As many of you may be aware, EU VAT rules are changing effective Jan. 1st, 2015, such that "electronically supplied e-services" (such as digitally-delivered non-physical goods) will become subject to the VAT rate at the buyer's location, rather than the seller's location. In order to accommodate these changes for our sellers' convenience, our VAT calculation behavior and related Transaction Log details will be changing as follows:
Effective midnight UTC on Jan. 1, 2015, whenever we process an order for sellers who have enabled VAT in Seller Admin > Sales Tax & VAT Settings, we will calculate VAT due for their items which have Sales Tax/VAT enabled by treating the product's Price setting as a gross price that includes VAT. Since conclusive buyer location data only becomes available to us after checkout, we cannot add VAT on top of item prices in the cart before checkout, so accurate VAT calculation can only occur when we process the order after checkout; therefore, our VAT calculation must determine after checkout what portion of your items' gross Price settings constitute VAT. This has the side benefit of allowing you to display and advertise a single flat item price to all buyers regardless of their location and applicable VAT rate.
Products using using Single File Download, Redirection, Send Stored/Generated Codes, or "Package files from other products" (aka "Bundle other products" in our new Admin) which do not also have Shipping/Buyer's Address enabled will be treated as digital goods subject to the buyer's VAT rate, rather than the seller's, and reduced VAT rates applicable to digital goods or specific file types (e.g. ebooks) also will be determined automatically. Products which DO have Shipping/Buyer's Address enabled will be treated as physical goods that remain subject to the seller's VAT rate, so please DO NOT manually enable Shipping/Buyer's Address for non-physical items that use VAT calculation.
For orders subject to VAT, we will perform a GeoIP lookup on the buyer's connection IP and require them to specify their country/postcode in the cart. When we process the order after checkout, we will log the buyer's GeoIP country, their Billing address (or PayPal account's Residence country), and either their Shipping address (if provided for other items in the same order) or the country they declared in the cart, and we will attempt to find a 2-way country match between those items in order to determine the buyer's place of supply for VAT purposes. In the rare case where no two of those items match, we would still process the order without calculating VAT and also email a Suspected Tax/Shipping Fraud notification to the seller, to bring that to your attention and let you decide how to resolve the situation.
Affiliate commissions will be calculated on the item's net price (gross price minus calculated VAT); however, in cases where VAT could not be determined due to a location-match failure (as described above), we will calculate commission on the affected item price(s) minus a generic 25% reduction to account for probable VAT.
You will be able to use your E-junkie Transaction Log to document each buyer's place of supply and determine how much VAT you'd need to remit to relevant EU jurisdictions or to a single VAT MOSS such as the UK's, which would then redistribute any VAT due to other EU jurisdictions. Downloadable Transaction Log export files for sellers using VAT will add new VAT-related fields at the end of each line, which should preserve compatibility with any existing software tools you may be using to process these files.
To take advantage of this new VAT calculation, all you should need to do is make sure VAT is enabled in your E-junkie Seller Admin > Sales Tax/VAT Settings and also select your origin country therein, and enable Sales Tax/VAT in the settings of each product that should be subject to VAT. Since this will treat item prices as gross including VAT, you may also wish to raise your prices to incorporate a "VAT overhead" factor sufficient to cover your total expected VAT liability. If you'd like to stall for time to edit your item prices, you can temporarily disable your sales by setting Seller Admin > Account Preferences > "Make items unavailable for purchase until" some date in the future, then simply delete that setting to resume selling once you've updated your prices. If you wish, you can also email us to request that we should just boost your VAT-enabled items' prices across the board by some percentage: