Posts

Brexit – Changes to our sale policy from the 1st of January, 2021

Update – October 2021

Our products are now distributed via the Freemius platform, which can handle the sale of our products to UK customers who are not registered for VAT. If you are resident in the UK, you can browse our products and purchase them, without having to enter a VAT number.

Brexit – What’s new

After a long period of changes, negotiations and changes, the “infamous” Brexit will reach a major milestone. From the 1st of January 2021, the United Kingdom and connected countries and regions, such as the Isle of Man and Northern Ireland, will no longer be part of the EU. During the transition period, we kept in contact with several authorities, to ensure that we can remain compliant with the regulations that apply to the sale of our product and services to UK residents. Unfortunately, it was only in the last few weeks that we were given some clearer instructions on how we will have to proceed. Due to the new rules, we will have to make some changes to our sale policies. For convenience and brevity, we prepared a summary, which you can find below.

Changes from the 1st of January, 2021

From a customer’s, things will remain mostly the same, with a notable exception. The UK Revenue Office informed us that, since we deal exclusively in services, we will have to account for VAT on all our sales, regardless of the amount. Like it happens with intra-EU sales, we will have to make a distinction between sales to consumers and sales to businesses:

  • Sales made to UK businesses, i.e. customers with a valid UK VAT number won’t have VAT applied to them. The buyer will account for VAT like they did, with the reverse charge mechanism.
  • Sales made to UK consumers, i.e. customers without a valid UK VAT number, will be subject to the applicable VAT, like it happens now. Note: UK businesses who are not registered for VAT will be treated as consumers, in this scenario.

What described above is exactly what happened in the past, for intra-EU sales. An important difference is that, to charge VAT to UK consumers, we will need a UK VAT number. We already applied to get such number from the UK Revenue Office, but we haven’t received one yet.

How the changes might affect our customers

Unfortunately, without the UK VAT number, we can’t charge VAT to UK consumers. Still, the UK Revenue would ask us to pay them the applicable VAT, which we can’t collect. They suggested us to just increase prices, to “cover” for the VAT, but that is not feasible, as it could affect all other clients as well.

Due to this “wrinkle”, we had to take a difficult decision. Starting from the 1st of January 2021, we will no longer be able to sell our products to UK consumers. If you try to place an order with a UK billing address, you will be required to enter a valid VAT number to complete the purchase.

This restriction will be in place until we will receive the necessary documentation from the UK Revenue Office, which will allow us to resume charging VAT to UK consumers. As of today, we don’t know how long that is going to take. The officer informed us that this registration process can take several weeks, and there isn’t much we can do to speed up the process.

Update – May 2021

Due to the additional administrative work required to have a UK VAT number and file the necessary returns, we opted not to register for VAT in the UK. Instead, we will move our products to an external platform, which will handle the VAT aspects on our behalf. We are aiming to have the migration completed by Q2 2021. After that, UK customers who are not registered for VAT will be able to buy our products.

 

We are aware that this is an unpleasant change, unfortunately we couldn’t find another viable alternative. The whole Brexit process has been chaotic and poorly managed for everyone involved. We will do our best to resume normal operations as soon as we can. In the meantime, if you have any question, please feel free to contact us. We will be happy to answer your queries.

 

The Aelia Team

EU VAT Compliance plugin for WooCommerce is now available

EU VAT Compliance, designed for the new MOSS VAT regime

Our new EU VAT Compliance for WooCommerce was conceived to help WooCommerce shop owners to help achieving compliance with the new European VAT regulations. The new regime, which is going to become effective on the 1st of January 2015, states that digital goods sold to consumers in the European Union are liable to EU VAT. The VAT rate to apply to each sale is the one charged in the country of consumption, i.e. where the customer  resides. These new rules apply to worldwide sellers who are delivering digital products or services to consumers in the European Union. For more information: EU: 2015 Place of Supply Changes – Mini One-Stop-Shop.

How our product can help you

The EU VAT Compliance plugin can collect information about the VAT applied to each order, and it allows you to use this information to prepare the required VAT returns. Here is a summary of the most important features provided by our product.

Calculation of VAT totals for each order

The EU VAT Compliance plugin automatically calculates VAT totals when an order is generated. The totals are grouped by VAT rates, to cover the case in which a single order contains products taxed at different rates.

Collection of VAT evidence

One of the most controversial aspects of the new VAT regime is that it requires the merchant to prove that the correct VAT rate was applied for each order. To do so, the merchant must collect evidence to support the choice of VAT, which must be stored together with the invoice, and stored for up to 10 years. Our plugin automatically collects all the available evidence from an order and stores it within the order itself, making it easy to retrieve them on demand.

Collects and validates EU VAT numbers

The EU VAT Compliance plugin allows to display a new field at checkout, where Business customers can enter their own European VAT number. Our plugin validates EU VAT numbers, applying VAT exemption when appropriate, and stores it with the order. Validation of European VAT numbers is performed via the official VIES service, provided by the European Commission. This feature is equivalent to the one provided by the EU VAT Number plugin, which would no longer be required.

Supports a dedicated VAT currency

You may be running your shop in US Dollars, but your Revenue Office expects reports in Euro. Our plugin can help with this too! When it collects the VAT data, the EU VAT Compliance plugin automatically converts the amounts in the currency you specify as “VAT Currency”. This information can then be used to produce the VAT returns.

Fully compatible with all our other products

This new plugin is fully compatible, out of the box, with our other products, such WooCommerce Currency Switcher, Prices by Country, Tax Display by Country and Prices by Role (coming soon).

Interested?

Please go to the product page to learn more details about the EU VAT Compliance plugin. You will find a list of requirements, existing features and planned features. If you would like to try the plugin, simply download it and install it on your site. It’s completely free!

Enjoy!

The Aelia Team