I have CD product which is Â£10.21 + VAT or Â£12 inclusive of VAT. I have VAT set to calculate via customer billing address. This works fine with UK customers.
Any customer outside the EU (who don’t pay VAT) end up paying Â£10.21. We would normally still charge Â£12 and get the extra Â£1.79
Or do we just have to loose the extra Â£1.79 on international orders?
Yes, that’s almost exactly how it’s supposed to work. VAT-wise anyway.
If you want to achieve what you say, charge Â£12 anyway (and therefor make more money than on UK orders) you can make different Store Views and have different prices. But I doubt you can easily make it happen out of the same UK prices, therefor needing a different Store View.
However, you base your VAT on the billing address, which in my understanding is wrong. All the VAT info I have read, is only concerned with the movement of goods, not with the flow of money.
If you supply goods to another EU country these sales are now technically known as despatches or removals rather than exports. The term ‘exports’ is reserved to describe sales to a country outside the EU.
VAT on exports of goods to non-EU countries
VAT is a tax charged on goods used in the EU, so if goods are exported outside the EU, VAT isn’t charged.You can zero-rate the sale provided you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence, within three months from the time of sale.
This line clinches it in that sense:
You mustn’t zero-rate sales if your customer asks for them to be delivered to a UK address.
So, as far as I understand it:
Billing in the UK, Shipping in the EU (non-VAT registered recipient) = you charge VAT
Billing in the UK, Shipping in the EU (VAT Registered recipient) = you don’t charge VAT
Billing in the EU, Shipping in the EU (non-VAT registered recipient) = you charge VAT
Billing in the EU, Shipping in the EU (VAT Registered recipient) = you don’t charge VAT
Billing in the EU, Shipping outside the EU = you don’t charge VAT
Billing outside the EU, Shipping in the EU - you charge VAT
Channel Islands aren’t a EU Member State.
So basically, the important part is whether the goods you ship are being “removed” from the EU. If yes, no VAT. If they travel between EU member states, there is VAT (unless recipient is VAT regged).
It’s not to do with the billing, but with the shipping.