Way to get out of charging VAT?

[ErikH2000]

I'm not sure if this is new or not, but I never saw it until today. Possibly, I just overlooked it. On my Plimus contract setup page:

"ELECTRONIC DELIVERY - Check this flag if this contract represents a product that is ONLY electronically delivered, this will dictate whether VAT is collected when selling to European customers or not, based on the new tax regulations, products which are ONLY electronically delivered will be subject to VAT."

Since I sell a CD version of my game, it seems I can get out of charging VAT on the CD version at least, but can I also do that for the download-only version ("contract", by Plimus terminology) offered from the same store? I don't understand VAT very well, but if offering a CD version of your game allowed you to skip charging VAT, then that's a big deal, right? It would mean that most of us should be selling some token CD at least to get more sales from European customers attracted by a VAT-less price.

Obviously this would be a good question to put to Plimus, but I thought maybe I'd get a little context from people here before trying that. Plimus support responses have always been responsible and relevant for me, but also amazingly terse.

-Erik

[mahlzeit]

If you ship a physical product to an EU country, the buyer is responsible for importing it through customs, who will add the VAT and import duties. Since customs is not involved for selling a non-physical product, the seller is responsible for collecting the VAT. So for all the CDs you ship, you don't collect VAT. For all the downloads you sell, you do collect VAT. (Or you don't and risk trouble with the EU.)

[ErikH2000]

If you ship a physical product to an EU country, the buyer is responsible for importing it through customs, who will add the VAT and import duties.
Interesting. Would you say that in practice, however, people in Europe would tend to not pay VAT for products arriving by mail order? Wouldn't my CD just arrive on their doorstep, and then it would be up to the buyer to take initiative for paying VAT after this?

-Erik

[mahlzeit]

If stuff slips by customs unnoticed, as smaller packages often do, most buyers won't be bothered to pay VAT and import duty on their own. Larger shipments usually do get noticed, and customs charges the delivery service (say, UPS or DHL) the VAT and import duties, which are then passed on to the customer upon delivery. That's what happened to me several times ordering semi-large quantities of books and CD's from the states. (Of course, if you are importing big things -- like cars -- you do have to notify customs you're doing this.)

[luggage]

I can't remember the exact amount but I'm pretty sure you don't pay anything on items under £13.

[ErikH2000]

I send CDs through US postal service to customers in the EU. I fill out a customs form and attach it to the package. This customs form is what is used to determine the value of the shipment for VAT purposes, right? Otherwise, I don't understand how the VAT tax would get calculated.

And then somewhere on the delivery side, the customer has to pay VAT. Like maybe the postal employee asks for it at their doorstep or leaves a note asking the recipient to come by the post office, pay the VAT, and receive their package. Does that sound right?

-Erik

[mahlzeit]

That sounds about right, Erik. FYI: For importing software on CD or floppy from non-EU countries into the Netherlands, no import duties are levied and standard 19% VAT is paid by the customer, but only if the price of the shipment (not counting shipping costs) is 22 euro or more. (I also remember buying some CDs once that were declared as "gift" on the customs form and I did not have to pay VAT on it. But that's probably not kosher.)

[ErikH2000]

Thanks for the help. I learned quite a bit from this conversation. :)

-Erik