Collecting EU VAT in Europe

What WordPress Plugin and Theme Sellers Need to Know

European Union Value Added Tax regulations stipulate that if your business sells digital goods to European consumers, you have to charge them local VAT based on their locations.

So, Who Needs to Charge VAT From Whom?

If your WordPress business is based INSIDE the EU:

If your WordPress business is based OUTSIDE the EU:

Reporting and Paying the Collected EU VAT

After you’re done managing and collecting the correct amounts of VAT rates from each of your WordPress product sales to consumers in Europe, you still need to submit quarterly reports to the tax authorities. To that end, anyone who is not a resident of a European country, but is selling a product to a consumer in a European country, must register a VAT Mini One Stop Shop (MOSS) to be able to submit their quarterly reports from all over Europe, in one place.

Why Were the EU VAT Regulations Introduced?

Historically, businesses used to charge VAT on the sales they had made based on the accustomed rate in the seller’s country. This enabled certain larger entities to save tax money by locating their businesses in countries with relatively low VAT rates. By doing so, they paid less taxes and were able to route that extra money directly to their pockets.

The aim of the EU VAT regulations — which bases the VAT rate on the consumer’s location — is to level the playing field. Unfortunately, these new regulations end up affecting micro-businesses in a less than desirable manner, forcing them to manage all of the different VAT rates of their European customers. Quite the headache.

Seamless EU VAT Collection for Your Business With Freemius

Freemius automatically collects and reports the required VAT from your sales to EU customers, freeing up time for you to carry on developing WordPress plugins or themes.

Geo Detection

In the checkout screen, we detect the consumer’s location using their IP address (geolocation).

EU VAT Calculator
Consumers who are located in any of the EU countries will get VAT automatically added to their order amount, according to their country of origin.
Exemption for Businesses
Consumers can declare their business VAT ID, which we then take into account for a possible VAT exemption.
Recordings for Reporting

All the necessary information — location, VAT amount, business VAT ID — is recorded by Freemius.

EU VAT Reporting and Payment

As the authorized reseller of your WordPress plugins or themes, Freemius acts as the merchant of record for the sale of your products. We handle the collection of all applicable taxes from your customers, ensuring a seamless transaction process. Subsequently, we meticulously report and remit the required taxes to the relevant European taxation authorities on your behalf. This includes both the European Economic Area (EEA) and the United Kingdom (UK).

See what our partners have to say about our EU VAT collection capabilities: