A photographer in Toronto sells a preset pack to a buyer in Lisbon. That sale needs Portuguese VAT, even though the photographer has never done business in Portugal.
That’s how EU VAT works for digital products. The tax follows your customer, not your business.
Every EU country sets its own rate, and business buyers follow different rules. It’s a lot to track by hand.
The good news? Easy Digital Downloads (EDD) Pro has EU VAT handling built in. In this guide, you’ll learn when you need to charge EU VAT and how Easy Digital Downloads EU VAT handling takes care of the busywork for you.
- Key Takeaways
- What Is EU VAT on Digital Products?
- Do You Need to Charge EU VAT on Digital Products?
- What You're Responsible For (and What EDD Handles)
- How Easy Digital Downloads Handles EU VAT
- How to Set Up EU VAT in Easy Digital Downloads
- Already Using the EU VAT Plugin? Switch to Built-In VAT
- Quick Answers to Your EU VAT Questions
- Does Easy Digital Downloads handle EU VAT without a plugin?
- Do I need to charge EU VAT if my business isn't in the EU?
- Is EU VAT handling included in the free version of EDD?
- What happens if a VAT number can't be checked at checkout?
- Does Easy Digital Downloads file my VAT return for me?
- What's the easiest way to handle VAT on digital downloads in WordPress?
- Sell to EU Customers With Confidence
Key Takeaways
- The buyer’s country decides: You charge VAT at your customer’s local EU rate, not the rate where your business is based.
- Non-EU sellers start immediately: The €10,000 threshold only helps EU-based sellers. Everyone else owes VAT from their first EU sale.
- Businesses get a reverse charge: A valid VAT number means you charge 0% and the business buyer accounts for the VAT.
- EDD Pro automates it: Easy Digital Downloads Pro updates EU rates weekly and checks VAT numbers right at checkout.
- You still file the return: EDD gives you the reports, but registering for OSS and filing each quarter is on you.
What Is EU VAT on Digital Products?
EU VAT (value added tax) is a consumption tax that EU countries charge on most sales, including digital products like ebooks, software, online courses, and music. When you sell a digital product to a consumer, you charge the VAT rate of the buyer’s country, not your own.
This has been the rule since 2015. It applies whether your business is in Dublin or Denver.
Each of the 27 EU countries sets its own standard rate. Those rates change from time to time, which is part of why tracking them by hand gets messy.
If you’re pricing in euros for EU buyers too, our guide to selling digital products in multiple currencies walks you through it.
Do You Need to Charge EU VAT on Digital Products?
Yes, if you sell digital products to consumers in the EU. Sellers based outside the EU owe EU VAT from their very first sale to an EU consumer. Sellers based inside the EU switch to charging the buyer’s local rate once their cross-border EU sales pass €10,000 a year.
Where your business is located matters less than where your buyers are. A course creator in Texas with a few students in Germany has to charge VAT, just like a software shop in Berlin.
The €10,000 Threshold and Who It Applies To
You’ll see the €10,000 figure quoted a lot. It’s real, but it only applies to businesses based in an EU country.
Below that amount, an EU-based seller can charge their home country’s VAT on sales to other EU countries. Once those sales pass €10,000 in a year, they charge each buyer’s local rate instead.
If your business is outside the EU, there’s no threshold at all. The European Commission’s One Stop Shop guidance covers the details.
Tax rules depend on your situation, so it’s smart to confirm your obligations with a tax professional.
B2B Sales and the Reverse Charge
Selling to a business works differently. When a business buyer in another EU country gives you a valid VAT number, you don’t charge them VAT.
Instead, the business accounts for the VAT in its own country. This is called the reverse charge.
The catch? You need to confirm the VAT number is real before you skip the tax. EU VAT numbers are checked against VIES, the European Commission’s VAT number database.
There’s one exception to watch. Sales to businesses in your own home country usually still get charged VAT, even with a valid number.
What About UK VAT?
The UK left the EU’s VAT system after Brexit. UK sales don’t go on your EU return, and UK VAT registration is handled separately through HMRC.
Easy Digital Downloads can still validate UK VAT numbers at checkout. It also has a separate field for your own UK VAT number.
What You’re Responsible For (and What EDD Handles)
Charging the right rate is only one part of EU VAT compliance. Most sellers also register through the One Stop Shop (OSS), which lets you file one VAT return for all your EU sales instead of registering in every country.
If you’re based in the EU, you’ll use the OSS Union scheme in your home country. If you’re based outside the EU, you’ll use the non-Union scheme and pick one EU country to register with.
Before July 2021, this system was called MOSS. You’ll still see that name in older guides.
| Your obligation | What Easy Digital Downloads does | What’s on you |
|---|---|---|
| Charge the right VAT rate | Adds EU rates and updates them weekly | Turn on automatic rates and review your tax settings |
| Validate business VAT numbers | Checks numbers at checkout and applies the reverse charge | Nothing extra |
| Give customers VAT details | Adds VAT info to orders, receipts, and invoices | Enter your company and VAT details |
| Keep records | Saves VAT data and the billing address on every order | Ask your tax advisor what location evidence to keep |
| Register for OSS | Not handled by EDD | Register with an EU tax authority |
| File quarterly returns | Exports the EU VAT Report and EC Sales List | File your return and pay the VAT due |
EU rules require you to keep your sales records for 10 years. So hang on to those old orders.
How Easy Digital Downloads Handles EU VAT
Easy Digital Downloads Pro builds EU VAT handling right into the plugin. You don’t need a separate VAT plugin or an outside validation service.
Once it’s turned on, it covers four jobs for you.
Automatic EU VAT Rates
Turn on Automatic Rates, and EDD adds the current VAT rate for every EU country to your store. It checks for new rates every week.
If you’ve already set a rate by hand for a country, EDD won’t overwrite it. You stay in control of any custom setups.
VAT Number Validation at Checkout
When a buyer picks an EU or UK country at checkout, a VAT number field appears. Buyers from other countries never see it, so your checkout stays clean.
The buyer enters their number and clicks Validate. If the number is valid and the reverse charge applies, EDD removes the VAT from their order right away.
What if the EU’s VIES service is down? EDD charges the tax so the sale still goes through, then checks the number again afterwards. With Auto-Refund Tax on Delayed Validation turned on, EDD refunds the tax automatically once the number checks out.
VAT Details on Orders, Receipts, and Invoices
Every order gets its own VAT section. You’ll find it under the VAT tab on the order’s details page.
Want customers to see it too? Turn on Order Details in your EU VAT settings to add VAT information to their receipt page.
Your company’s VAT details also appear on EDD invoices, which are built into Easy Digital Downloads Pro.
EU VAT Reports for Your Quarterly Return
When it’s time to file, go to Downloads » Reports » Export. You’ll find two VAT exports:
- EU VAT Report: A CSV of all the EU VAT you collected, for your OSS return.
- EC Sales List Report: A CSV of your sales to VAT-registered businesses, for your EC Sales List.
Our EU VAT exports documentation explains what’s in each file.
How to Set Up EU VAT in Easy Digital Downloads
Setup takes just a few minutes. Before you start, make sure you have an active Easy Digital Downloads Pro license and the latest version of the plugin.
Step 1: Turn On Taxes and EU VAT
In your WordPress dashboard, go to Downloads » Settings » Taxes and check Enable Taxes.
Scroll down to EU VAT and check Enable VAT handling and validation. Then click Save Changes.
Step 2: Add Your Company VAT Details
After you save, a new EU VAT section appears under Taxes. Click it to finish setup.
Turn on Automatic Rates so your rates stay current. Then fill in your Company Information, including your EU VAT Number and Country of VAT registration. Add your UK VAT Number too if you have one.
These details show up on your customers’ receipts and invoices, so double-check them before you click Save Changes.
If your business is in the EU, leave Reverse Charge in Home Country? off unless your local tax authority allows it for domestic business sales.
Step 3: Test Your Checkout
Visit your checkout page and pick an EU country as the billing country. The VAT number field should appear. Switch to a country outside the EU and UK, and it should disappear.
Enter a VAT number and click Validate to see the reverse charge in action.
For every setting in detail, see our EU VAT setup documentation.
Already Using the EU VAT Plugin? Switch to Built-In VAT
For years, EDD stores added EU VAT support with a separate plugin called Easy Digital Downloads EU VAT. If that’s you, switching is simple.
When you enable EU VAT in Easy Digital Downloads (Step 1 above), the old plugin deactivates automatically. Your past orders keep all their VAT information.
That’s one less plugin to keep updated. Our EU VAT migration guide walks you through the switch.
Quick Answers to Your EU VAT Questions
Does Easy Digital Downloads handle EU VAT without a plugin?
Yes. Easy Digital Downloads Pro includes built-in EU VAT handling. It adds EU tax rates, updates them weekly, validates EU and UK VAT numbers at checkout, and applies the reverse charge for eligible business buyers. You don’t need a separate VAT plugin or an outside validation service.
Do I need to charge EU VAT if my business isn’t in the EU?
Yes. If you sell digital products to consumers in the EU, you owe VAT from your first sale, no matter where your business is based. The €10,000 threshold only applies to businesses located in the EU. Most non-EU sellers register once through the OSS non-Union scheme.
Is EU VAT handling included in the free version of EDD?
No. EU VAT handling, including automatic rates and VAT number validation, needs Easy Digital Downloads Pro with an active license. In the free version, the EU VAT setting shows an option to upgrade. You can still add tax rates by hand in the free version’s tax settings.
What happens if a VAT number can’t be checked at checkout?
If the EU’s VIES service is unavailable, EDD charges the tax so the order still goes through. It then checks the VAT number again in the background. With Auto-Refund Tax on Delayed Validation turned on, EDD refunds the tax once the number is confirmed. Otherwise, you get an email to review the order.
Does Easy Digital Downloads file my VAT return for me?
No. EDD collects the right VAT and gives you the reports you need, but you file the return yourself. Export the EU VAT Report and EC Sales List from Downloads » Reports » Export, then use them to complete your quarterly OSS return.
What’s the easiest way to handle VAT on digital downloads in WordPress?
Use an ecommerce plugin that handles VAT for you. Easy Digital Downloads Pro is built for digital products and includes EU VAT handling out of the box. Turn it on, add your company details, and EDD takes care of rates and VAT number checks at checkout.
Sell to EU Customers With Confidence
EU VAT sounds scary, but most of it comes down to two jobs: charging the right rate and keeping good records. With Easy Digital Downloads EU VAT handling, the first job runs on autopilot, and the reports cover most of the second.
Already on Pro? Head to Downloads » Settings » Taxes and turn on EU VAT today.
Using the free version? Upgrade to an Easy Digital Downloads Pass to unlock built-in EU VAT handling for your store.
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