According to the law you're supposed to tax EU customers if your business is in the EU. Obviously the tax is different for each country and changes from year to year: https://en.wikipedia.org/wiki/Tax_rates_of_Europe . Businesses with a VAT ID can be exempted from the tax but only if they provide a valid VAT ID. At the end of the year your business then provides the list of transactions and VAT IDs to your state with the tax form and the state takes care of forwarding the taxes to the other countries.
According to the law you're supposed to check the validity of that VAT ID and because the data changes over time they provide an "API": http://ec.europa.eu/taxation_customs/vies/faqvies.do
That API forwards the query to country-specific databases and these databases go down. From their FAQ: "Some parts of the system may be unavailable at certain times due to the necessity to back-up the Member States' databases." Year right.. From my 1 month experience I've already seen two outages, one of them lasting a full day. And I'm not actively monitoring the service.
I've also had customers from Spain and Germany ask for their VAT ID to appear on their billing recipes, because of regulations again. It shouldn't be a biggie but Chargify doesn't support that field so I have to ask customers to use their Billing Address 2 field instead as a hack.
These are still things that I haven't figured out yet:
What happens if you provide invalid VAT IDs in your tax form ? I don't want to loose conversion because a state-owned service on which I have no control doesn't work properly.
I've read in multiple places that if the customer is in your business' country the rules are again different but I have no idea how.
As far as I understand it, you can check and are expected to observe and note anything odd about transactions with supplied VAT numbers but AFAIK - and I'm not a lawyer! - there's no law that you must check every one. (Note: This may be a UK specific interpretation.)
However, if they turn out to be false and the tax man comes back to you, you could be liable for the VAT. Depending on your sales profile, you might consider this an acceptable risk - I certainly do (I get perhaps 10 transactions like that each year).
We operate from Belgium. We only have to charge the Belgian tax rate (21%) for other Belgian companies or consumers living in the EU, in all other cases VAT rate is 0% (have to put a disclosure on the invoice referencing Belgian law though). Then again we don't sell any physical goods (luckily).
We don't automatically check validity of VAT number, so maybe I'll be able to answer that question in a couple of months.
When you use a full-service e-commerce service that serves as a reseller and is the merchant of record, taxes become their responsibility, not yours. At FastSpring, we handle VAT and have dealt with all the different issues that come with it: real-time VAT ID validation, exemption for B2B customers, being able to display prices using VAT net pricing mode or VAT gross pricing mode, and so on...
According to the law you're supposed to tax EU customers if your business is in the EU. Obviously the tax is different for each country and changes from year to year: https://en.wikipedia.org/wiki/Tax_rates_of_Europe . Businesses with a VAT ID can be exempted from the tax but only if they provide a valid VAT ID. At the end of the year your business then provides the list of transactions and VAT IDs to your state with the tax form and the state takes care of forwarding the taxes to the other countries.
According to the law you're supposed to check the validity of that VAT ID and because the data changes over time they provide an "API": http://ec.europa.eu/taxation_customs/vies/faqvies.do That API forwards the query to country-specific databases and these databases go down. From their FAQ: "Some parts of the system may be unavailable at certain times due to the necessity to back-up the Member States' databases." Year right.. From my 1 month experience I've already seen two outages, one of them lasting a full day. And I'm not actively monitoring the service.
I've also had customers from Spain and Germany ask for their VAT ID to appear on their billing recipes, because of regulations again. It shouldn't be a biggie but Chargify doesn't support that field so I have to ask customers to use their Billing Address 2 field instead as a hack.
These are still things that I haven't figured out yet:
What happens if you provide invalid VAT IDs in your tax form ? I don't want to loose conversion because a state-owned service on which I have no control doesn't work properly.
I've read in multiple places that if the customer is in your business' country the rules are again different but I have no idea how.