There are different VAT tax rates for each European country. You shouldn’t waste any time finding and including them in your store. It is best to use a WooCommerce EU VAT CSV file.
As a business owner, one of the first tasks you have to perform is setting up tax rates. WooCommerce makes the setup process to be as straightforward as possible.
It is recommended that you consult a tax professional on the best options to use for your store. The expert will also let you know about all applicable laws to your state, country, or brand. Since every business is unique, it is impossible to cover all the possibilities.
EU VAT in Practice
The value added tax (VAT) found in European countries is a general based consumption tax assessed on the value added to goods and services. It is applicable for all goods and services purchased and sold for use or consumption in Europe.
Goods that are sold for export or services sold to clients residing in other countries are not subject to VAT. On the other hand, imports are taxed so that the system can remain fair for EU producers so that they can compete on equal terms on the European market with suppliers residing outside the European Union.
A general tax that applies to all commercial activities that has to do with the production and distribution of goods and services. But if your yearly turnover is less than the threshold, which is different according to the Member State, you can’t charge VAT on your sales.
A consumption tax, since it is ultimately borne by the final consumer. It is not a charge for brands. It is charged as a percentage of each price. This means that the real tax burden can be seen at every stage in the chain of production and distribution.
Fractionally gathered through a system of partial payments whereby taxable businesses deduct from the VAT they have collected the amount of tax they have paid to other taxable companies after patronizing them. This makes sure that the tax is neutral regardless of the number of transactions involved.
Paid to revenue authorities by a taxable business owner, however, it is paid by the buyer to the seller as part of the business transaction – it is therefore an indirect tax.
Why you should subscribe?
European VAT provides a detailed explanation of VAT systems in European countries and an explanation of the EU VAT system. It has all the details for practitioners handling complicated cases on VAT in the EU in the non-EU Member States.
How it is charged
Even though the VAT is a percentage of the sale price, from this the taxable individual is entitled to deduct every tax paid initially. Therefore, you’ll avoid double taxation is and you’ll only pay tax on the value added at every stage of production and distribution.
By doing this, as the last price of the product is equal to the sum of the values added at every previous stage, the last VAT paid is comprised of the sum of the VAT paid at every level.
A number is provided to registered VAT traders and they have to show the VAT charged to customers on invoices. By this, a customer who is registered is aware of the amount he can deduct and the tax to be paid on the final product.
As a trader who sells products in the EU, add the VAT tax of your origin. For instance, if your store is located in France and you sell to Germany, add VAT tax to your products in France.
Those that sell digital services should use the country tax of their customers. As it is with the previous example, you should add a VAT tax from Germany. This is only applicable to B2C transactions. Those that sell B2B need to charge their customer zero rates. The customers will determine their VAT taxes. Here, the customer has to provide its VAT EU number.
How to configure EU VAT tax rates
The configuration process is easy and quick. It is summarized below:
1. Make a new tax category
• Go to WooCommerce, then settings, and then tax.
• Include a new tax class. You can give it any name you desire. The name will not be visible to users.
• A new link shows up as soon as you save the settings.
2. Download the WooCommerce EU VAT CSV file to your device
• The file downloaded will have all the IEU VAT rates.
3. Import the file and set the rates for new categories
• Choose a file in the next step and select the option that says ‘Upload file and import’.
4. Determine the class to your digital products
• Go to your product settings and choose your new tax class in the Tax class option.
• It is also possible for you to edit products in bulk.