I've been reading up on VAT as it looks like this year we may need to register.
We are in the UK, and sell digital goods on our website (one piece of software).
As I understand it, if someone buys our software outside the EU we don't need to charge VAT.
We use Paypal for all transactions. Paypal transactions are sort of annonymous in the way that we can't accurately define the country of origin of the payment. If we have a box saying choose your country, is this sufficient? I'm guessing not, how do other businesses deal with this?
Also, am I allowed to sell the software at different prices? For example, a US resident would be buying the software at $50, wheras the UK citizen would be buying it at say $40 + $10 VAT. Is this discriminatory in any way?
We ask for a billing address so we can determine whether to apply VAT. After all, there is no way to know where the customer is from other than asking. If the info the customer gives you is wrong, you might end up in trouble if you failed to apply VAT when required, but there is really no way to be 100% sure.
If you become VAT registered in the UK (or anywhere else in the EU for that matter) then you have to :-
Also, am I allowed to sell the software at different prices? ForNo - you can do what you want re: regional pricing. It can annoy though - how many times have you been annoyed that a company will charge $99 and £99? even though the exchange rate is not 1:1?
example, a US resident would be buying the software at $50, wheras the
UK citizen would be buying it at say $40 + $10 VAT. Is this
discriminatory in any way?