E-commerce businesses selling to EU customers must navigate complex VAT rules. This guide covers the practical aspects of charging, collecting, and reporting VAT.
Determining the Correct VAT Rate
The VAT rate depends on: the customer's location (country), the type of product (standard vs reduced rate goods), and whether it's B2B or B2C. For physical goods, rates are based on shipping destination. For digital products, rates are based on customer location. Always use current rates from a reliable source like our API.
Displaying VAT on Your Store
B2C prices should typically include VAT (tax-inclusive pricing) in EU countries. Display prices as "incl. VAT" or show the VAT amount separately. B2B stores may show prices excluding VAT with "ex. VAT" notation. Always show the VAT amount on invoices and receipts.
Invoice Requirements
VAT invoices must include: your VAT number, customer details (and their VAT number for B2B), invoice date and number, description of goods/services, net amount, VAT rate and amount, and gross total. For B2B reverse charge, note "Reverse charge—customer to account for VAT."
Checkout Implementation
During checkout: detect customer location from shipping/billing address, look up applicable VAT rate using our API, calculate and display VAT amount, validate VAT ID for B2B customers (apply 0% if valid and reverse charge applies), and store all VAT details for invoicing and reporting.