How does Sellfy handle the EU VAT laws and Brexit?

In this article:

How do I comply with both EU and UK VAT laws as a seller?

What does Sellfy do to help me with VAT?

How do I enable VAT collection?

How do I register to sell as a VAT Mini One Stop Shop (VAT MOSS)?

How do I block sales from the EU or the UK?

The VAT MOSS and UK VAT data reports

Further reading for VAT-related topics

How do I comply with both EU and UK VAT laws as a seller?

Both the European Union and the United Kingdom charge VAT (value-added tax) for digital and physical product sales. This tax is charged based on the country where the buyer is located, as opposed to the seller's location. The rules regarding each of these taxes will vary, for any questions please contact your local tax authority.

As a seller of digital or physical goods, your options will differ where you are located.

Located outside of the EU (United States, United Kingdom, Canada)

1. To sell in the UK, you will register with HMRC and collect UK VAT on orders
2. To sell in the EU, you will need to register for a Non-union scheme VAT MOSS or VAT mini-one-stop-shop (Generally considered easiest!) or  register to pay VAT in every EU member state in which you sell
3. Alternatively, you may stop selling to the customers in the EU or UK altogether

Located in the European Union

1. To sell in the EU, you will need to register for a VAT MOSS or VAT mini-one-stop-shop (Generally considered easiest!) or register to pay VAT in every EU member state in which you sell
2. To sell in the UK, you will register with HMRC and collect UK VAT on orders
3. Alternatively, you may stop selling to the customers in the EU or UK altogether

If you decide that you will be selling to the UK and the EU, make sure to enable the tax collection in your Taxes section.

What does Sellfy do to help me with VAT?

Sellfy helps you maintain compliance with the new regulations. We'll make it easy for you to collect VAT on any order placed in the EU. We'll identify the buyer's location, charge the appropriate tax and provide a VAT MOSS report that contains all the information that you need for your single calendar quarterly return. See here how to enable the collection of this information in Tax Settings.

Determining the buyer's location

Following both HMRC and European Commission requirements, we store two non-contradictory identifiers of the buyer’s location, based on:

1. The IP address
2. Customer’s own choice of a country
3. Credit card (or Paypal) information

Charging the appropriate tax for the EU

We'll do the messy work for EU VAT collection, and keep track of all current tax rates for each EU country. Once a buyer's location is determined, we charge the right percentage of tax for that country. Keep in mind, that you won’t be able to edit the VAT rates for individual countries, we'll make sure that all the rates are up to date.

For UK VAT collection, we will set the correct rate, just select Add new to add the United Kingdom to your list of locations for tax collection.

If you have any questions on this, feel free to email into [email protected].

Provide a UK VAT and VAT MOSS data report

If you choose to sell to the UK, then you'll be able to pull a report with any UK VAT collected. You'll need to submit a UK VAT return and any payments due to HM Revenue and Customs (HMRC) on a quarterly basis.

If you choose to go ahead with VAT MOSS, you’ll only have to submit a  single calendar quarterly return and VAT payment and the Member State will then take care of the rest, by sending all the “appropriate information and payment to each relevant member state’s tax authority.” We'll compile all needed information into one report, that you export whenever you need it. Read more here.

How do I enable VAT collection?

To start collecting taxes and collect the information needed for VAT, you'll:

1. Go to your Store Settings
2. Select Taxes
3. Enable tax in your store
4. Enable sales from the EU and/or the UK
5. If selling to the UK add this location
6. Optionally, you can select for these taxes to be included in the product price and/or charge taxes on your shipping costs as well.
7. Press Save

How do I register to sell as a VAT Mini One Stop Shop (VAT MOSS)?

To register for the VAT MOSS, please go here: EU VAT MOSS scheme registration. 

Please remember, we aren't tax advisors, so we won't be able to guide you on your business choices, instead, you'll ask an attorney or your tax accountant.  For more information and a full list of MOSS registration portals, including one in your country, visit the European Commission website.

If you choose to go ahead with VAT MOSS, you’ll only have to submit a  single calendar quarterly return and VAT payment and the Member State will then take care of the rest, by sending all the “appropriate information and payment to each relevant member state’s tax authority.”

After you register, we'll help you collect the required EU VAT taxes. Read how to enable VAT collection here. For UK VAT, be sure to manually set the tax rates.

How do I block sales from the EU or the UK?

If you'd rather stop selling in the EU and/or the UK rather than register for paying the respective VAT, you can easily do so! Follow the steps below.

1. Log in to your Sellfy account
2. Navigate to your Store Settings
3. Select Taxes
4. Enable tax in your store
5. Choose "Don't allow purchase from European Union" and/or "Don't allow purchases from the United Kingdom".
6. Press Save

This will block all purchases from the EU and/or the UK, which means that you don't need to collect, register or report VAT for either. Please remember that we are not tax advisors, so if you have concerns or questions, please contact an attorney or an accountant.

The VAT MOSS and UK data reports

If you've enabled your Taxes Sellfy collects information required for UK VAT and VAT MOSS reports and then provides this data to you for tax purposes. The report is accessible to you at any time in your Sellfy account and can be generated based on custom months and years. You'll simply export the report.

This report will contain:

1. The countries where your buyers were located
2. The subtotal of a purchase
3. Tax amount charged
4. Purchase Total 
5. The currency of the purchase

To export either report:

1. Log in to your Sellfy Account
2. Navigate to Store Settings > Taxes
3. Scroll down to VAT MOSS report
4. Select the region, month(s), and year from the dropdown menu
5. Click Export data

Further Reading

Here are some helpful links for you to read further about these new regulations affecting your business practices. These sites are not affiliated with Sellfy, but may offer you further insight!

Articles on EU VAT

The Guardian article on New EU VAT regulations

European Commission website

EU-VAT GitHub repo with relevant links

Articles on UK VAT and Brexit

Brexit: new rules are here

VAT on Cross Border Services and Digital Sales after Brexit