do you need to know my postal address (or country)?
  • What is a VAT IDs.
So here an explanation:
In the European Union we have standardised rules for value added tax. That tax is like a sales tax, but it applies to all sales and companies can claim the paid tax back later.
To visualize the rules, I made this diagram:

Customers from Germany do always pay VAT for plugin licenses. Sales to customer outside the European Union (e.g. USA) are exports and free of tax. And as software has not customs, the orders are also duty free. From the customers inside the EU we have some locations which are VAT free like the island La Reunion, a part of France. For the exact list, check this page on wikipedia. Now a company from inside the EU and outside Germany can be VAT free or not depending on whether they registered for reverse charge. So if they registered and have a VAT ID, I can lookup whether the ID is valid and if yes, the sale is VAT free. They have to pay VAT in their local country, but for me the sale is VAT free.

Now the only way for me to know where the sale is from, is the country you use in the order. And every month there is an order for me to refund as sometimes customers pick the wrong choice on our order pages. But with a second order we normally get the license paid.

I hope this articles helps to clear things up. Comments? Questions? Please post here.
09 06 10 - 19:33
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