First off, let me say this:
- I’m not a lawyer.
- I live in the US.
- I’m not some VAT expert.
- I’m not an accountant.
That aside… what I am is a web developer, and I have found some practical solutions to help you navigate the VAT laws. I know a lot of you are planning your products for next year, and I thought this may help you not only with compliance but with your planning.
1. Is this even an issue for you?
I sell services, which are pretty much exempt from this VAT thing. My digital products (the workshops) will be taken off the shelf by the end of this year and repurposed for something else anyway, so I don’t have to worry about that. But does it effect you? Check out this link to find out. If you fall under the definition of digital services, you’ll want to read the rest of it to see what you need to do.
2. Can you get compliant?
There are solutions out there for selling to VAT countries, such as:
- Using the new extention to WooCommerce (if you are using the latest version)
- Using an add-on for payment processors
- Using someone else to sell your stuff (but you’ll have to check how Amazon, Etsy, Sendowl etc are handling it — they haven’t posted a lot about it yet)
You’ll have to look at your own setup to see what it would take to get your system compliant (and if it’s even possible, or if you will have to swap systems).
3. Is compliance even worth it to you?
This is a much trickier question. Sure there are solutions and answers out there for you, but in the end you will have to decide if selling to a country with these VAT laws is even worth it to you. For example, if you only make one sale a year to an affected country, would it be worth it to swap over? Probably not. If the bulk of your sales comes from there, is it worth it? Probably so!
The alternative would be adding a "human interaction" to your product to work around the laws. For example, can you add a consultation or strategy session to your digital product? Or perhaps a free call or a discussion group? These sorts of additions to your digital product can make it so that your product will avoid the limitations of the VAT laws.
Only you can make the cost/benefit analysis to decide if switching your system to be VAT-compliant is cost effective, or if it is a better business decision to just shut off sales to those countries.