Setting Up EU VAT Rates for Digital Products

EU VAT laws for digital goods changed on 1 January 2015, affecting B2C transactions only. VAT on digital goods must be calculated based on customer location, and you’re required to collect evidence of this via an IP address and/or Billing Address.

In addition, you need to set up VAT rates in your WooCommerce store to charge the correct amount. This guide shows you how to set up rates specific to Digital Goods.

Setting Up Your Tax Classes

If you’re only selling digital goods, VAT rates can be added under Standard Rates in WooCommerce.

If you’re selling/distributing both digital and regular products, you can create and use a new tax class, for example Digital Goods, and update them.

To set up EU VAT rates in a new tax class:

  1. Go toWooCommerce > Settings > Tax.
  2. Select the Additional Tax Classes setting.
  3. Add a new tax class to the list, for example, Digital Goods.
  4. Save.

Once saved, you can begin assigning this tax class to Digital Goods, but first input the rates.

Setting Up the EU VAT Rates

The next step is to input the EU VAT Rates into WooCommerce.

Look Up the Latest VAT Rates

The latest VAT rates can be found at the Europa website: http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf If these rates change, you need to update the VAT rates for your store.

Input Rates

  1. Go toWooCommerce > Settings > Tax > Digital Goods (now a new tab after you created a new tax class).
  2. Enter rates for all EU member states. See our guide on Setting Up Tax Rates in WooCommerce.

At the time of writing, they were:

COUNTRY CODERATE %
GB20.0000
BE21.0000
BG20.0000
CZ21.0000
DK25.0000
DE19.0000
EE20.0000
EL23.0000
ES21.0000
FR20.0000
HR25.0000
IE23.0000
IT22.0000
CY19.0000
LV21.0000
LT21.0000
LU17.0000
HU27.0000
MT18.0000
NL21.0000
AT20.0000
PL23.0000
PT23.0000
RO24.0000
SI22.0000
SK20.0000
FI24.0000
SE25.0000

Alternatively, if you have a CSV file in the correct format, you can import the VAT rates to save time. Here are the above rates in CSV format with tax class Digital Goodstax_rates.csv

To import this file, click the ‘Import Rates’ button on the tax input page, and an importer will appear.

Tax Rates Importer
Tax Rates Importer

Once you’ve uploaded and imported or input your rates, you should see a table similar to this:

The EU VAT Rates
EU VAT Rates

With EU VAT rates set up, users buying a product with the Digital Goods tax class are charged tax based on their location, not the store location.

Assigning the Tax Class to Products

To apply this tax class to digital products in WooCommerce:

  1. Go toProducts > Products.
  2. Edit a product.
  3. Select Digital Goods from the Tax Class dropdown.
  4. Save.
Setting the product tax class
Setting the product tax class

You can also bulk-edit products:

  1. Go toProducts > Products.
  2. Tick the box to the left of each of the products you want to bulk-edit.
  3. Select Edit from the bulk actions dropdown.
  4. Click Apply.Bulk Actions
  5. Set the Tax Class in the dropdown box.
  6. Click Update.

Source: https://docs.woocommerce.com/document/setting-up-eu-vat-rates-for-digital-products/

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