How would I prove it's a non-EU customers?
I'm starting a company like many of you here, selling software. I'm located in Europe and one thing that really troubled me and prevents me from going forward is one question:
How do I prove the location of a customer? As you may know, I do not have to charge EU VAT if the customer is located outside the EU - is his address enough, even if its faked? I am aware that you cannot give me legal advice, I'm looking for opinions how some of you have handled this issue.
Here's how it works right now:
- Customer comes to site
- Customer enter his details like address and selects a country and
enters a tax ID - Based on the information I now ask for tax or I don't
Problem is that the information can be easily FAKED and customers can then avoid paying taxes by selecting a non-EU country
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I found this very useful http://www.brightjourney.com/q/vat-customers-outside-eu - I will most likely use Plimus, but it's still an issue I think is not addressed enough and deserves a lot more attention from the financial ministers – Mashup 11 years ago
1 Answer
I don't know if this is useful, but in Australia we have GST which is very similar.
We just ask customers for their address and country, and don't do further verification. We charged the Australian ones GST and not the others.
In Australia, businesses can claim back any GST they spend, so for a business, it doesn't really matter to pay GST, they just get it back anyway. If VAT is similar, and your customers are businesses, there is probably no reason for them to lie.
I am not a lawyer, I am not in the EU and I don't know how VAT works. So take my answer with that context.
