Hey Weavers, I’ll be live on Youtube with @joeworkman doing a walkthrough of our latest project file Mercury. If you are curious on how to power a fully features e-commerce website with no monthly fees check the live stream recording at the following link. (Updated link)
@Davide This looks interesting and I followed your post to look at the Vibrologix stacks.
From a quick scan of their site, they appear to offer a solution for digital downloads by determining the customers location, apply the correct VAT and charge the appropriate Price + VAT to the customer.
They don’t mention who then pays the appropriate VAT to each country that charges VAT.
Am I correct in thinking that the site operator is responsible for the payment of this VAT?
From what I can see from the VCP dashboard you can define different VAT rates yes. You can add automatic IP taking through a third party service, or allow customers to pick their country manually.
I’m pretty sure you would then have to declare those taxes yourself.
Thanks for the screenshot, showing the relevant VAT settings in the ecommerce payment stacks. Super looking project.
That is my understanding because it appears to put the full VAT control, into the hands of the web builder. I think for clarity you should, and for your own protection, point out to users that it is their responsibility to pay any VAT to the country where any purchase is made.
Anyone not familiar with the additional complications of selling a product via a digital download should look into this topic in depth as it is a hge can of worms. A good example, is that in just Europe alone, as I recall, there were 28 different countries, with 18 different rates of VAT, and the seller of the digital download, wherever they are located in the world, has to pay each country the VAT due, on time and without delay, every 3 months, and also maintain records for all countries, for all sales in that country. This is of course completely untenable for small businesses, so the solution is to use a service like Paddle, which handles the VAT for you. There is of course a hefty monthly ongoing cost for this type of service
I notice that in the screenshot above, there are 3 checkboxes, that would take the site builder into deliberate tax avoidance by not charging VAT, or not applying the correct VAT or offering a VAT avoidance loophole by entering a known VAT number.
On the other hand, this shopping payment solution is a dream gift for anyone who would be happy to either charge the VAT and just keep the VAT charged (yet allow the buyer to believe his VAT payment will be paid to his country) or choose to not charge the VAT and then sell their downloadable product at a reduced selling price, 25-30% lower than the competition’s price. Also in both of these scenarios, they would not have to pay any ongoing VAT processing fee. This is almost a win win win situation for these law breakers and tax avoiders but it could of course lead to large fines or prison.
I’m not for a second suggesting that you condone any of this, but the “NO MONTHLY FEES” title could be considered missleading.
N.B. The Option to include the Maxmind Geos2Lite database may not meet every countries, country identification requirements. Even the $252 per year ONGOING COST, next service up, does not have 100% identification.
For everyone selling digital goods there is IMHO no other way than using Paddle, Fastspring, etc. There are reasons why also the largest software vendors use such dedicated services.
Great product @Davide, look very nice!
So can you integrate Paddle or Fastspring in the payment process of this shop?
I don’t know but that would defeat the purpose of avoiding monthly fees.
Everyone selling digital downloads should do the right thing and use a service like Paddle or Fastspring.
From a RW + Stacks point of view, it is very simple to do that using Paddle. You just add a few lines of Paddle’s code to a page and setup any BUY link to use the Paddlelink format URL and the product ID number. Paddle then handle everything, and I suspect Fastspring is similar.
VCP can actually generate links that are active for a set amount of time. I can see myself using Mercury for a digital content store.
The pro feature you are missing with Mercury is the option of having an area where customers can login and re-download past orders.
Make no mistake, I’m not saying you can’t build it. You could potentially expand Mercury with Sitelok and achieving exactly that. Totally possible, but I wouldn’t pack that into a project file. In all the projects I developed with Sitelok there is not a single one that is similar to another. Everybody needs their membership systems adjusted differently, I would then have to support each and everyone of my customers setting up their personalized solution. Not practical at all.
That’s a good advice, I’ll make sure to let customer know about this European tax issue.
Thanks for the tip.
FYI This isn’t a European tax issue. It is a world tax issue.
If you sell digital items, no matter where your shop is located, buyers in Australia, Japan, Belarus, Chile, the EU, Georgia (country), Iceland, India, Indonesia, Malaysia, Mexico, Moldova, New Zealand, Norway, Russia, Saudi Arabia, Serbia, Singapore, South Africa, South Korea, Switzerland, Taiwan, Thailand, Turkey, Ukraine, or the United Arab Emirates , must be charged be charged VAT and this VAT must be paid to each country where the purchase was made.
@Webdeersign Thanks for those information. What about selling tangible goods to other countries (within the EU or worldwide)? Would I also have to pay the VAT I charged to each country where the purchase was made?
AFAIK the core issue here, is that if you charge VAT on a service or tangible product that is delivered in a non electronic automatic way, then if you charge VAT, you must charge VAT and you also must pay that VAT to your government, if you are VAT registered. This is relatively easy because you only need 1 set of VAT returns for 1 country.
Digital downloads are treated very differently in that VAT must be not only be charged whether you are VAT registered or not, it must be paid to the buyers country even if the seller is in the USA, for example! So if you buy a stack from the USA, you should by law, be charged the German VAT and that seller should apply the correct VAT and pay that VAT to the German tax authority.
I am by no means an expert in this, but I use Paddle mainly to handle this huge bureaucratic mess and also to follow the law and pay my taxes. Yes my customers have to pay VAT and I have to bear the ongoing monthly high cost for this, but they have the comfort of knowing that the correct VAT will be paid to their government tax authority in their country.
@Fuellemann the situation for shipping physical stuff is pretty straight forward.
However, delivering a product electronically, such as a web download is a completely different situation.
Anybody who has a business selling digital or physical goods should have an accountant. I’m not an expert on tax laws that is why I have a professional taking care of all of that for me and my businesses.
I recommend people to get in touch with a local expert for their taxes. An article of an American company (with a very particular business model) is not going to cut it in case of an authority check on your account.
People should take this matter seriously, businesses must take it seriously. Laws change for every state and country, find a local professional, he/she will be able to tell you what’s best for you.
Yes the operator is responsible for paying the VAT to each country. I do this on my site and it’s not as complex as it sounds.
If you use Sitelok with Vibracart Pro you can setup an area where users can log in and download earlier purchases. Sitelok has a free plugin for this purpose.
No you don’t. For consumers you charge them your local VAT and for businesses with an approved VAT number you reverse charge, what means you charge them 0% and they have to declare VAT (the percentage they use in their country) to their country’s tax agency.