In Plug&Pay, you can determine the VAT settings for your shop under Settings > VAT & Union Regulation:
In which country do you file your tax return?
In this overview, you can indicate in which country you file your tax returns. The country determines which VAT rates can be selected per product.
Did you change the country in which you file your tax returns? You must select new VAT rates for all your products.
International sales
It is possible to charge 0% VAT by default for orders outside the EU. You can enable this option on the 'VAT & Union Scheme' page.
Whether a customer is located outside the EU is determined for physical products based on the address, and for digital products based on the IP address.
For digital products, the IP address is used to determine location in order to prevent fraud. If we were to use the address, it would be possible to enter a different country with a lower VAT rate to reduce the price. To prevent this, we use the IP address.
For physical products, the product is often shipped. This means it would rarely make sense to enter a different country to get a lower VAT rate and pay less, as it would interfere with the shipping. The risk of fraud is therefore lower, which is why we use the entered address here.
Are you selling a digital product? Keep in mind that you cannot easily test the 0% outside Europe option if you are located in Europe. The location is determined based on your IP address, and you are in Europe.
ℹ️ A product that is set to display its price including VAT will apply the same selling price in countries outside the EU.
A product that costs €100 including VAT in the Netherlands will also cost €100 outside the EU, even if you charge 0% VAT.
Setting VAT rate per product
You set the VAT rate per product. Edit the product and go to the Prices tab. Here you can choose the VAT percentage for this product. You can also indicate whether the price entered in the checkout is in- or excluded of VAT.
Are you selling your product to consumers? In this case, the price is often shown including VAT.
Are you selling a product to companies? In this case, the price is often shown excluding VAT.
VAT rules for e-commerce in the EU
Do you sell products within the EU and do your customers not file a VAT return? If you have a turnover of more than €10.000 in a calendar year, you must charge VAT according to the rates of the customer's country.
For example, if your shop is located in the Netherlands and a British customer makes a purchase, a British VAT percentage will be charged.
If you enable this, the customer's location will be used to determine the VAT rate. This means that you do not set a fixed rate per product.
Would you like more information about rules for e-commerce in the EU? Read this article for more information.
VAT reverse charge
In Plug&Pay, VAT is automatically reverse charged if a valid VAT ID is entered. On checkouts, it is possible to enter a company name. If a company name is entered, a box for a VAT ID appears below it. If the VAT ID is valid, the VAT is automatically reverse charged.
While creating a manual order, if a company name is entered, a box for a VAT ID appears, with a slider to reverse charge VAT.
Plug&Pay determines whether a VAT ID is valid based on the VIES. If the VAT ID is not valid according to this database, it is not valid according to Plug&Pay either and you cannot reverse charge VAT.
Disable reverse charging VAT
Do you want to disable the automatic reverse charging of VAT in your checkout? For each checkout you can go to Advanced, and disable the option to reverse charge VAT:
Frequently asked questions
Why is 0% VAT charged on an order?
Why is 0% VAT charged on an order?
Your shop is located in the EU, and a customer from another EU country has entered both a company name and a valid VAT ID.
This means that the VAT is reverse charged.You indicated that you charge 0% VAT outside the EU, and the order was placed outside the EU.
You have indicated in the settings on the ‘VAT & Union Scheme’ page that you want to charge 0% VAT outside the EU, and it is an order from outside the EU.
I want to reverse charge VAT, but the VAT ID is not accepted?
I want to reverse charge VAT, but the VAT ID is not accepted?
Plug&Pay determines whether a VAT ID is valid based on the VIES. If the VAT ID is not valid according to this database, it is not valid according to Plug&Pay either and you cannot reverse charge VAT.
What VAT rates are applied to shipping costs?
What VAT rates are applied to shipping costs?
Shipping costs have the same VAT rate as the purchased product. If there are several products on one invoice, with different VAT rates, the highest VAT rate is used.
How do VAT rates work for affiliate payment runs?
How do VAT rates work for affiliate payment runs?
If you create a payment to an affiliate, an invoice is automatically generated.
As a matter of fact, you should see this if the affiliate sends this invoice to you: you are the affiliate's customer. It would get chaotic if every affiliate creates invoices for your manually. That is why the invoices are created by Plug&Pay.
Most important to realise: it is not a sales invoice from you, but a credit invoice.
This means that the VAT rates are not always the same as the ones set for your products. The VAT rates for affiliates depends on whether the affiliate is an entrepreneur or a private individual. Affiliates indicate this in their account.
If a valid VAT ID is entered by the affiliate, VAT is reverse charged.
No VAT rates are charged for private individuals.
It is possible that the VAT rates on this credit invoice are reverse charged. This happens when you entered a valid VAT ID at Settings > General data, and the affiliate is an entrepreneur in another EU country. The affiliate can thus be seen as a company within the EU. Because you also entered a valid VAT ID, you VAT is reverse charged.