EU (Tax) Compliance
complete
Alex Crafter
As discussed on discord...
This is what the invoice needs to include:
In all cases
- Our Vat ID
For Affiliates in Germany
- Their VAT ID if they have one
- 19% VAT must be included in one of the two ways:
- The original payout amount stays the same and the invoice just shows that his "earning" is 81% of it and 19% are VAT
- The original payout amount + 19% VAT is paid out and again its shown on the invoice
So basically as long as VAT is handled on the invoice everything is fine, we don't really care which option you choose
For Affiliates in the EU
- Amount stays the same, but little notice saying "This invoice is subject to the reverse charge mechanism, if applicable."
For everyone else
Nothing special :)
Maybe that is something you can easily pass to the Wise API. We have never worked with Wise before and therefore we do not know that at the moment.
If you can do that, it would be really amazing and you would be like one of the few systems having that feature, which is basically essential to all EU businesses.
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Abdulsamad Aliyu
complete
GVMarketing
Validation Vies EU is essential
GVMarketing
Hello, how about adding validation with Vies EU? It would retrieve all the company data that enrolls in the program, and there is no shortage of such in Dropshipping! In Poland, we have a 23% VAT, and it is necessary to issue such sales documents. The most important function of all! Best regards, Adalbert
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Amy Day
In spain its also mandatory to have the customers tax number (nie/dni) on the invoice as well as showing 21% vat.
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Abdulsamad Aliyu
Amy Day GVMarketing Alex Crafter I've implemented this feature, your feedback would be appreciated
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Amy Day
Abdulsamad Aliyu thanks :-) Looks great. Is there somewhere I can input my vat number so it's generated on their invoice too? And, is there a way the system can calculate the VAT rate for the country, or is this done in stripe?
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Ayo Aliyu
Amy Day you can add your vat number in campaign settings -> invoice settings.
About the VAT rate thing, I still don’t understand how that will work here and why it should show vat on the invoice.
Let’s take this scenario:
affiliate refers a customer to you, the customer pays $100, and you pay the affiliate 10% commission, so $10.
When you generate the invoice for that transaction.
It will show $10 billed to you,
If you’re in a country where the vat is 20%, and the affiliate is in a country where the vat is 25%. Whose vat rate gets added to the invoice, who pays the vat? Is it you the business owner? Or the affiliate? I mean, if the vat on the invoice is 20%, does it mean you will be paying $12 in total to the affiliate for that transaction?
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Amy Day
Ayo Aliyu I can see in invoice settings the customer can add their Tax number, but I also have to show my VAT number on the invoice. Am I missing it?
Usually you only charge VAT to customers in your own country. Otherwise for tax reasons the sale is classed as an "export" and VAT isn't charged. (I'm just checking the situation within the EU)
In my case, most sales should be coming from Spain at 21%. This means for my subscription of $100 including TAX the commission of 10% should be $10 INCLUDING VAT.
So the invoice should show $8.26 + VAT 1.74
Not $10 + $2- otherwise that would be adding in double the amount of VAT.
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Ayo Aliyu
Amy Dayhey Amy, in the settings for your affiliate program, that is the space for you to enter your own VAT ID for the invoice. Any tax Id you enter there will show up as your company’s tax Id.
Okay, in this context though, when an invoice is created, we are not creating an invoice for your customers when they make a payment to you.
We are creating an invoice on behalf of the affiliate, towards you. Because in this case you’re the customer, and the affiliate is the service provider, because they’ve provided a service to you of bringing a customer and you’re paying them for that service. So won’t we have to use the tax rate of their home country?
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Ayo Aliyu
Alex Crafter what do you think
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Amy Day
Ayo Aliyu yes correct, the rate of their home country would be used, if it was applicable. So let's assume my affiliates are also in spain, they would charge me 21% tax. But they should only charge that on the value of the goods excluding tax. So $8.26, not the amount including tax $10. It either has to be all included, or all excluded in the commission they earn.
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Abdulsamad Aliyu
Amy Day Got it, will implement this today. But for it to work, you will have to enter your invoice country in the affiliate program settings, and the affiliate will have to set their own invoice country as well in the affiliate portal.
BTW there's now a button to delete an affiliate program. It's in Campaign settings -> Others
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Amy Day
Abdulsamad Aliyu great, I think that's fine for people to enter their country. I saw the delete button and used it earlier today. Thanks :-)
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Abdulsamad Aliyu
Amy Day The VAT calculation on invoices feature is now out.