Heidi from Germany is looking for a t-shirt in a French fashion shop.
The French eCommerce supplier cannot show her the shirt on the product page with French VAT (20%), it has to be displayed with German VAT (19%). An eCommerce provider has to display all items with the respective VAT of the country in all 28 EU member states, as stipulated by the EU Distance Selling Act.
For this, ClearVAT offers the solution DISPLAY. The currently valid VAT rates are dynamically delivered for all product groups and items over an interface.
Heidi enters her billing address, but wants to send it to her niece Danuta in Poland as a present. Now the VAT rate has to change dynamically from 19% German VAT to 23% Polish VAT in the checkout of the French retailer. And not only that, the French shop also has to pay the Polish VAT to the state of Poland, as stipulated by the mail order business regulation of the EU. There is an exception for the French online T-shirt shop, however. The Polish VAT only needs to be charged if a particular threshold is surpassed. In Poland this is 160.000 Polish Zloty (ca. 37.700 EUR) per year. Every one of the 28 EU member states has a different threshold, however, and currency fluctuations also have to be taken into account.
For this, ClearVAT offers the solution THRESHOLD CONTROL. The thresholds are monitored and the correct VAT is automatically calculated and displayed dynamically for every item over the interface.
Heidi has sent Danuta the T-shirt. The French shop has in the meantime become popular in Poland and ships for over 40.000 EUR per year. The threshold is thus surpassed and the French eCommerce provider is obliged to charge, collect, and pay Polish VAT to the Polish financial authorities. If businesses want to trade in the whole of Europe, they have to register with 28 financial authorities and for each submit a VAT return in 22 languages. This is prescribed by EU law.
For this, ClearVAT offers the solution COLLECT & CLEAR. The sum gets collected automatically from the customer and the correct amount of VAT is paid to the respective financial authorities.