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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 merchants now have global tax support, making sales tax simple for merchants, regardless of the customers location.

Taxes in the US

Sales tax nexus occurs when your business has any kind of connection to a state. All states have a slightly different definition of nexus, but 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 has made tax collection really easy at the checkout. Just set your checkout to automatically add tax logic by determining where your customer is and BAM!, a tax amount is assigned to the order! We think Chec’s automated tax support is going to save you a lot of time when it comes to taxes!

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 order.
If tax is not included in your price, Chec will add tax to the sale.

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If your prices include tax then your taxes will be calculated using this formula:

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


Locations

Add your business address to help us 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! We've made tax records that much easier for you and pricing that is more transparent for your customers.

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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:

  • Download 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 service

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

To learn more about MOSS read this.

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

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Chec automatically uses the buyer IP address to get their location, and then calculates the correct tax, as well as collecting as much evidence as we can for you.

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Resources for Chec Merchants