Hey everyone! I'm currently setting up an e-shop in the EU and have a question about VAT rates. As I understand it, digital goods should be taxed based on the billing address, while physical goods are taxed according to the shipping address. Is that correct? If so, can the cart or checkout summary show different VAT rates for different items depending on their type and the provided address information? I've never actually seen an invoice with multiple VAT rates, so I'm curious if that's acceptable or common. How do you guys typically manage this in your e-shops? Any advice would really help!
2 Answers
You're not alone in facing challenges with VAT when mixing digital and physical goods in the EU; it can be a real headache!
Stripe is great for processing payments, but their tax handling doesn't support multiple VAT rates out of the box. You may have to manually calculate and show these rates for now. While it works in the short term, keep in mind it could get complicated with refunds or special cases.
Looking ahead, consider integrating Stripe with a tax tool like TaxJar or Quaderno; they can manage VAT rates better based on item types and locations, saving you future headaches.
Yes, you've got it right! For VAT in the EU:
- Physical goods are taxed based on the shipping address.
- Digital goods are taxed according to the billing address.
So, it's totally possible for the checkout summary to show different VAT rates for various items based on this information.
If, for example, you sell one digital product billed to someone in France (20% VAT) and one physical product shipped to Germany (15% VAT), the invoice should definitely reflect both VAT rates accordingly. Unfortunately, it sounds like you might be seeing invoices that show just one type of product at a time. It's definitely acceptable to show multiple rates as long as they're clearly itemized.
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