What is by-product pricing?

Vat-inclusive pricing is it required on my US website?

• I have an ecommerce web site that sells software distributed via electronic download. I have 4 international sites that are localized in these languages: German, French, Spanish, Japanese. Those sites properly show pricing inclusive of the VAT tax. I also have an English language version of the site that currently DOES NOT show pricing inclusive of VAT. MY QUESTION: For my English language site, I get visitors from all over the world. Are we required by law to show pricing on our product pages that includes the VAT amount? This is tough to manage beacause the VAT rates are different for each country. We would need to detect the locale of the site visitor based on their brower setting and then dynamicaly present pricing inclusive of VAT for that particular market. Am I required to do this? Or, since this is my English language site, am I expempt?

• Answer:

  Hi marketing_manager, As a supplier of "electronically supplied services", VAT rates are a little bit simpler than what you have described. I've copy and pasted some relevant sections below, but please click on the link for full details. Orders from... * EU countries: you only need to charge your local VAT rate * Non-EU country: you don't need to account for these. > If you are a UK supplier of these services [electronically supplied], you will no longer be required to account for VAT on supplies to: * businesses in other Member States or * non-EU customers (except, in certain circumstances, where they are used and enjoyed in the UK). > When does the place of supply remain where the supplier belongs? The place of supply remains in the country where the supplier belongs when: * the customer belongs in the same Member State as the supplier or * the customer belongs in a different Member State to his supplier and receives the supply other than for business purposes (eg a private individual or non-business organisation). > Supplies to a private consumer or non business organisation (charity, government body etc) in another EC country: You, as supplier, account for UK VAT at the standard rate Example: A UK business supplies customised software to a charity in France. This is subject to UK VAT at the standard rate." http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageOnlineServices_ShowContent&id=HMCE_CL_001173&propertyType=document "The rules applicable to EU businesses supplying the same types of services to final consumers in the EU remain the same. By these rules, EU businesses charge VAT at the place where the operator is established when making sales to final consumers. In other words, rather than having to keep track of the various rates in the Member States in which their customers are located, they only need to keep track of the rate of the Member State in which they are headquartered. For example, if they are established in Great Britain and they make sales to France, Germany and Sweden, all they would need to worry about is the British VAT rate of 17.5%." http://www.accountancy-uk.co.uk/features.taf?_function=display&_section=Accountancy560 "If you are selling services (and note that electronic products such as downloaded documents, music, software, etc are all defined as services in the VAT directive) on a business to consumer basis, then you always charge VAT at your own local rate, regardless of level of sales or thresholds." http://europa.eu.int/ISPO/ecommerce/drecommerce/answers/000090.html "As a result, U.S. and other non-EU firms are now required to register with EU authorities and to levy, collect and remit the VAT tax applicable in the customer?s place of residence, while their EU competitors can register in just one jurisdiction and charge that country?s VAT rate on all transactions regardless of the location of their customers within the EU-15." http://www.uscib.org/index.asp?documentID=3217 Additional Links: Electronically supplied services: A guide to interpretation http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageOnlineServices_ShowContent&id=HMCE_CL_000907&propertyType=document Flowchart 1 Electronically supplied services - where the supplier is a UK business http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageOnlineServices_ShowContent&id=HMCE_CL_001727&propertyType=document Flowchart 2 Electronically supplied services ? where the supplier is within the EU http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageOnlineServices_ShowContent&id=HMCE_CL_001730&propertyType=document I hope I've helped you to sort this out but please note that this is for information only, please consult an accountant for professional advise on your specific situation. If you have any questions, please post a clarification request *before* closing/rating my answer and I'll be happy to reply. Thank you, hummer Google Search Terms Used: vat rate eu services internet vat rate services ecommerce ecommerce services rate eu countries ecommerce vat what to charge eu countries ecommerce vat what to charge non-eu ecommerce software vat eu non-eu vat ecommerce vat uk website u.s. customers I also search the HM Revenue & Customs website.