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Recurly provides VAT (Value Added Tax) for EU (European Union) Merchants. With the new EU VAT rules, Recurly has a new VAT feature aimed to help merchants manage compliance. Here is a summary of the functionality you can expect in Recurly's new VAT feature.
Partnering with Avalara, the leading tax compliance solutions provider, Recurly provides an in-the-box integration that enables merchants to accurately collect VAT. As tax experts, Avalara is managing the different customer country rates, which is typically a resource-intensive process for merchants.
Reverse VAT occurs when a customer provides a valid VAT number and is located in a different country than the merchant. The customer is identifying themselves as a business and no VAT is charged on the invoice. The customer is obligated to pay the VAT amount later to the proper EU authority. Whenever an invoice is not charged VAT, the invoice must include a note that VAT was not charged and a reason.
Invoices must be provided in the language of the customer, and VAT must be presented in the currency of the customer.
Merchants selling digital/electronic goods to nonbusiness customers (no VAT number) must provide two nonconflicting points of address proof for each customer. Since the digital/electronic VAT rate is that of the customer, the EU requires proof that the rate is correct for that customer.
Merchants collecting EU VAT will be able to turn on country specific invoice sequencing to create a different sequence for each member state in the EU. Using Recurly, all new invoices in the EU will have an invoice number that increments that country’s sequence. Each sequence starts with 1000 and is prefixed by the two letter country code, which will provide better organization and access to specific invoices.
Recurly allows merchants to configure their plans and charges to be a “Digital Product”, “Physical Product”, or “Unknown”, which will help in properly staying compliant with the new EU VAT rules for telecommunications, broadcasting and electronic services. Recurly works closely with Avalara to provide correct customer rates for plans that are digital.
Recurly provides VAT number validation for customers who are VAT-registered businesses. In the instance a reverse charge, the invoice will include notes identifying that the customer is responsible for VAT.