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Andrew Underwood

Global Tax Support, including EU VAT MOSS.

Andrew Underwood on

We’ve made managing and recording taxes for Chec merchants automated and simple. Chec's global tax support makes recording sales tax painless for merchants, regardless of where your customers make a purchase from.

This is a quick rundown on what you need to know about recording taxes.

Nexsus tax in the US

Sales tax nexus occurs when your business has any kind of connection to an American state. The tricky part is that every state has a slightly different definition of what nexus is. Most of the time, states consider that a “physical presence” qualifies as nexus.

Physical presence can mean a number of things, including:

  • Having an office
  • Having an employee
  • Having a warehouse or factory
  • Having an affiliate
  • Storing inventory
  • Drop shipping from a 3rd party provider
  • Temporarily doing physical business in a state for a limited period of time, such as at an art fair or trade show

If you have sales tax nexus in a state, then you must collect sales tax from buyers in that state. Luckily, Chec makes tax collection really easy at the checkout. Just set your checkout to automatically add tax logic by determining where your customer is and, hey presto, the taxable amount is added to the order!
We think Chec’s automated tax support is going to save you a lot of time when it comes to tax season!

How to enable Chec’s tax support

To activate Chec’s automatic sales tax calculator, go to the Setup navigation tab and select Tax.
Enable Tax if you want Chec to manage how your tax is calculated for every order you make.

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If your prices include tax, Chec will separate tax from the total sale amount.
If tax is not included in your price, Chec will add tax to the sale amount.

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If your prices include tax, your taxes will be calculated using the following formula:

TAX = (TAX RATE * PRICE) / (1 + TAX RATE) 
(e.g. £20.00 at 20% VAT will be £3.33)


Location based tax

Add your business address to help Chec accurately calculate tax. This address is usually the address displayed on your invoices.

Next, add the countries you make or plan to make sales in. We’ve made it easy to set taxes on both physical and digital goods separately.

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Tax in the United States

Add your nexus states zip codes where you conduct business or have a presence in i.e a warehouse or distributor.

Chec will automatically calculate sales tax including county, municipal and other taxes.

And you’re done!

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EU VAT MOSS

Understanding VAT MOSS

As of January 1st 2015, all digital goods sold to EU consumers are now taxed (VAT), based on the location of the customer, not your business location.

VAT applies to the following digital goods:

  • Downloadable and online games
  • E-books (e.g. Amazon Kindle)
  • Download and streaming music and videos
  • Cloud computing, including software provided as a service (‘SaaS’)
  • Subscriptions to online journals, newspapers etc
  • Membership fees to online associations, fan clubs or dating services

You can read more about European VAT here.

The VAT tax applies to any merchant who makes a sale of any amount to a customer in the EU. Meaning if you are a US based merchant and you sell an ebook to a customer in Spain for $2.00, you are required to pay tax on that sale.

European VAT Requirements For All Digital Sellers

For all digital sellers, EU VAT comes with a checklist of requirements.
Merchants must:

  • Identify the location of your customers
  • Calculate the correct VAT rates based on the location of your customer
  • Submit a quarterly EU VAT return to each EU state or use MOSS (Mini-One-Stop-Shop), which reports to each EU state on your behalf
  • Store evidence for 10 years

You can learn more about VAT MOSS read here.

You can enable EU VAT MOSS by clicking on the toggle in the dashboard.

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At the checkout, Chec identifies the IP address of the customer to determine their location as well as calculating the correct tax amount. When the order is complete you can view the relevant data by clicking View Evidence.

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Tax Resources for Chec Merchants

Here are a few insightful articles from people who love and understand tax.

Happy selling!
The Chec team