The digital products sold from European Union (EU) merchants must be reported every quarter to each member country. Digital products are taxed based on the customer’s billing address. According to the law, merchants have to create a tax report and validate the relevant tax amounts for digital products, as opposed to physical products.
All digital products sold by EU member countries must be reported from merchants on a quarterly basis to a central tax administration, along with payment due for tax collected during the period.
Any merchants who have not reached the threshold yet (50000/100000 € of seasonal business) must continue to report physical products sold to the EU states where they have registered VAT numbers.
Any dealers who are examined for taxes paid for digital products must provide all required information to build up the customer place of residence.
- The customer place of residence can be established using the customer’s billing address and a record of a successful payment transaction.
- The Magento database tables can provide the information directly.
There are seven things you have to do to collect digital products tax information:
- Load the tax rates for all EU countries.
- Generate a digital products product tax class.
- Assign digital products to the digital products product tax class.
- Generate physical products tax rules, using physical product tax classes, and associate them with the appropriate tax rates.
- Run the tax report for the appropriate period, and collect the required digital products information.
- Export the tax sums that are related to the tax rates for the digital goods product tax class.
Above is an insight into EU place of Supply for Digital products on Magento 2. We hope that you can collect digital products tax information from your web store. If you have any question, feel free to leave a comment or contact us directly. In the next article of Magestandard, we will provide information on fixed product tax in Magento 2. Keep tracking our blog site to read more useful Magento 2 insight article.