In this article, you'll read how to manage the VAT settings in Plug&Pay. This includes setting your country of tax filing, VAT profiles per product, international sales and reverse-charging VAT.
Managing VAT settings
To adjust your VAT settings, navigate to Settings > VAT & Union Regulation.
VAT & Union Regulation
Here you'll find the general VAT settings for your shop.
In which country do you file your tax returns?: Specify the country in which you file your VAT return. This setting determines which VAT rates are available per product. When you change the filing country, the VAT rates per product need to be set up again.
Description in case of 0% VAT (Reverse charge): This is the text shown on the invoice when VAT is reverse-charged. The default text meets the legal requirements; only change it if you know exactly what you're doing.
International sales: Enable this option to automatically charge 0% VAT for sales outside the EU. Plug&Pay determines the customer's location based on the address entered for physical products, and the IP address for digital products.
ℹ️ If you sell a product including VAT for £100, the sales price outside the EU stays at £100, even if you charge 0% VAT.
VAT rules for e-commerce in the EU
If you sell products to consumers within the EU and generate more than €10,000 in revenue per year in other EU countries, you're required to charge VAT according to the rate of the buyer's country, via the OSS scheme. You set this up using the VAT rules for e-commerce in the EU feature.
Read more about setting up the OSS scheme in Plug&Pay in the article Setting up and adjusting the OSS regulation.
Setting up VAT per product
Per product, you set the VAT rate under the Pricing tab in the product settings. Here you also indicate whether the price is shown including or excluding VAT. For sales to consumers, prices are usually shown including VAT; for businesses, excluding.
Reverse-charging VAT
In Plug&Pay, VAT is automatically reverse-charged when a customer enters a valid VAT ID. Plug&Pay validates the VAT ID via VIES. If the ID is invalid there, VAT can't be reverse-charged.
You can allow customers to fill in their VAT ID on your checkout by navigating to Content > Fields within the page settings. Under Details, first enable the Company name option, after which you can enable the VAT ID option. Then choose whether this applies to All orders or Foreign orders and save your changes.
If the customer enters a valid VAT ID, VAT is reverse-charged automatically.
Reverse-charging VAT: Manual order
For a manual order, you can reverse-charge VAT using the Reverse VAT toggle, after entering a company name.
Reverse-charging VAT: Disabling
It's possible to disable automatic VAT reverse-charging on a specific checkout. You do this by navigating to Advanced within the checkout settings, where you disable the option Reverse VAT for business customers from another EU country and save your changes.
Frequently asked questions
Why is 0% VAT being charged on an order?
Why is 0% VAT being charged on an order?
This can have two causes. The customer has filled in both a company name and a valid VAT ID, so VAT has been reverse-charged automatically. Or you've indicated in the settings that you want to charge 0% VAT outside the EU and the order is from outside the EU.
Why isn't the VAT ID being accepted when reverse-charging VAT?
Why isn't the VAT ID being accepted when reverse-charging VAT?
Plug&Pay validates VAT IDs through VIES. If the ID is invalid there, Plug&Pay doesn't accept it either and VAT can't be reverse-charged.
Which VAT rate applies to shipping costs?
Which VAT rate applies to shipping costs?
Shipping costs follow the same VAT rate as the products purchased. If several products with different VAT rates are on one invoice, the highest rate applies to the shipping costs.
How does VAT work on invoices for affiliates?
How does VAT work on invoices for affiliates?
When you pay out an affiliate, Plug&Pay automatically creates an invoice. This isn't a sales invoice from you but a credit note, as if the affiliate is sending you an invoice. The VAT rate on this invoice may therefore differ from the rates you've set for your products.
The VAT rate depends on whether the affiliate is a business or a private individual. The affiliate indicates this themselves in their account. If the affiliate has entered a valid VAT ID, VAT is calculated. For private individuals, VAT remains at zero.
If the affiliate is a business in another EU country and you've entered a valid VAT ID in your Plug&Pay account, VAT is reverse-charged.