The Business of VAT with Recurly

Recurly

About Recurly

Recurly provides enterprise-class recurring billing management for thousands of subscription-based SaaS, media, mobile, productivity, and publishing businesses worldwide. Businesses like AccuWeather, DishDigital, GigaOm, Groupon, JibJab Media, HubSpot, Asana, Twitch.tv, and Zillow depend on Recurly's ability to deliver recurring billing automation. Learn More

VAT Collection Available to All Merchants with Recurly

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.

Avalara Integration for Accurate VAT Rates

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.

Webinar: VAT Features Overview

Important Recurly VAT Features

Reverse Charge Support for VAT Registered Customers

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.

With Recurly

  • Recurly includes a VAT Reverse Charge Notes section on the invoice when a customer provides a valid VAT number. 
  •  Merchants can edit their VAT Reverse Charge Notes to have a default message for everyone, or create a custom message for specific invoices.

Localized Invoices for Your Customers

Invoices must be provided in the language of the customer, and VAT must be presented in the currency of the customer.

With Recurly

  • Invoices can be translated into 11 additional languages using Recurly’s hosted invoice pages where browser language detection displays and downloads the invoice in the language preference of the customer.
  • The majority of Recurly merchants who collect VAT handle currency conversions themselves by creating invoices through the API with their own VAT currency conversion included.

Location Validation

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.

With Recurly

  • Recurly captures up to three additional pieces of evidence and checks to confirm that at least one matches with the invoice address in order for the invoice to be created. Depending on whether your invoice is using the billing address or account address, these are the possible pieces of evidence that will be checked against it:
    • Billing Address
    • Account Address
    • Credit Card BIN Address
    • IP Address

Additional Recurly VAT Features

Country-specific Invoice Sequencing

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.

Identifying a Plan, Add-on, or Charge as Physical vs. Digital

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.

VAT Number Validation Services

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.

Not prepared for the new VAT changes?

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