From January 1, 2015, all digital goods purchased by a European customer are submitted to the VAT taxes of the purchaser rather than the shop’s country.
The VAT taxes are not charged in the cart of those European customers that have a valid VAT number registered in the Intrastat records, but the VAT number is stored together with the other purchase details in the order detail page.
These details are used to create the MOSS report (which we explain below).
This report collects all the orders made by customers with a valid VAT number registered in the Intrastat records and gathers them following the related countries, showing the number of orders per country and the overall amount of the UNPAID taxes.
Before proceeding, verify you enabled the tax calculation on your shop.
After setting the taxes correctly as explained in this page, the plugin will automatically remove the VAT when:
- the user is European
- the VAT number is valid
By default, the VAT discount applies if the cart includes only digital goods.
However, you can also apply the same action to physical products by enabling the entry Apply to physical products in the plugin settings dashboard.
From the tab General settings, you can set up all the plugin options.
- Forbid EU customer checkout: if enabled, when a European customer adds digital goods to the cart, the checkout will not be allowed.
- Hide VAT field if VIES server is down: if enabled, the VAT field on the checkout will be hidden if the VIES server used to validate the VAT number is not responding.
- EU VAT field label: here, you can enter the text for the field EU VAT in the checkout page.
- EU VAT field placeholder: here, you can enter the text to use as a placeholder for the field EU VAT in the checkout page.
- EU VAT field description: here, you can enter the text to use as a description for the field EU VAT in the checkout page.
- EU customer warning: if you have activated the option Forbid EU customer checkout, you can choose to show a warning message in the cart page to notify customers of digital goods they have added to cart.
- EU VAT warning message: here, you can type the text of the warning message.
- EU VAT error message: here, you can type the text of the error message.
- Custom base locations: here, you can add country codes (comma separated) that will replace base location(s) specified in WooCommerce settings.
- Mandatory VAT number: if enabled, the VAT field will be required.
- Enable VAT number in same country: if enabled, it shows the VAT number field to all EU customers even the ones coming from the same country as the shop base location.
- Disable VAT exception in same country: if activated, it disables VAT exception in calculating totals for the same country.
- Apply to physical products: if enabled, it applies the VAT exemption on physical products too.
- Country confirmation message: here, you can configure the message to show to EU customers when the IP address and the billing country do not match.
- Mandatory VAT number message: here, you can set the message to show when the mandatory VAT number is not provided.
If you want to prevent European users from purchasing digital goods, go to the plugin settings dashboard in YITH Plugins -> EU VAT and enable the entry Forbid EU customer checkout.
In this way, the user can’t complete the order if the cart includes at least a digital product.
Besides, you can choose to show a warning message on the cart page to remind customers of digital goods in the cart.
If the country specified by the users differs from the IP address, the system will ask the user to confirm the country they inserted in the Country field of the Billing Address section.
Legally, you need two proofs to validate the VAT discount:
- the country specified by the user belongs to the EU
- the user confirmed is part of the EU
The related checkbox will be added to the end of the checkout process.
The data are saved on the order page.
By default, if the user is part of the same country you specified as shop Base Location, the plugin doesn’t apply the VAT discount.
Though, you can change this behavior by enabling the entry Enable VAT number in same country in the plugin settings dashboard.
The system allows inserting additional base locations. Since the VAT applies if the user’s country is the same as the base location, you can extend this feature also to more than one country.
If you want to bypass the manual addition of the taxes, you can import all the standard taxes of the countries of the European Union with just one click.
Click on the button “Import standard tax rates” and the process will be automatic. It is necessary to select all the entries that have been created.
The plugin tracks all the orders originated by the European countries, with the total number of orders and the total amount of taxes for each one in detail.
You can access the report in YITH Plugins -> EU VAT -> Reports.
From this section of the plugin, you can also export the reports into a CSV file by clicking on Export CSV.