I am looking to setup a small business selling digital products, that are downloadable and or online questionaires.
I want to sell internationally and am a European business.
I have a potential client who wants to sell my products in Africa.
The product in question is a pay per view web site.
What are the legal / vat costs of doing this?
The exact answer will depend on your country and it's export rules, however based on UK VAT rules:
If selling to Business/Individual in the same country you should apply your country VAT rate if the product is VATable. Ebooks for example are.
If selling to Business in the VAT zone but not in your country, you should apply VAT on VATable products unless they can provide a verifiable VAT number, in which case you do not apply VAT.
If selling outside of the VAT zone you do not charge VAT on the product.
The person purchasing is responsible for any local custom tax that may occur, on digital products this doesn't normally happen but is something to bare in mind.
You will need to make sure that you clearly record where you have charged VAT, where the customer was exempt due to having a VAT number (and record the number) and how many non VATZone sales you have had. You will also need to make sure you send a VAT receipt for the customers records.
The VAT system in most countries are such that companies that export get deductions for all their VAT expenses (so if you buy a printer, you'll get back your VAT expenses), while VAT on exported goods is 0%.
This makes a lot of sense, because the idea of VAT is that it should be neutral to the company, and it shouldn't hurt exporting companies.
So if you needed to pay VAT on products that are exported, you'd be in a worse position than a company that was situated outside the EU, which is undesirable to EU.
If you did not get VAT back on your "printer" purchase, you would be in a worse position than a company that was situated outside of the EU which is also undesirable.
So as an export-based company, you have little to fear from VAT, except paperwork.