VAT tax code for EU countries

Report · Oct 01, 2012

Hi,

My UK based client has just highlighted that "VAT is due on all sales to the public in EU countries."

However in BC Tax Codes, as far as I can work out, tax codes are only applicable by country that you have a domain setup for. That means that on a standard UK domain setup I can't setup a single VAT Tax Code for EU countries, only for the UK.

Does anyone know a way of assigning a tax code to multiple countries without having to buy and setup a domain for each country??? (there are 27 in the EU!!)

Report · Oct 01, 2012

Hi Oliver,

Our current tax framework doesn't allow for that. The only option you have here is to apply VAT to all purchases, regardless where the customer is purchasing from.

-mario

Report · Oct 09, 2012

Thanks Mario,

Do you know of any plans to change this to be in line with EU rules and regulations?

Thanks

Oliver

Report · Oct 10, 2012

We have an interesting problem related to a possible solution to this limitation in BC.

We want to set up two carts using GBP. One with VAT and one without VAT. It is quite easy to set up the later so that it will not show any EU countires in the ship-to form. However, I can only find two countries in the world that use GBP - UK (obviously) and South Georgia and South Sandwich Islands*.

*Falkland Islands, Guernsey, Jersey use Falkland Island pounds, Guernsey pounds etc (exactly the same as a Pounds Sterling but none of the payment gateways / banks accept them online. Only South Georgia and South Sandwich Islands use real GBPs (probably becaues no one actually lives on these islands....). See authorative references:

http://www.sgwiki.gs/mediawiki/index.php/Government_of_South_Georgia_and_the_South_Sandwich_Islands

http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/south-ame...

However, big problem - BC has programmed this 'country' to use Euros!! So we are raising a case to ask BC to change this minor details.

If you would like to raise a case on BC too, then we have a reasonable work around.

James

Report · Oct 10, 2012

That isnt good, as I actually need to setup a French version of a site but still accept pounds (due to client problem accepting euros). I was planning of setting the domain as Culture- French for language and Country - Guernsey for payment in pounds.

I now have 2 reasons to raise a case on the above and will do so now,

Oliver

Report · Apr 22, 2013

Hey Oliver

I'm pleased to note that South Georgia and South Sandwich Islands have now been correctly set up to use GBPounds! http://forums.adobe.com/message/5158498

I've managed to set it up a new cart and it seems to work fine with both SagePay and Paypal.

Just need to find a easy way to get users in the the correct cart so they don't pay VAT unnecessily. I don't know any easy answers for this one.

But this is a massive step for UK shops who want to sell in GBP inside and outside the EU.

James

Report · Apr 23, 2013

Awesome James

I am in the same situation and here's what I think could be a solution.

I set up a subdomain using the country South Georgia and South Sandwich Islands where I can now display GB/UK prices without VAT.

This new subdomain is fine for manually entered orders as the client now has the option to bill clients with or without VAT

When it comes to the front end of the website, I'm thinking the solution is to set up a redirection flag which directs users from countries below onto the non VAT applied prices.

I'm not sure if it's possible to identity the IP address and force EU based users onto the EU sub domain (or how reliable it is)

However, the only way the client can let people buy in the non VAT prices is by forcing the user to enter their VAT country and by ensuring the goods are shipped to that country.

So I'm thinking a required field on the EU checkout to enter VAT number and only show the countries below in the country dropdown on the checkout

If the user doesn't have a vat number or doesn't enter their VAT number, they can't purchase and must go and order from the default UK checkout.

Austria

Belgium

Bulgaria

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

Any feedback or thoughts before I get my developer to implement

Fraser

Report · Apr 23, 2013

Hi Fraser

This is our implementation http://www.onoto.com/. Quite complicated with 4 carts (soon to be 5 with non-VAT GB)

We have flags at the top, however some users miss these and then end up paying VAT unnecessarily which then has to be refunded. On the non-VAT carts we prevent shipping to EU countires by using this http://forums.adobe.com/message/5033887#5033887

We tried IP re-direction, however, this did not work because some users wanted to buy in different currencies or wanted to ship to other regions. Say they live in UK but want to ship into US.

If you just have GBP VAT and GBP non-VAT then you could put some wording in the large product description to ask users if they are shipping outside of EU and then re-direct them to the non-VAT cart. We can't do that because we have three currencies (see bottom of http://www.onoto.com/luxury-pens/magna-plunger-filler/magna-plunger-filler-black-acrylic). - however any suggestions how to make this more user friendly would be helpful!

Wishlist: BC to allow different Individual Product Large templates.

Report · Jul 02, 2013

Hi Mario

I have the same issue as OliverR33. This is quite a major requirement regarding VAT. Client is based in the UK, but has to charge VAT to all EU countries and zero VAT to non-EU countries. Assigning tax codes to various countries without having to set up a domainfor each country would be extremely useful?

Is there a solution or anything in the pipeline?

Thanks

Jon

Report · Sep 24, 2013

Hi daddycooler,

I think Mariuo has left the company, ..... unfortunately!

We have the same issue with several sites in Cyprus, our clients are selling internationally and need to charge Cyprus VAT on sales to other EU countries but can sell without VAT to non EU countries. We are having major issues with our clients as we are unable to cater for this requirement.

BC needs to get asap in line with European regulations, we raised this issue for more than 18 months now.

If anybody know a work-around, we'll gladly take it.

Cheers

Hartmut

Report · Jan 22, 2014

So... Now we also ran into this issue.

Will look at a work-around, it does not seem easy though.

Report · Jan 24, 2014

It's great time to act indeed.

For sales from the European Union countries VAT applies as follow:

Every customer settled in the vendor's country must pay the local VAT tax.
B2B customers in the vendor's country have to mention their VAT number and may have a refund of the tax through their VAT declaration

B2C customers in the other EU countries also have to pay the VAT
B2B customers in the other EU countries don't have to pay the VAT if they provide a valid VAT number

Customers outside the EU don't have to pay the VAT

BC is tailored to mainly handle the Australian and US tax and has not integrated the European regulation.

This makes BC eCommerce totally unusable for EU vendors unless they are not liable for VAT, or limit their sales to consumers (B2C) only, within the EU.

SOLUTION: An input field should be added in the basket to record the VAT id when available, inform the customers about this, verify its validity and apply the corresponding VAT amount when needed.

Adobe has done that in it's online shop since many years. As Business Catalyst is part of Adobe it seems commonsense to share a fucntionality that has already been developped! And to put it in use immediately.

For those tempted to ignore the law (BC, Partners or their Customers) eSellerate KB lists some penalties and activity prohibition that could be set by the EU Authorities, next to some good practices.

Please note that this also applies to vendors outside the EU selling to EU-based customers. It thus potentially concerns every BC eCommerce.

Report · Jan 24, 2014

Well written!

The suggested solution is also how most other shops do it.

Using the API to check VAT is out of the question, since it can't be checked with SSL (The cart is not SSL encrypted).

A request for checking the validity of SSN for factoring services was actually in the works a couple of years ago, but wast postponed in favour of V3 and then the project was shut down. The suggested solution is exactly as described for VAT checking, it's very unfortunate because this problem would have been solved now if the project where completed.

We simply can't do anything until Adobe add’s the functionality.

Report · Jan 24, 2014

As you said, Luc, it's great time to act, and fast.

We lost already one e-commerce client on this issue, another e-commerce client of ours just had a tax inspection and got fined for the same. Now, as you said this firing back from the client to us partners and in fine to Adobe as BC is not compliant. (the penalties are interesting....

In addition to the rules you mentioned above, it is perhaps worth noting, that on intre EU distance sales (e-commerce), the sellers country's VAT is charged up to threshold (total annual sales to the buyers country), if the merchant is seeling more anually, the buyers country VAT is to be applied.

http://www.eworkswsi.com.cy/FAQRetrieve.aspx?ID=51101&Q=

This information is only known by the seller, we are suggesting a VAT (tax) parameter/value/field by country as implemented in Magento

What about for example adding a parameter to the tag_shippingoptions:

Instead of:

{tag_shippingoptions,true,false,CY;US;CA;DK;ES;IE;IT;DE;FR;BE;GB;GR;PL;PT;RO;SE;RU;UA;CN,false,false}

just read a simple number and add it as VAT in the cart

{tag_shippingoptions,true,false,CY;US;CA;DK 19;ES 19;IE 19;FR 20;RU;UA;CN,false,false}

In the above example, the seller is in Cyprus (CY, VAT = 19%) and would need to apply

CY (nothing additional as BC applies VAT correctly)

US, CA nothing since outside EU

DK 19;ES 19;IE 19; Cyprus VAT is applied as total yearly sales are under the threshold

FR 20; French VAT is applied as total yearly sales are above the threshold

RU; UA;CN are outside EU

The absolute numbers could be replaced by a variable if a country VAT tabel was made available.

So there could be solutiuons, even easily through javascript if the VAT field in the shopping cart was accessible....

Report · Jul 07, 2014

Just setting up up first store on BC, about 10 sites in, 3 of which need online store development.

I had not seen this article until today unfortunately and I have just spent over a week in touch with BC support over the problems I was having with the store setup. My client is based in Ireland and had the "crazy idea" of shipping to countries in the EU, and US and a few others besides.

I assumed this would be straight forward enough and now I am very worried.

As a dublin based designer/developer BC seems to be offering me less and less.

As mentioned I have been on to support about a lot of the issues that have been brought up in this post but they never pointed any of these issues out to me. It was like I was the only one to ever have these issues, now I feel cheated out of a weeks work and still none the wiser as to the best way forward.

My last reply to BC support earlier was:

====

Hi guys,

1 week later guys, and a lot of time lost troubleshooting a problem that seemingly can't be fixed, or at least I cannot understand exactly how to do it.

Had ye not seen this article:

https://forums.adobe.com/message/6068744

please guys I would have preferred to know about the issues and the fact that BC commerce does not work properly or legally in relation to EU tax laws.

After discussing the problem with my client yesterday, his first reaction was that there must be something wrong with the BC system as it seemed to be not defaulting or based on correct tax requirements in EU.

I’m looking bad here, and I’m still none the wiser as to how I should get this to work. I have explained the lengthy, country by country subdomain setup solution but as you can see from the article linked above it still does not function in an acceptable manner.

Is this forum discussion accurate and up to date, and can you please suggest a way to setup shipping to countries inside the EU that is in line with EU eCommerce guidelines etc.

Thanks in advance,

as an EU partner with BC, I need to get this issue resolved,

I have moved all my sites to BC and I’m just started to get online store requests,

it would have been good to know the problems in advance.

Please help.

====

I have looked at the suggested workarounds in the comments of this post but I can't fully understand them.

Is BC feasible to setup a site based in Ireland,

selling to EU countries, US, Australia and UK etc,

prices only euros,

charging VAT where appropriate on goods and shipping,

and provide a solid, legal workflow of emails and documentation?

or should I just be moving on, and if so, where?

sorry the long reply, but this issue needs a bit of ranting I think, can't believe it,

thanks, Kieran

Report · Jul 08, 2014

Kieran

I've felt your pain for years. Adobe BC development team have had their heids up their arse for 5 years and continually ignore the fundamentals of selling in Europe.

BC Next won't solve the problem - it's only on Beta no movement on core modules this year then !

Open Plaform won't solve the problem.

This should be an out of the box solution. And frankly BC are a disgrace letting this fester for 5 years. Find another solution.

Fraser

Report · Jul 08, 2014

Thanks for the comments Fraser,

any recommendations for another solution?

Report · Jul 08, 2014

Other than the ones described in the thread, that is, setting up each country in EU, set VAT and Shipping tax on everyone - there is no other method.

Report · Jul 08, 2014

In your experience, if you go through the setup for each country,

is it then a viable solution?

Do you not have to overcome other issues,

- re-direct people to correct subdomain,

- shipping options no forcing incorrect billing state into CRM

- issues with legality of workflow, invoice emails etc

- forced to deal in currencies specific to shipping country

Also, btw,

I have just setup my us. subdomain and I cant see another shopping cart template for US in the remote Layouts/OnlineShop folder,

does the system generate these or where do I find them. Do I still need to setup separate:

- Shopping Carts

- Register Forms

- Order Receipts

- Templates?

Many thanks for your comments,

Kieran.

Report · Jul 08, 2014

Set it up like this:

1. Create Subdomains:

for EU Member countries, those would be:

AT, BE, BG, CY, CZ, DE, DK, EE, ES, FI, FR, GB, GR, HR, HU, IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SI, SK

Example: shop-at.mydomain.com

The landing page can be anything, but since this wont be used - we created a blank page.

2. Create VAT Codes:

For EU Member countries, those would be:

AT, BE, BG, CY, CZ, DE, DK, EE, ES, FI, FR, GB, GR, HR, HU, IE, IT, LT, LU, LV, MT, NL, PL, PT, RO, SE, SI, SK

We set the country from the dropdown (Note, these will only be available if the subdomain exist!) - then put VAT as Tax Code, because that's what it is.

3. Shipping options:

Set "Country of domain purchase is made from:" to the country where the goods are sent from, if your country doesn't have EUR as currency, choose a domain that has that as currency - like Finland.

Set the description to the country you are setting up the VAT code for, example, Austria.

Be sure to leave "Shop shipping option to:" as "All", so that people ordering from other countries still can order.

Set "Limit Delivery to Following Countries:" to the country you wan't this option to be for, in this example: Austria.

4. Edit the Shopping Cart Layout.

(Please note! The shopping cart layout will be the default domain you have chosen for the site. Example: shopping_cart-AT.html If this file does not exist, you have to go to it in admin module templates and save first!)

The the shipping options tag to: {tag_shippingoptions,true,false,AT;BE;BG;CY;CZ;DE;DK;EE;ES;FI;FR;GB;GR;HR;HU;IE;IT;LT;LU;LV;MT;NL;PL;PT;RO;SE;SI;SK;IS;NO}

In the above, we limit the countries we wan't to be able to ship to and add those outside of EU that we want to include.

In the Cart, it will looks like this now for example:

Destination country:
Austria

Choose shipping option:
Austria €10.50

Destination state:

VAT

With some javascript, you can monkeypatch the shipping option function to select shipping option and VAT automatically and hide them from the customer/visitor.

Congrats, you are now charging VAT for EU countries.

Without automation, this will take a long time to setup - so create a spreadsheet and plan all options in advance, since changes will take a lot of time!
We monkeypatched the admin to auto-create these, in total it takes 3 minutes and it creates them based on a spreadsheet we let the client fill in.

Report · Jul 08, 2014

Wow tmikaeld,

thanks so much for that setup,

I have read snippets of others and always thought I would have to charge in different currencies, setup multiple shopping carts etc,

but that solution looks great.

I just tried it with IE (origin) and UK & US

seemed to work ok apart from the dropdowns in the shipping options,

I need to find out how that Monkeypatch you mention would work, I was getting errors trying to do it myself.

Thanks again,

I just wish BC support had been able to give me this kind of instruction,

is there any drawbacks to this solution? before I crack open the champagne 🙂

Report · Jul 08, 2014

You are welcome.

No drawback other than time, from what we have found.

We also have it connected via API to two different accounting softwares, the accountants have not complained so far.

PS: You should hire a proper JS coder to do monkeypatching, otherwise it might break on some browsers and render the cart unusable. So be careful.

Report · Mar 11, 2015

Hi tmikaeld,

we have a similar problem with tax situation in the EU. Our seller is Germany based. This means, the tax for all registered wholesalers from the EU, except of germany, will not be applied. Tax for them is zero. How do we set up this? Is it at least possible to set up a subdomain for each of these countries or is there even a better way? Does anyone know a solution?

Thanks!

Report · Feb 16, 2015

Is there a way of achieving this for charging VAT only to companies without a VAT number also how do i get around VAT showing on the invoice in the address field?

Any help appreciated?

PS - Sorry to revive an old thread

Report · Jan 27, 2014

Hi, i need this solution and just searched for the option to apply VAT to all purchases, how can I achieve that?

Karl